Eastern Michigan University reins in multi-million dollar shortfall, strikes near-balanced budget
Seven months ago, Eastern Michigan University officials called a budget shortfall projected to exceed $5 or $6 million "discouraging."
Chris Asadian | AnnArbor.com
A poorly performing investment portfolio coupled with an unexpected fall in enrollment led EMU Chief Financial Officer John Lumm to warn in September that the school was experiencing a shortfall that would likely expand if EMU didn't make significant cuts— and quickly.
As officials determined where they could cut the budget, the shortfall increased steadily, eventually reaching $4.6 million in September. Yet in recent months the shortage has shrunk rapidly —lowering to $3 million by February— and officials reported a near-balanced budget during a Board of Regents meeting on Tuesday.
Now the school is just $100,000 in the red, a sum officials say EMU can easily tackle.
"All in all we have to be very pleased with the financial performance in the university," said Regent Mike Morris.
The lowered deficit, Lumm said, is due in part to the investment portfolio rebounding from its poor performance and turning September's $1.9 million loss into a $2.4 million return as of March 31. EMU recouped the rest of the deficit by cutting programs and expenses. The school used attrition, cut back on overtime, lowered energy use, curbed auxiliary costs such as travel and equipment purchases, eliminated some financial aid and deferred select projects.
Nonetheless, Lumm warned that the school's budget performance "could change" if enrollment levels for the upcoming spring and summer sessions don't reach projected levels.
"We assumed that the enrollment levels would remain the same" as last year's levels, Lumm said.
And despite striking a balanced budget, EMU is projected to finish the fiscal year (ending in July) having raised roughly $5 million less than officials predicted. That's largely due to the enrollment shortfalls, Lumm said.