The University’s decision to fund marketing and communications as an ongoing operating expense at the rate of $3 million per year, starting in 2018-19, raises questions regarding how “one-time” funding (the marketing campaign was initially approved as a 3-year pilot project) is converted to “ongoing” funding from operations. This is an important issue because it is often claimed that lack of ongoing funds prevents the University from investing in the core academic mission.
In January 2016 a related question was raised by AUNBT and circulated to the Board of Governors regarding the growth observed in the “Administration & Development” expense line in the University’s internal (non-audited) statements of year-end financial operations. These expenses are generally considered to be “ongoing”, that is, budgeted as annual expenses for the foreseeable future.
One of the most interesting features of the President Executive Team’s 13 April 2016 response to AUNBT was the statement that conversion from soft (or “one-time”) to ongoing funding can occur “when soft funding is no longer available but the expense is deemed essential and should continue”.
The President’s Executive Team provided on page 2 of its April 2016 response to AUNBT a number of examples of such conversions in the period from 2008-9 to 2014-5 (fiscal years):
- An amount of $696,000 per year in operating expenses was deemed essential for Advancement, with a succinct explanatory note: “Conversion of soft funding to ongoing operating.”
- A further conversion of $206,000 per year is explained as “moving Alumni Support from undesignated, soft dollars, to the operating budget for stability in funding.”
- Another such transition of $500,000 per year was granted to Donor and Development Relations.
The following chart represents the information provided:
It is important to note that some of the decisions are a response to regulatory requirements (e.g., records management) or contractual obligations (e.g., executive administrative leaves). In other cases, however, they are discretionary: a matter of management choices.
Including the recent decision to convert marketing and communications to an ongoing operating expense at the rate of $3 million per year, the data above indicate that in the past 10 years at least $6.4 million in “one-time” funds has been converted to ongoing operating expenses. Close to 69% of that amount ($4.4 million) can be attributed to ongoing expenses in the Advancement portfolio.