For the first time in 20 years, Kent State University ended its fiscal year with a deficit. Now, the university is announcing new cost-saving initiatives it hopes will make sure it doesn’t happen again in 2025.
KSU budgeted around $687.5 million for 2024 and went over that budget by around $10 million, University President Todd Diacon said Thursday in an annual financial update. To cover the added costs, the university dipped into savings.
The university went over budget for three primary reasons, Diacon said. Maintenance and repairs expenses were over budget by $7.1 million, health care benefits ran over by $6.6 million and the university did not budget for the state-mandated tuition discounts associated with the College Credit Plus program, which resulted in a $4 million loss.
By dipping into the university’s reserves to cover the deficit, Diacon said that it reduced the reserve funds earning interest. Interest earnings are used to make up a part of each year’s base budget.
Other universities regularly plan for annual budget deficits, but Kent State University does not, he said. The university has enacted hiring and travel freezes that are in effect until further notice.
Diacon compared Kent’s plan to cut spending to the Federal Reserve Board’s attempt to engineer a soft landing to reduce inflation.
“At Kent State, we are also aiming for a soft landing, one that a) delivers balanced budgets annually and b) reduces the number of our employees primarily through attrition,” Diacon wrote. Kent State is also aiming to cut down ongoing expenses by between $10 to $12 million a year.
“Over the next 36 months, we will see a reduction in the number of employees at Kent State,” Diacon wrote. “Most vacated positions will not be filled, and for those vacated positions that are filled, we aspire to do so with current employees as much as possible.”
Kent State’s 2025 budget comes to around $706.6 million, an increase of $16.1 million from 2024’s budget. The university received less than a 1% increase in funding from the state of Ohio, according to Diacon.
Because of this, the university has had to cut $12.3 million in projected expenses to balance the budget and will cut more to address 2024’s deficit, Diacon said.
“An annual deficit of nearly $26 million can be expected by the end of Fiscal Year 2028 if we do not act to increase revenues and concurrently reduce expenses,” he said.
One of the ways the university is looking to save money is by rethinking how it uses space, Diacon said. The fall 2024 semester saw enrollment numbers that were the same as fall of 2009, but instructional and administrative spaces increased by nearly 800,000 square feet.
“We must right-size space and utilize it in the best possible way,” Diacon said. “The average cost to operate and maintain space is approximately $7 per square foot, so by taking that space offline, we reduce our budget.”
By closing the old business building, which is now vacant due to the new Ambassador Crawford College of Business and Entrepreneurship building being built, the university will save $700,000 in operating costs, according to Diacon.
Throughout the year, the university will adjust the budget as needed to make sure the fiscal year ends with a balanced budget, Diacon said.
Diacon will be discussing the cost-saving measures further during his next live video chart on October 24, according to the university.