Due to the state revenues improving, Missouri Gov. Mike Parson will unfreeze funds that he placed expenditure restrictions on near the start of the pandemic, returning more than half a million dollars to Northwest’s budget. The Springfield News-Leader reported that Parson will return a portion of the frozen funds to institutions since the state revenues have improved.
Vice President of Finance and Administration Stacy Carrick said despite this good news, she worries that this return of funds for universities like Northwest will not last long.
When the pandemic first began to affect the state’s revenues, Parson instituted two expenditure restrictions, which is a way to freeze funding after the state budget has been approved. The combined restrictions withheld $3.9 million in funding from fiscal year 2020 that the University would have received.
The state then withheld another $3.8 million from fiscal year 2021 in July in state appropriations for the University, of which only a portion will be returned with the unfreezing of the appropriations.
Carrick said when the University closed in Spring 2020, the University cut costs where it could to make up for the lost revenue. She said the University cut back on utilities and expenses for certain buildings, waited to fill open positions and delayed some capital improvements to facilities on campus to help save money.
Carrick said she is concerned that if the state revenues drop again, Parson will install another expenditure restriction, leaving institutions scrambling to make ends meet again.
“(The state) could come back later in the year … We could see a further reduction; we could see them give more back,” Carrick said. “It just truly depends on how the state revenues continue to perform.”
Carrick and the University were informed that of the $3.8 million that was restricted, the University will get back $556,000, which is about 14.6% of what it should have received.
Carrick said this $556,000 was already budgeted in the fiscal year’s budget, which means when the institution receives that portion of their funding, it will be used for what it was originally intended to operate with.
“It’s not like we are getting additional money; we’re getting money back that they took away, if you will,” Carrick said.
Originally, the University was to receive about $30.2 million in state appropriations, but with the expenditure restriction, it collected only about $26.3 million.
Northwest experienced financial setbacks at the beginning of the pandemic, but since then, the University has been able to remain financially stable and healthy.
According to documents received by the Northwest Missourian from Carrick for the fiscal year of 2020, the University received about $81.8 million in revenues, which include net tuition and fees, state appropriations and auxiliary services. This does not include small dollars made from students being on the campus and making purchases outside of their meal plans or buying and renting textbooks.
In former years, revenues were slightly higher for the institution. In fiscal year 2018, the University’s revenues were about $87.8 million and even greater in fiscal year 2019, when revenues totaled nearly $90.5 million.
Carrick, who has worked in the Northwest finance department for over 10 years, explained that the Composite Financial Index is a benchmark comparison of universities’ financial health that is used by the Higher Learning Commission.
According to the documents provided by Carrick, the CFI is a “financial measurement of an institution’s health.” To be considered financially stable, an institution must be at a 3.0 or greater.
Northwest had CFIs of 3.98 in the fiscal year 2018 and 4.5 for the fiscal year 2019.
“We are strong, and from an overall financial position, the strongest we’ve been in the last decade,” Carrick said.
Carrick noted that the CFI for fiscal year 2020 will not be calculated until after December when the Board of Regents view the audit. Only then can the University calculate the CFI.
Carrick said any institution that falls at or below a 1.0 for three consecutive years is put on a financial recovery watch list.
When Carrick came to Northwest, she said the University had been on the financial recovery watch list in 2007, 2008 and 2009.
“When I came in, we had some financial challenges and we had to work our way out of those,” Carrick said.
Carrick explained that she anticipated that for the fiscal year 2020, the CFI will have a slight drop because of the challenges brought by COVID-19 but will remain stable.
“While Northwest has faced financial impacts due to COVID-19, through agility and incremental decision-making, we continue to focus on health and safety, learning and student success and our people,” Northwest President John Jasinksi said in an email to The Missourian. “Northwest entered the pandemic in its strongest financial position over the last decade by making difficult decisions, utilizing a growth mindset and continuing to address organizational viability.”