Reserve funds keep budget afloat

Despite the nine-year low freshmen class enrollment, Santa Clara will not look to solve budget issues by raising next year's tuition, according to Budget Director Dennis Roberts. However, this is no guarantee that a raise in tuition will not occur for other reasons.

In addition to the fact that fewer students mean less revenue for the school, costs have increased by $16.3 million from the 2002-2003 academic year. Roberts attributed the increase to rising salaries, benefits, insurance costs and utility rates.

Rather than making up for the disparity by raising tuition, Roberts said the administration will take an entirely different approach to the dilemma.

"The solution is to enroll a freshmen class in the following year at a level that we anticipate," said Roberts. "So what the president, the provost and the vice president are trying to do is to shore up any of the problems we've had in admissions. The expectation is that in the following year the freshmen class will meet the target."

The administration will also look for creative ways to cut costs throughout different departments.

"We're looking at a lot of the administrative and operational processes and trying to streamline and combine departments where we can. We've also asked departments to look for ways to reduce their organizational expenditures," said Roberts.

For example, Roberts said departments formerly reporting to Enrollment Services are being combined with other departments to provide better service to students.

Roberts emphasized that although departments will be restructured, there will be no resulting lay-offs in response to budget issues.

Although Roberts could not rule out the possibility of a tuition increase next year, he said that it will not be in response to the small freshmen class. Historically, however, the trend has favored a raise in tuition each year. The tuition has increased by $8,910 since the 1997-1998 academic year, an average growth of 4.9 percent per year, or $1,485. Next year's tuition will not be determined until later this year.

Roberts cites many reasons for the steady annual increase in tuition; the main contributing factor being the growing need of increased faculty salaries. According to Roberts, the high cost of living in the Silicon Valley requires that the salaries of the university faculty rise accordingly.

Out of the $224 million in the budgeted revenue, salaries and benefits take up 54 percent. The next biggest cost are operating expenses, which take up 22 percent of the budget and financial aid which requires 16 percent.

The other main factor for the raise in tuition is the increasing need for financial aid. With the poor economy, a growing amount of students are in greater need of financial assistance and the raise in tuition helps create more funds.

Roberts said that eventually the provost and the budget council will determine what tuition will be in the long-run.

"It's a balance of affordability for students and trying to make sure that we have sufficient funds for the programs that we want [in order] to maintain the high quality of this institution," said Roberts.

The university's fiscal year begins on July 1 and ends on June 31. For the 2002-2003 academic year, the school was able to avoid having a deficit. Roberts is hopeful that they will able to do the same in the coming year, if all attempts to restructure the budget go according to plan.

Each year approximately 1 percent of each student's tuition goes into the university's reserve funds. These reserves are often short-term funds designed as a safety system.

"If you don't set aside reserves, when you get a bill, if you didn't save the money ahead of time, then what happens is that the year you have expenditure you have to scramble to find funds for," said Roberts.

The reserves are designated mainly for maintenance needs â€" such as repairing older equipment and facilities â€" however they also serve as a cushion for the school when unforeseen costs arise. Although reserves can last for a few years, in most cases they last only one or two years. The class of 2003 was the second largest class in school history, which allowed Santa Clara to set aside a sizable amount of money. These funds are proving useful with the smaller revenue for this year.

The ambitious $350 million campaign that President Paul Locatelli, S.J., announced last October spearheads an effort to make significant change on the university as a whole.

The original date set to reach the targeted amount is June 2006. The majority of the funds raised thus far are from alumni, corporations and foundations. At this point, the plan is 64 percent into its execution, with 55 percent (more than $190 million) of the targeted funds acquired.

"Given the economy of the last few years, we think we're doing very well," he said.

Contact Lance Dwyer at (408) 554-4546 or at ldwyer@scu.edu.