After the fiscal crisis that occurred last January, Fordham has had to close a serious budget shortfall. This was caused in large part by unexpected under enrollment, university officials said Monday afternoon.

Despite recent budgetary shortfalls, the administration still believes that they can balance the budget for the upcoming fiscal year 2015. They admitted that this caused them to change their forecasting for the future, since Fordham faces financial challenges in the coming few years.

“Eight out of 10 schools failed to achieve budgeted tuition and fee revenue,” said John Lordan, senior vice president and chief financial officer, at a planning and budgeting meeting Monday afternoon. “It’s rare that so many [schools] went in a single direction.”

According to Lordan, only the Gabelli School of Business (GSB) and the Graduate School of Business Administration met and exceeded their projected goals for enrollment.

Almost 94 percent of Fordham revenue comes directly from student tuition and fees, according to the Board of Trustees’ Financial Plan for fiscal years 2014-2018.  This number, because of its size, largely impacts how the university forecasts its budgets for its five-year plans, especially if the projected numbers, such as expected number of students to enroll, does not meet expectations.

This mismatch between projections and actual numbers is exactly what caused the budget shortfall in fiscal year 2013.

The gap created a $5.2 million debt during fiscal 2013 which typically runs from April 2012 until March 2013, which caused the university to dip into its provisional fund, or allotted money for capital investment, of $6.7 million. That money was scheduled to be invested in capital projects, such as building renovations. Instead, in fiscal 2013, it was used to offset the debt and only the leftover money could be invested.

Despite the fact that the projected enrollment numbers did not meet expectations, revenue as a whole was still higher than revenue from 2012, mainly due to the rise in tuition price, according to Lordan.

Back in 2007, Fordham raised tuition by eight percent for the school year. But since 2010, tuition increase has slowed to under five percent per year, holding steady at 4.5 percent for fiscal years 2012, 2013 and 2014.

This does not, however, seem to be generating enough funds for the university as, according to the Board of Trustees’ Financial Plan, “the revenue problem only gets worse in fiscal 2014 and beyond.”

Lordan and his staff predict the university will only be able to raise tuition somewhere between three and four percent for the 2015 fiscal year, which might add to the university’s fiscal woes. Each one percent increase in tuition generates about $3 million in revenue, Lordan said. If the university only raises tuition three percent, instead of 4.5 percent of late, it would give them about $4.5 million less in revenue than the year prior.

The Trustees warn that if tuition does not grow fast enough, programs could be affected as “any further constraints on undergraduate tuition rates would cost the university dearly,” the financial plan reads. “Each decrease…could cause significant disruption of academic programs, particularly if the reductions lasted for several years,” as per the plan.

University officials seem to realize they cannot continue to hike up prices as they did in the past, especially since, according to the financial plan, “the nation’s long economic downturn and the decline in the value of family assets combined with intense political pressure and harsh public criticism of universities, have made future increases at those levels unlikely.”

Simultaneously, because of tuition costs and the state of the economy, more and more students are turning to financial aid. At this time, according to Lordan, between undergrads and grad students, nearly 44 percent of Fordham’s graduate and undergraduate students need to receive some kind of financial aid package to attend the university.

Administrators say the increased need for financial aid is also stretching the university’s resources. Lordan said the university needs “to keep [financial aid] from going much beyond 44 percent. We’re dangerously close to the 50 percent level.”

Financial pressure on the university is also increasing because of some big-budget projects that have been scheduled to hit the books over the next few years.

For example, the university recently “financed its biggest construction project ever, a $250 million Law School building,” according to the financial plan. The university was able to offset some of the cost by selling a parcel of land at Lincoln Center for $75 million. The goal of this new undergraduate residence hall and Law School at Lincoln Center is to attract students to that campus, thereby increasing long-term revenue.

At the same time, some of the remaining costs from the Lincoln Center construction and other projects need to be paid off soon, according to Lordan.

That is why the financial plan says “undergraduate tuition and room revenue at Lincoln Center begins to increase in 2015 as the new Law Building opens.”

Fordham Law School underenrollment has been one of the largest contributors to the university’s recent revenue shortcomings.

The Law School and Fordham’s other graduate and professional schools are expecting falling enrollment, according to the financial plan, while enrollment at all the undergraduate levels will remain constant. The Law school has reduced its expected matriculation levels by 10-15 percent in hopes that it will still attract quality students to maintain its current reputation.

At Monday’s budget discussion, Lordan also discussed growing university expenses, the largest portion of which is devoted to faculty salaries and benefits. According to the financial plan, over $300 million is devoted to salaries, wages and fringe benefits for the faculty and staff in the 2014 budget.

Lordan said that according to his staff’s calculations, faculty salaries at Fordham are located within the 90th percentile of universities and colleges.

According to the financial plan, Fordham also has a higher fringe benefit rate, which includes factors such as health insurance coverage.

These, according to Lordan, help Fordham acquire and retain the highest quality faculty and staff, especially in comparison to peer and aspirant schools such as Columbia and NYU.

However, Lordan did mention that these expenses could go up by approximately $1 million when all facets of the Affordable Care Act take effect, within the coming year. This is reflected in the financial plan, which asserts that faculty is paying too small a share of their benefits: “The 2014 budget reflects an equalizing of employees’ share of health insurance premiums. This would return faculty, who currently pay less than seven percent, to the 15 percent share agreed to in 1996 and paid by administrators since that time.” This has been an ongoing discussion between the faculty and the administration.

Lordan and Frank Simio, vice president of finance, cite additional taxes and more required funding for employees as reasons why the university could have to spend more.

Despite all these serious financial issues, administrators say they are optimistic about the future. The university is continuing capital projects including the renovation of Loyola Hall, a new campus center in place of McGinley, a new recreational center and science building at the Rose Hill campus as well as continuing to add to their master plan of Lincoln Center’s growth.

Some professors in attendance, however, did not agree with the university’s path.

“This budget is more for buildings than for people,” Henry Schwalbenberg, Ph.D, associate professor of international political economy and development, said.

Lordan responded by saying the university constantly faces a tradeoff between investing in the future with capital projects it hopes will attract students and satisfying current university members.

Schwalbenberg also brought up the issue of faculty salaries, claiming that newly hired assistant professors make almost the same amount as associate professors.

This issue of benefits and salaries has not been officially worked out for fiscal year 2015. The salary increase for faculty and staff is still to be determined. Once those figures are set, the university can continue to finalize its expenses for next year.

In previous years, especially last year, however, many of the colleges within the university have had to reallocate their funds to help offset expenses and shortfalls.

According to the financial plan, the allocation rules shifted millions of dollars of costs and revenue among of all of Fordham’s colleges.

The schools that received the most funding from this reallocation include Law, Graduate Arts and Sciences and Graduate Business. On the other side, Fordham College at Rose Hill, the Gabelli School of Business and the School of Professional and Continuing Studies, lost money during the reallocation process.

“This dependence on revenue from undergraduate operations, Graduate Business and Summer programs, poses serious risks to the university during this planning period,” the plan states.

As of now, however, the preliminary budget for 2014 is balanced, according to the data in the Board of Trustees Financial Plan. The University expects to bring in around $504.8 million in revenue and plans to spend about $504.7 million, which brings the books back into balance without dipping into the reserve funds, which as stated was one of the dilemmas this past fiscal year.