USF President Judy Genshaft and Provost Ralph Wilcox had a clear message to deliver to the Faculty Senate on Wednesday afternoon: USF is not in a financial crisis and the university is “incredibly grateful” for the Legislature’s help during the past year in restoring recurring Educational and General (E&G) revenue funds.
The message came two days after Genshaft responded to a letter from Board of Governors Vice Chair Mori Hosseini, who wrote a letter to Genshaft, copying Gov. Rick Scott, requesting “that USF take steps to correct the record regarding any public misconceptions about the university’s financial stability” after the university undertook spending reductions to adjust to what Genshaft had previously called “the new normal.”
Hosseini wrote to Genshaft saying news articles from the Tampa Bay Times, Tampa Tribune and The Oracle, which reported “USF administrators were concerned that a decline in reserves could damage the university’s general bond rating,” had come to the attention of the BOG, and the BOG felt the concern was unwarranted.
“Board staff has researched this issue … in doing so, they spoke to representatives from the State’s Division of Bond Finance and one of the major bond rating agencies — neither of which indicated concerns about USF’s bond rating,” the letter sent on Nov. 1 stated. “Based on this review, the assertion that a decline in university reserves would damage the university’s bond rating appears not to be an accurate reflection of USF’s current situation.”
The letter stated that in a year in which the state Legislature restored $300 million to the State University System and an additional $230 million in additional funding — restoring $45 million to the USF base budget, $5.5 million for USF-specific initiatives and $21 million for USF capital projects — “the university’s position is disappointing.”
In July, Genshaft emailed faculty and staff stating the university would need to increase the university’s cash reserve by 5 percent over the next year, place a hold on hiring for all vacant positions and “manage the use of carry-forward funds at the enterprise level while allowing our deans and division leaders to manage their priorities” in order to increase cash reserves to protect the university’s bond rating.
After hearing feedback from faculty and deans, she later said the university would modify the plan to restore the reserves over a three-year period. In his annual fall address to faculty, Wilcox hinted at staff reductions, General Education and elective course reductions as part of attempts to restore cash reserves over the next three years.
But the report compiled by the BOG questioned the timing and need for spending reductions.
“A university’s general bond rating is determined by the entire health of the university, not just the Education and General (E&G) funding that is appropriated by the State,” the report stated. “… We have found no evidence that suggests USF’s bond rating is at risk. No rating agency has issued a credit watch or expressed concerns regarding USF’s declining reserves potentially impacting their bond rating.”
At 23 percent, Hosseini wrote that USF’s reserve balance was among the highest in the state and well above the 5 percent required by state statutes.
Genshaft told Faculty Senate on Wednesday that USF has always opted to maintain a higher cash reserve level. In 2001, USF’s BOT raised it to 8 percent.
“This past year, because we have used so much of our cash, I had recommended we bring it up to 10 percent, just carry forward cash, that if anything happened, we had enough,” she said.
In her response to Hosseini, Genshaft said the university was grateful for the help of the Legislature in restoring revenue during the previous year.
“The USF Board of Trustees and I remain incredibly grateful for the actions taken by the 2013 Legislature and Gov. Rick Scott to restore USF’s state appropriation reductions from 2012 and to further invest in strategic state priorities, capital projects and employee raises at USF and throughout the State University System,” she wrote. “It is in large part because of those investments that USF is as financially stable as it is today. “… As we work through this dynamic time we have strived to provide open, candid communication to all our constituencies,” she wrote. “Regrettably, it appears these measures have been misconstrued by some as evidence of financial instability. I am truly sorry that our actions or message may have come across this way and assure you that this is not the case. Rather, our efforts are meant to maintain USF’s sound fiscal health now and well into the future …. We will work to improve communications and clarify any erroneous perceptions that USF is not financially stable.”
Genshaft told faculty she was “absolutely confident” USF was on the right path from a budget standpoint. Cutbacks, she said, were necessary for the future, though the university was not in crisis.
“Last year, the University of Florida cut $38 million, and there was not a peep said because everybody understood how much it was down,” she said. “(The Board is) saying, ‘we’ve restored it, so why are you cutting now? Why would the newspapers report that it’s the Legislature’s fault?’ We’ve got some important messaging that has to go out: We are happy that (Florida House) Speaker Weatherford, who is our person, has helped us out. We do need to make sure that message gets out.”
Wilcox said the message consistently sent has been one of a “course adjustment,” not crisis.
“This is not a revenue problem,” he said. “It’s an expenditure problem. The Legislature has been a tremendous help on the revenue side. We have to take it upon ourselves to bring the expenditures in line with revenue, and we’re doing it … Is there ever a perfect time? Your guess is as good as mine.”