A balancing act: the financial state of the university

As enrollment numbers shift and funding changes, the administration at Southern Adventist University must play a balancing act in the day-to-day operations of the school as it looks to the institution's future.

Like last year, Southern will again be operating at a financial deficit for the 2019-2020 academic calendar. During the 2018-19 school year, the school fell about $700,000 short of its projected income, and this year it will likely hit about a $1.4 million difference.

These numbers are a reflection of steady drops in overall enrollment in the past few years. In 2012, the school hit its all-time peak with 3,319 undergraduate and graduate students. That number decreased each school year until 2017 when it just got back over the 3,000 mark and then decreased again in the last two years. 

The 2019 fall enrollment currently sits at 2,834, 107 less than that of 2018, according to Southern’s Datatel Colleague Student Information System Online Fact Book.

Though general enrollment is down, this year’s freshman class of 512 is larger than last year’s 502, according to an email sent to faculty from Southern President David Smith. The retention rate rose by 5 percent, and the figures are better than what the school initially projected. As a result, administrators decided not to adjust the budget once the school year began.

“It looks like we’re in a little better of a position than we thought we were going to be,” said Doug Frood, executive director of budgeting and financial analysis.

A nationwide trend

Director of Admissions Rick Anderson said the downward trend in enrollment isn’t just something seen at Southern, but across higher education in general, as well as in Adventist academies.

According to 2019  findings by U.S. News & World Report, a leader in college statistics, there have been eight consecutive years of shrinking numbers across the nation's universities.

Anderson attributes some of the downfall to the 2008 recession.

“We believe...it was really impacting the families who were starting college in the years after [the recession],” he said. “The families whose income was affected, whose careers were affected in the years after 2008,...had more difficulty in choosing higher education.”

What does that mean for current Southern students

Currently, according to Frood, not much will change in the day-to-day operations of the school. He believes that drastically cutting back spending will, in the long run, further damage the institution.

“The challenge, as the budget guy, is trying to tell people, ‘Yes, I realize we have a deficit budget but let’s not try to save so much money at the expense of the student experience and quality,’” he said. 

This philosophy of maintaining the culture that has already been established on campus also bleeds into the school’s commitment to keep up buildings and other parts of campus infrastructure. The school also reaches out to donors and alumni for major campaigns to build new buildings, such as the Beitz Center for Student Life, and update old ones.

“The good news, even though I’m sure students at times don’t feel it, (is that) we’ve not gotten carried away,” Frood said. “We could probably balance this budget easily if we wanted to cut back on maintenance. We’ve chosen not to do that. We’ve chosen to say we think it’s important that we maintain the campus as best we can...We’re not going to back so far off that we get a balanced budget, but we get a campus we aren’t happy about in five years.”

Southern has had many years of excess revenue, Frood said. Therefore, while it is not ideal, running a deficit for a short amount of time will be okay as long as work is done to increase enrollment, drawing  funds to  the university, he explained

“From a student perspective, we are going to be challenged to make sure that we are making the right investments to make sure you have a great year, while noting that by doing that we may lose a million and four, which may burn a million or so in cash,” he said. “But like I've said, we’ve had some great years. We can afford to burn a million dollars in cash. We’re not going to go broke.”

What does that mean for the future

In terms of admissions, the department is working to improve its communication with prospective students as well as reach out more effectively to those outside of the Adventist academy systems that may look at Southern as an option.

The school is hoping to bring in an average of around 530 students per incoming freshman class to slowly regain numbers despite graduation and students that don’t stay at Southern.