ANALYSIS: CMU’s deficits the result of new spending, declining enrollment

CMU's annual operating budgets either broke even or made the university money until the last two academic years. (Source: CMU.) [Budgets in blue were approved by President Leonard Plachta, those in red were by President Michael Rao, those in black by Interim President Kathy Wilbur and those in green by President George Ross.)
CMU’s annual operating budgets either broke even or made the university money until the last two academic years. (Source: CMU.) [Budgets in blue were approved by President Leonard Plachta, those in red were by President Michael Rao, those in black by Interim President Kathy Wilbur and those in green by President George Ross.)
This brief analysis is the latest in a series examining CMU’s annual operating budget.

By John Irwin

Things have drastically changed at Central Michigan University over the last five years, financially speaking.

Between the 2006-07 and 2010-11 academic years, CMU operated with an annual profit, so to speak, of roughly $18 million annually. Record enrollment levels allowed the university to offset declines in state appropriations funding.

Five years later, and on-campus undergraduate enrollment at CMU has declined by 8.3 percent and state funding has yet to match levels seen prior to Gov. Rick Snyder’s 15-percent cut to higher education funding in 2011.

The result has been two consecutive budgets with deficits totaling a combined $26 million, including a projected $11.2 million deficit this year. If that deficit was spread across each of CMU’s 17,764 on-campus undergraduates, each of them would owe the university about $630.

Simply put, CMU’s spending has risen at a far faster rate than its revenue stream over the last five academic years.

Revenue has risen by 7.3 percent in that time span from $417.9 million to $450.8 million. Meanwhile, costs have risen by 14 percent, from $399.3 million to $462 million. That’s despite rhetoric from top CMU administrators that the entire university has had to cut back and tighten its belt. The numbers show that’s not the case.

What accounts for the big spending increases? As previously written by Insider, spending on the College of Medicine — which was initially sold by administrators as “self-sustaining” — has taken up a disproportionate amount of the annual operating budget. In 2010-11, just after the college was approved and before it began operations, CMED a budget of about $2.3 million, all of it subsidized by the university. Five years later (and two years into its operation), the medical school has an annual budget north of $18 million, which CMU subsidizes to the tune of about $11 million.

In other words, if it wasn’t for the medical college’s expenses, CMU would nearly break even, despite the enrollment and state funding declines.


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