The ongoing efforts to improve Washington State University’s fiscal health continue to pay off.
In just three years, the WSU system has turned what was a $30 million annual operating deficit into a nearly $30 million surplus, helping to start replenishing depleted financial reserves as the university deals with the unprecedented challenges posed by the global pandemic.
“We have reached this point much faster than expected,” said WSU President Kirk Schulz. “We asked our faculty and staff to dig in, get creative and help, and the entire WSU community has delivered.”
WSU ended its 2020 fiscal year with a positive operating balance of $28 million, a significant increase over the $7.8 million balance from the 2019 fiscal year. The university also saw its spendable cash and investments relative to its operating expenses increase, with levels rising closer to peer institutions. WSU also drew closer to its peers in its levels of spendable cash and investments compared to its total adjusted debt and its operating margins.
While the lingering effects of COVID-19 will continue to impact WSU, university leaders took action early in the pandemic to prepare for the worst. In fiscal year 2020, WSU saved $12.5 million by refunding trust and building fee revenue bonds and another $11.2 million in fiscal year 2021 by refunding and financing general revenue bonds.
Without the difficult steps taken to improve the university’s financial wellbeing, WSU would be in a much more difficult place post-pandemic alongside many of its peers, Matt Skinner, senior associate vice president for finance, said.
“We remain realistic for what the immediate financial implications of COVID-19 are, but in the past few months we’ve found reasons to be upbeat and optimistic,” Skinner said.
New sources of revenue have been key to the improved fiscal health of the university in the last few years, Skinner said. These included new state support for the Elson S. Floyd College of Medicine, as well as tuition revenue brought by modest rate increases and enrollment growth. Since the onset of the pandemic, federal stimulus funds have provided relief to offset some of the lost revenues and extra expenses incurred due to COVID-19. These funds were also used to provide emergency aid to students.
From 2016 to 2020, WSU systemwide grew by more than 1,000 enrolled students, peaking at 31,607.
At its worst during the 2017 fiscal year, WSU’s annual expenses dwarfed revenues by nearly $30 million. A series of strategic investments that included expanded classroom space, the new medical college, development of WSU Everett, construction of new athletic facilities and other priorities required tapping into the university reserve funds in the years prior to help cover the annual cost of operating the university system.
That same year, WSU President Kirk Schulz enacted the Fiscal Health Initiative, which set out to right the university’s financial situation and rebuild its depleted reserves. These reserves had decreased by $115 million, or 56% in the four years prior to the implementation of the initiative.
In 2019, WSU’s operating budget showed a small surplus, the first time that happened since 2013 and a year earlier than breakeven had been forecast under the Fiscal Health Initiative. This quick turnaround was due in large part to the effort of departments across the WSU system, which made significant cuts in an effort to become more sustainable for the lasting health of the university.