Trustees adopt 2020-21 budget reflecting better-than-projected shortfall, enrollment

Contact: Paula M. Davis

KALAMAZOO, Mich.—The Western Michigan University Board of Trustees passed a balanced 2020-21 general fund budget Thursday that accounts for a $76 million shortfall tied to projected reductions in state funding, actual losses in tuition and fee revenue and other factors. The final budget is $9 million better than projected in May.

Enrollment proved to be one of the better-than-expected elements in this year's budget picture. Predicted in May to be down as much as 15% in some national higher education models and similarly in the University's own forecast, WMU's fall enrollment is 20,490, down by 4.6%, which is less than a third of the predicted decrease. Out-of-state enrollment grew slightly. The student body also increased by 585 students through its expanded partnership with Guizhou University of Finance and Economics in China.

"On balance, we've been able to prevail against the pandemic-generated headwinds of high school graduates taking gap years, limitations on international travel and the fallout from the worst economic downturn since the Great Depression. Clearly, the value of a Western degree is strong both within the state, across the country and around the globe," says WMU President Edward Montgomery.

About 72% of the general fund budget is derived from tuition and fees. Western is one of only six Michigan public universities that did not raise rates on tuition, fees or housing this year.

"Due to the coronavirus pandemic, it's been a difficult period for our students and their families on a number of fronts, including financially. To help alleviate some of their financial strain, we kept tuition flat. That may have put college in reach for many who would otherwise not have been able to join us this year. Though freezing tuition in the face of expenses had an impact on our budget, it was the right move," Montgomery says.

Earlier this year, WMU administrators forecast unprecedented losses of up to $85 million due to the economic impact of COVID-19 on the state of Michigan's budget as well as tuition, the two main sources of income for the University's general fund.

"We are grateful the losses are better than predicted, but they are still significant. We took a conservative approach in our budget modeling to keep the University on solid fiscal footing as we weather a period that is challenging for every sector of society," Montgomery says.

Trustees' review and adoption of the general fund Thursday comes later than is typical. Usually, the budget is approved before the July 1 start of WMU's fiscal year. This year, however, trustees passed a 90-day continuation of the 2019-20 budget in June to allow for an accurate enrollment count and have time to gain more insight into the state budget. At this time, funding for Michigan's colleges and universities is still to be determined. However, in reviewing the state’s revenue projections, the University is making conservative assumptions in its budget. This year’s budget follows a fiscal year with an 11% reduction in state operational funding, or $12.5 million. The cut came toward the end of 2019-20, and though the state provided an equivalent amount in federal CARES Act funding to make up for the reduction, there were limits on how those federal dollars could be used.

WMU's final budget is based on an accurate yet conservative approach. Given the state's reduction last fiscal year and the state’s current and future years' revenue projections, the budget assumes a 20% reduction in state appropriations. In light of a pandemic and economic crisis that is ongoing with an uncertain trajectory and duration, University officials say WMU's goal is to re-establish financial stability by avoiding a mid-year budget cut or a budget cut next fiscal year, if at all possible.

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