Last week, President Andrew K. Benton sent out a memo to faculty outlining Pepperdine’s current economic situation. This memo, according to Benton, was not a warning of impending cuts; its only purpose was to inform.
“I thought the memo was probably a precursor to something, I’m not sure exactly what. My fear is that it would lead to a reallocation like one we went through several years ago, but I think the general sentiment is that people are just going to wait to see what happens next,” Ken Waters, Chair of the Communication Division and Professor of Journalism, said.
“A memo like this is a bit like a Rorschach Test; I see it one way, others see something different,” Benton said, “in this economy, people are given to assumptions that cuts are coming, but I just wanted to keep the faculty informed.”
Although the economic situation over the past few years has taken its toll on all universities, Pepperdine is still doing better than most, according to Benton. Despite this fact however, the University still faces some issues and needs to remain careful in its expenditures in order to maintain financial security. Pepperdine will also come under increased pressure due to cuts in grants by the government, Benton said.
Pepperdine is in a better position economically than many of the other universities in the area, said Benton. According to his memo, Pepperdine has increased tuition by 2.95, 3.25 and 3.95 percent in the past three years. By comparison, Arizona schools have increased tuition by 14 percent and University of California schools have increased tuition twice in the past year, Benton said.
Pepperdine’s firmer financial standing is a result of strategic planning. In 2008, when the University saw financial trouble coming, Pepperdine took a 10 percent budget reduction.
“We don’t wait for things to go bad and then react. We still have some of that initial money in the bank, and as a result, we have been able to do a lot of things that other schools have not. That kind of planning ahead really pays off,” said Benton.
Although Pepperdine remains on relatively firm economic footing, the University still needs to be careful in its expenditures, Benton said.
“The economy is still an issue for us,” he said.
Pepperdine is lacking in a robust alumni-giving base, at a time when it would be most helpful, and the downturn in the economy has not helped the matter, Benton said in his memo.
Also according to his memo, the Graziadio School of Business, traditionally one of the schools which has helped the University financially, has suffered in its enrollment due to a decline in enrollment for part-time MBA’s.
“When you derive over 70 percent of revenue from tuition,” Benton said, “you have to start looking elsewhere as well.”
Graziadio is currently putting together a proposal consisting of many different parts, but there is no final plan yet for that part of the University yet, Benton said.
As far as the University as a whole goes, the focus in the future will be on spending and hiring in a very strategic manner. It will be a priority to make sure students come first, and growing budget lines will be examined to make sure that the growth is necessary to the improvement of the University, Benton said.
“It is important to look at new ideas for programs or buildings and make sure that they are cost-effective. We need to be sure that they will provide real value,” Benton said.
In addition to troubles with the economy, the University will likely see increased pressure put on it from the government, both in Sacramento and in Washington, Benton said.
“When I see California saying, ‘Give me a tax increase, or there will be a 44 percent cut in Cal Grants,’ I get concerned,” Benton said. “A cut like that will impact students, and they will look to Pepperdine to make up the difference.”
According to his memo, cuts will come from the federal government as well: “The Pell Grant, federal funds granted to students most in need of support, will likely be reduced from $5,550 to probably $4,700 (if we are lucky) for 2013 – 2014.”
Benton wants students to know that he is pushing back as hard as he can against the expression of cutting aid to students while also remaining focused on managing the current university finances effectively.
Benton continues to see pressure on the university from the economy and world affairs, as well as from Sacramento and Washington. The purpose of his memo was not to burden the faculty, but to inform the faculty of some of the ways in which the University has been and will be affected, Benton said.
“There is no other memo waiting in the wings that will announce upcoming cuts,” said Benton, “I felt that it was my ethical obligation to inform the faculty of the economic situation the University is facing.”
