By Heather Fabritze
News Editor
Washington College began slashing departmental budgets, implementing pay cuts, and freezing the majority of hiring searches to ensure its regular operations till summer after administration raised red flags in the fall semester over the lack of cash flow available for discretionary spending.
WC’s standard audit of its budget in early fall of 2024 alerted administration to an issue regarding an increasing gap in cash flow. While the situation is not dire, according to President of the College Dr. Mike Sosulski, senior staff are attempting to do “everything” they can to save costs through the end of the fiscal year in June when the budget resets.
At first, the problem went entirely unnoticed by students, and according to an anonymous member of faculty, even professors and staff were kept mostly in the dark.
“What is disturbing is that the extent of it was only really brought to light through an audit,” the anonymous source said. “There’s been no numbers released, so it’s unclear how much is really at stake, and then this is on top of the ongoing deficit due to the decreased enrollment.”
There is a stark difference between the deficit described by the Business Office at past town hall meetings and the shortfall the College currently sees with cash flow. As Vice President for Finance and Administration Bo Connell describes, the institution’s budget is a long-term projection of revenues and expenses over an entire fiscal year.
This roadmap is subject to change, and the College will not know how they land on the budget until the official day of record in the fall, when enrollment numbers and tuition revenue are finalized. The Business Office’s predictions will never be fully accurate, which almost always leads to a natural deficit.
With decreased enrollment as a lasting effect of the COVID-19 pandemic, the College was aware of the deficit it would be navigating until fiscal year ’29 at the earliest. The cash flow issue, however, is a surprise.
Cash flow describes the funds that come in and out of WC in the short term. Normally, the budget would account for the amount of discretionary spending we would have to do; however, our expenses are outpacing our revenue at a rate the Business Office was unable to predict.
To determine the root of the problem, WC hired an external accounting firm using $50,000 from the endowment to review the budget. The organization found a few notable issues, which led to the cash flow shortfall the institution is experiencing.
The most prominent cause, according to President Sosulski, is that there were duplicated contracts across the institution.
He provided the example that WC does not have a corporate DropBox subscription for use of its services. So, if a department or office requires an account, they sign a contract with the organization individually. This oversight leads to half a dozen or more subscriptions across the College’s departments and offices.
Although this may seem like a miniscule drop in a larger bucket, when this oversight repeats for every program WC purchases, the expenses add up quickly.
President Sosulski also said that staff and faculty are not properly utilizing the school’s Enterprise Resource Program, which is the main computer system WC uses to run. The system the College owns, Colleague, costs millions of dollars each year to use.
However, instead of using the functions that are already implemented in Colleague, staff and faculty are purchasing separate programs unnecessarily.
“We’re paying for stuff we don’t necessarily need because it’s already baked into our main program, but nobody’s using it because they think something else is more convenient or they weren’t trained on it,” President Sosulski said. “We’re just trying to comb through the whole thing and go, all right, I know you like this product, but we’re paying extra for it. We’re already paying for this product, let’s learn how to use this product. It’ll integrate better.”
Other smaller issues also contributed to the cash flow difficulties, including insufficient enrollment revenue and a lower-than-expected retention in the Class of 2027. According to Connell, 80 percent of the College’s revenue comes from tuition, and this unexpected drop in students led to shortfalls that the Business Office could not predict.
“I believe [administration] are very worried about appearances and about perception, both from students that are here and from potential students and their families…The [enrollment] numbers have been pretty good that they’ve been talking about for next year,” the anonymous source said. “Obviously nobody wants to jeopardize that.”
There are a few immediate action steps WC is taking, or has already visibly taken, to extend the discretionary fund as far as it can reach to June.
Administration suspended a majority of the corporate credit cards across the institution, which the anonymous source blames on unchecked credit card spending contributing to the cash flow shortage. This suspension is forcing larger purchases to be approved by a more select number of senior staff.
WC tightened overall oversight of contract signing to combat the heart of the problem, as well as temporarily reducing retirement contribution for faculty and staff to one percent.
Senior staff on the President’s Cabinet all took two-week furloughs and President Sosulski himself took a 20 percent pay cut.
One major and noticeable change to students was also the implementation of an institution-wide hiring freeze for the remainder of the fiscal year. While various departments were still permitted to finish their searches and employ new faculty for the fall, according to prior Elm coverage, the other five proposed hires were put on hold for the time being.
According to Connell, senior staff have consciously pondered the freeze to ensure that the impact on student experience is entirely minimized.
“We have evaluated positions that have become vacant, like somebody’s here and they leave, and we’ve been evaluating those positions and in those areas where it really is very student-facing, or what we would call mission critical,” Connell said. “Exceptions have been made to the hiring freeze to make sure we replace those positions, because, as we’ve just said, the student experience really is driving most of the decisions.”
Another large aspect was the slashing of budgets in both Academic and Student Affairs. The former has a direct and immediate effect on departments, although it is unclear how much.
“You can ask, you know, by what percentage? I’ve heard different percentages,” the anonymous source said. “Most faculty budgets have been slashed…I know things like paper are in short supply again, and there’s all kinds of things like that, but I think it’s more of the apprehension of what this is leading to than anything dramatically terrible at this moment, if that makes sense.”
While administration did share more detailed numbers and information with a smaller number of faculty, they required confidentiality from those parties and have not widely disseminated any information.
One of the only open communications was an email President Sosulski sent to faculty and staff on Feb. 12 informing them that “less desirable choices” still needed to be made, although senior staff was making a concentrated effort to lessen the impact on faculty and staff.
“This financial situation is different from previous experiences,” President Sosulski said in the email. “The need to contain expenses in this budget year is acute, but some of the measures that we need to take will likely be felt beyond this year.”
He ended the email with the assurance that administration would be working with faculty and staff to simultaneously consider the student experience and what is realistic within WC’s revenue as the Business Office currently builds next year’s budget.
“Knowing what we know now about where things are inefficient will help us build a much more functional and efficient budget for next year,” President Sosulski said. “We won’t be caught by surprise.”
To prevent a similar problem from appearing again, Connell said they are going to begin with fixed costs such as salaries, benefits, and contracts — everything that keeps the College up and running — and take a consciously conservative approach.
Once the Office assigns a baseline budget according to costs, the remaining revenue projection will be distributed as discretionary funds.
Connell is determined that the fiscal year ’26 budget will not exceed conservative revenue projections. They plan to give various departments smaller budgets next year before beginning to grow them as enrollment also does.
“I think what we’re doing today is we’re building a very stable foundation for the school going forward,” Connell said. “For the last few years, maybe the budget wasn’t quite built on a solid foundation. Some of the assumptions proved to be inaccurate, either in terms of enrollment or in terms of operations. What we’re doing right now is we’re focusing really hard to make sure we’ve got a rock solid foundation.”
Above all, Connell stressed the importance of enrollment in fixing this issue in both the short and long term, calling it “critical.”
“As you can imagine, enrollment is where our money comes from,” Connell said. “Enrollment, a little bit from the endowment, and then a little bit from fundraising. If any one of those [revenue sources] gets out of whack, it doesn’t really matter how much we try to manage the budget, because revenue is such a critical piece of it. So, again, really working hard to build a rock solid budget going forward that we think is going to position the college for years, and years, and years of success.”
A full report from the external accounting firm will be released in the near future and made available to students through an open town hall.
Photo by Selena Francese.
Photo Caption: Like past budget information, Connell plans to share the findings of the external accounting firm at a public town hall.