Safety Funds: State's release of general revenue, CARES Act money benefits higher ed

The state’s September financial report and much better-than-projected unemployment rate resulted in Gov. Mike Parson releasing Oct. 9 over $133 million in COVID-19 relief and general revenue funds.

Higher education is among the beneficiaries, as $10 million in Coronavirus Aid, Relief and Economic Security Act dollars are designated for private colleges and universities. Another $26 million in general revenue funds, previously held back by the state to balance the budget, are being released to public community colleges and four-year higher education institutions.

Missouri State University and Ozarks Technical Community College were the largest beneficiaries in the Springfield area to see a portion of state general revenue withholdings restored. Roughly $1.7 million was released to MSU, with $925,000 going to OTC. Both amounts are 50% of the state’s total general revenue expenditure restrictions for the two schools.

“Frankly, we were not anticipating that money would be released. That was a pleasant surprise,” said MSU President Clif Smart.

Both Smart and OTC Chancellor Hal Higdon say the release of additional state withholding funds will be dependent on Missouri’s revenue performance through the remainder of the year.

“If the Christmas season is robust, then I could see the governor releasing that money in the spring,” Higdon said. “But we just don’t know what the economy holds. This quarter is the big quarter for retail.”

The state’s monthly general revenue report released this month showed net general revenue collections in September was up 3% to $944.5 million compared with September 2019. Missouri’s jobless rate, currently at 7%, is less than half the 16.3% projected when the budget was being determined, according to state officials.

Spending focus
While MSU and OTC are the only local schools to receive new general revenue state funding, four others are eligible to receive CARES Act funds. Drury University, Evangel University, Baptist Bible College and Cox College have been approved for reimbursement of COVID-19-related spending.

Drury can be reimbursed a maximum of roughly $238,000, while Evangel is authorized to request up to nearly $177,000.

“We’ve already begun the process of pulling receipts together and going back to the beginning of COVID to see what things we spent money on,” said Michael Kolstad, Evangel’s vice president of university advancement.

Kolstad said Evangel previously received $1.8 million in federal CARES Act funds, with half that total used as direct cash grants for students to cover expenses, including housing, course materials and health care.

Missouri higher education institutions were allocated $206 million in CARES Act funds through the U.S. Department of Education. MSU received $13.8 million in Springfield and $960,000 in West Plains, with OTC allocated nearly $8 million and Drury getting $2.47 million, according to past Springfield Business Journal reporting.

Drury spokesperson Mike Brothers said the university used CARES Act funding to cover much of its pandemic-related expenses, such as extra cleaning supplies, webcams and networking equipment.

“Regardless of the amount we’ll receive as a pass-through from the state in this round, we are grateful to the governor and the Missouri Department of Higher Education and Workforce Development for their efforts to distribute this needed funding across the state,” Brothers said via email.

Over $1.67 million in CARES Act funds from Greene County also has been allocated among the six schools, including $845,000 for MSU to be designated for COVID testing.

Smart said the university has sent in roughly $450,000 in receipts to the county for testing costs. Between 500 and 600 tests are being conducted on campus each week since classes started in August. A high of 383 COVID-19 cases was reported the week of Aug. 30, according to the university website. However, the case count has been declining ever since, landing at 26 the week ending Oct. 11.

“That’s real progress to get to where we are now from where we were the second week of school,” he said. “How we’re delivering the classes, the masking requirements coupled with some modifications in behavior has been successful.”

Budgetary concerns
While the newly announced funds will reimburse many ongoing COVID-19-related expenses, the money isn’t eligible to restore any budget cuts the schools have imposed.

Evangel cut $3.2 million from its budget, Kolstad said, which included a 10% salary reduction for administration, freezing retirement contributions and early retirement opt-ins by nearly 20 faculty and staff members. Some cuts were made to be proactive regarding an expected enrollment drop, he said. The fall enrollment of 2,185 students represented a 6% decline from last year.

Drury officials wouldn’t disclose the school’s budget cut amount, but they say it was planned based on a 5% drop in enrollment and 15% decline in revenue for the 2020-21 academic year. The school’s undergraduate enrollment is 1,409 this semester, compared with 1,478 last year, a 4.7% dip. Brothers said budget adjustments include early retirement for around a dozen employees, voluntary 10% pay cuts by the senior leadership team and the elimination of 26 positions.

At MSU, the systemwide budget is $262 million, down $16.4 million from 2019-20. Smart said cuts were widespread: They included travel, maintenance and repair budgets, planned classroom upgrades and a freeze of almost $5 million worth in open positions.

“We probably right now have between 100 to 150 positions open. Part of that was by design,” he said. “Now that we know what the year looks like, we’ve opened some of those up to begin hiring again.”

The decision to start hiring was made after enrollment gained over 30 students from the prior school year, putting the Springfield campus enrollment at over 24,000. Systemwide enrollment is at 26,000.

“We had budgeted to be down 1,500 students, so to be up 30-plus is significantly better than anticipated,” he said.

OTC’s Higdon said the college managed to avoid any cuts to its $85 million budget.

“We spend very conservatively,” he said. “If we have $10 to budget, we budget $9 and always have a cushion. We just don’t have the fat to cut.”

MSU wasn’t the only school to surpass enrollment expectations amid the pandemic. Drury, Evangel and OTC officials all say student numbers didn’t come near the large drops projected in the spring.

“Financially, we prepared for the worst but hoped for the best,” said OTC spokesperson Mark Miller of the school’s enrollment of 11,260, down 3% from last year.

Smart said MSU likely would have sustained a significant enrollment drop if it went all virtual for classes this fall instead of its hybrid model. Around 60% of classes have some sort of a seated component, he said.

“We just didn’t know what it was going to look like,” he said. “Were students really going to come to school in the middle of a pandemic? Apparently, the answer is yes, they are.”