Dubeck assesses USF’s financial situation

A little less than $240 million rests in part of the University of South Florida’s coffers — enough so that if every dollar were stacked on top of each other, they would stretch from the floor to the ceiling of the four-story Marshall Student Center roughly 1,401 times.

These funds mark the “unrestricted” portion of the University’s reserves, which the USF administration can use however it legally sees fit, according to its 2007 budget audit. In a time when the University has been struck by budget cuts that have lopped $52 million from its funds over the past two years — with the looming threat of additional cuts this spring — Temple University physics professor Leroy Dubeck visited the Tampa campus Thursday to inform the University community of these untouched funds and other ways the University can combat a shrinking budget.

“These are real dollars,” he said. “The question is, are they going to be used for addressing the budgetary crisis, instead of laying off more people and doing other things that’d be more detrimental to the University?”

Dubeck, who has sat on collegiate budgetary committees and authored books on the subject, compared the use of the unrestricted funds to buying a car. A person could set aside some of his paycheck to replace his old clunker, Dubeck said, but then, if he gets laid off from his job, he may need to spend that money so he doesn’t lose his house. Similarly, while some unrestricted funds are designated by the university’s governing body — the Board of Trustees (BOT) — for certain uses, they can legally be undesignated to address more urgent needs.

No restrictions, only 
Re-designating funds isn’t as simple as deciding not to sign the lease on a shiny new car, however. Faculty Senate President Larry Branch said that once a budget has been submitted to the state, any changes — or re-designations of unrestricted funds — must get state approval first.

Florida law also requires the University to keep an amount equivalent to 5 percent of the Educational and General revenue USF receives from the state in a cash reserve in case of an emergency, said USF spokesman Michael Hoad.

Even without those funds, Dubeck said the University would have about $190 million in unrestricted money that it could use to offset budgetary shortfalls. In an e-mail to faculty, USF Provost Ralph Wilcox said that about $53 million of these funds have been allocated to departmental operating expenses, visiting instructors’ and adjuncts’ salaries and support for graduate students, among other costs.

“From the outset, the judicious spending down of these cash reserves has been an important and integral part of our plan to balance the budget,” he wrote.

Since reserve funds are non-recurring, the University cannot depend on having them year after year, so it can’t use them to pay for base salary increases or other annual expenses, Wilcox said. This also presents a challenge when deciding how much of the unrestricted funds to use at once, since it is uncertain when the budget cuts will end.

A stimulating discussion
Dubeck said he estimates that the United States will pull out of its recession within two years, but some analysts suggest it could last up to five. If Dubeck’s estimate is correct, he said that university administrators should look into using a portion of these funds to stave off additional job losses, bloating class sizes and other issues.

Even if it isn’t, Dubeck said USF could look to other sources of funding to help the situation, such as the House’s proposed stimulus package. If approved, the package would provide about $79 billion for state education systems, with about $39 billion going toward local schools and universities.

Based on the state’s population, Florida would likely receive about $1-$2 billion, Dubeck said.

“You know, a billion here, a billion there. It helps,” he said.

This brought Dubeck to his second question of the afternoon, which served as one of the underlying purposes of the presentation: How could the University see a healthy portion of this money?

“From what I’ve been told about Florida’s Legislature — I live in New Jersey and work in Pennsylvania, so people here would know better than I would — it’s going to take mobilization on the part of students, faculty, staff and, ideally, the administration,” Dubeck said. “What we did at a local level today, you’ll later have to do at the state level. It’s old-fashioned political lobbying.”

What’s next: demanding transparency
Dubeck advised the audience — a mix of about 100 students, faculty and staff in the Marshall Student Center Ballroom — to do two things: first, seek a breakdown of how exactly administrators plan on spending the portion of unrestricted reserves they intend to use, and second, take an active role in lobbying for more money.

Faculty Senate Vice President Steve Permuth said he praised Wilcox for listing how the administration intends to use the unrestricted funds, but that the next step is finding out how much is being allocated to each endeavor, and making sure that the funds primarily benefit 

Dubeck’s presentation was based on an analysis of USF’s audited budgets from 2003 to 2007, as well as the unaudited budget for the 2007-2008 fiscal year. Once a university completes its budget, it must be sent to the Auditor General for official review by the state. 

Though Dubeck concluded that the University was in “excellent financial condition,” he did note two areas of concern.

Dubeck found that the percentage of expenses going toward instruction had steadily decreased from 2003 to 2008, falling from 32.23 percent to 27.96 percent.
The change doesn’t reflect a decline in funding, but a dramatic increase in the amount of money USF has received toward research, said USF spokeswoman Jacqui Cash.

“It’s all a percentage of the whole — when one number goes up, others will shift,” she said, referring to the 4 1/2 percent climb research funding took during the same years. “It can only equal 100 percent at the end of the day.”

Dubeck also noted a “significant deficiency” in the 2007 financial audit. The Auditor General randomly selected about 20-30 grants and contracts from the University’s list of reserves and found that the money listed as owed to USF on six of the awards had been overstated by about $6.7 million. Similarly, USF’s deferred revenue for these awards — money that USF has received for work that hasn’t yet been completed, for instance — was overstated by $7.1 million.

This meant, Dubeck said, that some money hadn’t been collected in a timely fashion or that the amounts had been misreported.

“That was as of June 30, 2007,” he said. “We won’t know until the Auditor General completes last year’s audit if the issue has since been corrected, or if it’s been repeated.”

In an official response to the Auditor General, then-Chief Financial Officer Carl Carlucci said USF had created a special unit within the Contracts and Grants division of the Department of Research Financial Management. According to the statement, the unit will be responsible for accounts receivable collections and award closeout so that the University can keep better tabs on collecting awards before the availability period expires.

Though Dubeck analyzed all four types of University reserve funds — restricted expendable, restricted nonexpendable, net related debt and unrestricted — he focused on unrestricted funds because they are the ones the administration has the most control over. The restricted funds — such as the restricted expendable, which is the University’s endowment — are essentially a pool of gift money, grants and contracts that are legally bound to being spent in a certain way.

After delivering his presentation, Dubeck said the most important aspect to him was seeing the turnout.

“It shows that students care about what’s going on,” he said. “For change to occur, we’ve got to continue these discussions, and students have to get involved.”