Understanding the Challenge
Phase 1: Understanding the Challenge
After a difficult year and a half of extraordinary circumstances and efforts, we are
preparing for an in-person Fall 2021, largely due to an effective vaccine rollout
and the support and cooperation of our entire community. Not only is this promising
news, it is also encouraging for our financial health and sustainability.
As we shared in May, the expected reductions in the level of state support that had
been planned for last year were restored. We did not, however, receive additional
state support or an increase in tuition. We are providing updates to the information
that we shared last year, which reflect this restoration of state funding and highlight
some of the continuing financial challenges that remain.
In response to external funding challenges and during a most difficult operating environment
for all of higher education, we launched the Strategic Budget Initiative in an effort
to operate as efficiently as possible and to find alternative revenue sources . We
were heartened by the response. Hundreds of faculty and staff contributed and collaborated
across five task forces and dozens of opportunity-specific working groups. We are
now in the implementation phase on the first tier of initiatives.
While it’s too early to assign a dollar figure to the SBI’s cumulative contributions
to SBU’s financial health, we expect approximately $5 million of projected cost reductions
for FY21/22. We expect this amount to increase over time as revenue generation proposals
Although the current outlook is certainly more positive than a year ago, Stony Brook’s
financial challenges remain. We are reliant on state support and tuition rates that
are not set at the campus level, and the foundational challenges that make our budget
unsustainable still remain to be addressed.
The following chart shows Stony Brook’s funding—including state tax support, tuition,
and fees—against the growing cost of education. It also shows where, with reasonable
assumptions around costs based on inflation and student population growth, our funding
should have been, based on 2014/15 funding levels. The trend lines are unmistakable
and of great concern.
Declining State Funding & Unfunded Mandates
Over the past two years our financial situation has been less than clear as New York
State worked to manage the impact of the pandemic and the economy on its budget. We
demonstrate the shifts of recent years in the chart below.
Based on guidance we received, we anticipated state tax support to decrease by $19
million in FY20 and an additional $7 million for every year after that, reducing the
annual support SBU receives from $147.7 million to $122 million. Fortunately, all
but $6.3 million in FY21 was reinstated. The annual support amount has been restored
to its previous level ($147.7M) for FY22 and for the foreseeable future. While the
reinstatement of those much needed funds helped close the anticipated funding gap,
state funding is still lagging behind ever rising costs.
In fact, we have had a number of unbudgeted but important regulatory and compliance
requirements that have required the university to divert staff and financial resources.
Likewise, our multi-year labor contracts negotiated by the State include a series
of mandated Contractual Salary Increases (CSI). While well-deserved by our staff and
faculty, these increases have not been matched by state funding. Based on the current
levels, we expect the cost of the CSI increases to exceed the full amount we receive
from tax support by 2030.
Compliance costs and salary increases are not the only unfunded mandates. The Tuition
Assistance Program (TAP), for example, has for several years been set by New York
State at 2010 tuition levels, meaning that Stony Brook had to find funds to close
the $8.0 million TAP gap in FY20 and $7.8 million gap in FY21. While the enacted
NYS budget includes money to decrease the TAP gap by $500 per student in FY22 with
an eventual phase out of the gap by FY25, we will need to continue to address this
shortfall in the near term.
Changing Student Mix
Traditionally universities work toward an optimal mix of in-state, out-of-state, and
international students to meet academic and budgetary goals. At Stony Brook, we have
worked to cultivate a rich mix of international students to complement our exceptional
U.S. student body. This mix is important, not just for the diversity of thought and
experience it brings but also for the additional revenue it brings the school.
The chart above demonstrates generally the tuition contribution that out-of-state
students have at Stony Brook. However, to understand just how significant this impact
is, consider FY20. During that school year, 22% of Stony Brook’s students were out-of-state,
but accounted for 43% of tuition revenue. The following year, despite some success
in increasing enrollment of domestic, out-of-state students, we saw a combined 17.4%
drop in the non resident population of students driven primarily by the impact of
COVID travel restrictions on international students. As a result, our tuition revenue
fell by almost 6% although our total enrollment dropped by less than 2%.
For the upcoming year, this change in student mix will lead to an expected tuition
shortfall of $15 million, or 5%, below what we saw in FY20. This is a trend that we
see continuing in the near future. While aggressive recruiting first-year out-of-state
domestic students and transfer students has contributed to significant reduction in
lost tuition from international students (impact of $5M from FY21); we do not anticipate
a return to the pre-pandemic level of international students who pay non-resident
Peer Institution Comparisons
More fundamentally, SBU’s tuition rates remain considerably below those of our regional
research university and AAU peers. In fact, according to the data in a report published
last year by the
State Higher Education Executive Officers Association
, public institutions — including both 2- and 4-year — received an average of $7,875
state support and $321 state aid to students (total of $8,196) in education appropriations
per FTE in 2019. Although this reflects an increase in inflation over the previous
year, in most states, funding remains at 2008 pre-recession levels. Although it is
one of just seven states that has narrowly increased funding since the recession,
New York’s funding nonetheless reflects the overarching national trend of decreasing
state support for higher education not just as a percentage of per student funding
but as a percentage of costs—from 68.6% in 2008/09 to 44.7% in 2018/19.