Board of Trustees Finalizing Budget for New Fiscal Year 

Graphs related to the University of Puget Sound's Financial information, which were shared by the Board of Trustees

By Grace Farrell 

  The Puget Sound Board of Trustees is currently finalizing a budget plan for the upcoming fiscal year to help transition the University out of deficit spending. Members held several on-campus meetings following President Crawford’s initial budget recommendation, and the finalized budgeting proposal will be sent to the President in April. The Budget Task Force, which includes the executive vice president, chief financial officer, and provost of Puget Sound, is also responsible for overseeing this. They hold occasional open sessions for the campus community and will work with President Crawford to ensure his ideas are incorporated into this upcoming plan. 

  Kim Kvaal, executive vice president and chief financial officer, characterizes the University budgeting process as being similar to that of personal budgeting. “The fundamentals are the same,” she says. “There are just more 0’s at the end.” 

  Not surprisingly, student tuition composes most of Puget Sound’s budget revenue. Other revenue sources include investment income, gifts and grants to the University, and other revenue contributions. The expense budget (required outputs in the University budget) is divided into relatively equal portions of compensation for staff (38%), for faculty (32%), and operating and capital expenses (26%). Operating and capital expenses refer to costs of landscaping and building upkeep, as well as departmental budgeting costs, business insurance, and debt repayments. Another notable cost is compensation for student workers, composing 4% of the expense budget annually. 

  While the inputs and outputs for the budget should ultimately remain balanced to avoid deficit spending, COVID changed the budget’s trajectory. Deficit spending became a needed component of budget upkeep, which was implemented via an “incremental plan allowing the Board of Trustees to dip into University quasi-endowments,” says Kvaal. This unusual measure was only employed following the onset of the pandemic because of unusually low enrollment statistics over four consecutive years. Since student tuition provides the majority of budget revenue (at approximately 80%), this decline in enrollment took a significant financial toll on the University. Kvaal reiterates the importance of maintaining high retention rates so that upper division classes don’t dwindle beyond their projected numbers; she also hopes the incoming freshman class will be a large one. 

  Because endowment funds are currently being accessed to pay budget expenses, the University is deficit spending. However, Kvaal expects that the plan outlined by the Board of Trustees will navigate the University out of deficit spending by fiscal year 2026. The gap between budget revenue and expenses should remain at a 7.3 million dollar loss according to the fiscal year 2024 projection, and will move toward a $5-million dollar loss for 2025, easing the budget into a zero-debt model in years to come. 

  Considering this plan, Kvaal says that the Board of Trustees is optimistic about future budgeting proposals. This is due to higher projected enrollment of incoming freshman classes as well as continued revenue from investment income. Since the majority of the Puget Sound endowment remains untouched even in these unusual years of budgeting debt, millions of dollars of revenue enter the budget each year generated solely from unearned investment income. 

  Kvaal is hopeful that the upcoming fiscal year’s finalized budget will reach projected statistical success based on these revenue sources. She notes the Board’s continued emphasis on “allocating resources to advance the university’s mission in strategic alignment with their goals.” Continued measures passed by the Board of Trustees in collaboration with President Crawford should get post-COVID budgeting balanced.