Years of declining enrollment, the discovery of an over-inflated yearly budget, and an almost $11 million budget shortfall have put UA Little Rock in an awkward position at the beginning of the new decade.
Declining Enrollment
UA Little Rock’s enrollment troubles aren’t unique. For years, colleges across the country have faced steadily declining rates of enrollment. According to the National Student Clearinghouse Research Center, college enrollment in the United States dropped 11 percent from 2011 to 2019. In 2010, UA Little Rock counted over 13,000 students. Six years later, in 2016, enrollment tallied at just over 11,500 students. The latest enrollment calculation, completed for Fall 2019, counted about 9,500 students.
While lost enrollment revenue has been a common experience in recent years, budgetary enrollment projections for the current fiscal year pushed the school’s financial issues to the extreme.
“We projected an enrollment decline of 1 percent,” UA Little Rock Chancellor Christina Drale said. “And it was 9 percent.”
That 9 percent decline resulted in about $5 million worth of revenue loss. Drale said the original projected decline was the result of philosophical differences.
“I think there were people who recognized that was not a realistic projection,” Drale said. “But there were others who were very optimistic and truly believed we would be able to turn enrollment around and limit it to a more modest decline.”
While the university isn’t expecting another 9 percent drop in enrollment for next year, they are prepared for more declines.
“We are predicting we will not regain any of the 9 percent we lost this year,” Drale said. “And in fact, [we think we] will lose potentially another 6 percent.”
That 6 percent accounts for a further $4 million in potential revenue losses.
For this year, however, the school still has another $6 million to make up for outside of their operating budget.
$11 million budget deficit
Institutions like UA Little Rock have a part of their budget called net position which deals with depreciation, bonds, and other accounting matters.
Over time, the university failed to account for depreciation in their budget.
“We weren’t setting aside enough funds to match that depreciation level,” Drale said. “We came into this fiscal year $5.6 million in the negative on our net position.”
For the 2020 Fiscal Year, the university faces an almost $11 million budget shortfall.
University Audit
A report which alarmed many on campus arrived in an Arkansas Democrat-Gazette article last November. The report detailed an audit of the school’s 2019 Fiscal Year which discovered the school’s actual budget was significantly lower than what they provided to UA System officials.
For years, the school had been over-inflating their yearly budget by rolling over accounts designated for multiple years. In one case, revenue was overcalculated by $20.5 million.
Despite some hiccups, Drale said the school has learned from their mistakes.
“We’ve stopped that practice and we’ve corrected that,” Drale said. “We did roll over the grants for this fiscal year and we had to go back and correct that. So, we think we’ve got all of that worked out. There were some not-best practices going on for a while.”
University Response
In spite of all the financial challenges, the school just finished the second in three rounds of budget cuts to account for 2020’s deficit. But the most significant cuts are on the horizon. For more on the university’s response to their financial crisis and the potential impact on students and faculty, read the follow-up to this story in next month’s edition of the UA Little Rock Forum.
