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FPU faces challenges
This fall, undergraduate enrollment at Fresno (Calif.) Pacific University grew by one-third over three years ago – from a full-time equivalency in 1996 of 580 to 761. The professional studies program has continued to expand and during the past five years, significant growth in the graduate program has created perpetual facility space problems.
In 1997, this numeric growth was highlighted when the institution shifted from a college to a university structure, establishing three schools: Fresno Pacific College (undergraduate), Fresno Pacific Graduate School and Fresno Pacific Graduate School of Professional Studies.
Provost Howard Loewen, who is responsible for the day-to-day internal operations of FPU, says the university’s growth has strengthened the institution’s character. “When you go through this much change you mature in the ability to handle change. I would say that overall this community has handled significant change with aplomb.”
Managing the growth process and foreseeing potential pitfalls have been a challenge for FPU. For the most part, the growing pains have been manageable.
However, this academic year, it became clear that the internal fiscal management of the university had not kept pace with the other changes.
Corrective measures are being taken to address financial practices. A new budget formation process and a five-year financial plan are expected to provide long-term financial health. More than $1 million US has been trimmed from the budget, primarily through a freeze on nonessential spending and by cancelling a salary increase scheduled to go into effect Jan. 1.
FPU’s current cash flow difficulties are due to an operating deficit from the previous year, a lower-than-projected enrollment, and short-term loans.
In addition to the extra expense of deficit payments, projected revenues did not materialize when the graduate school enrollment fell below the projected budget level.
The University’s practice of borrowing funds for capital expansion, while not unusual, has also contributed to its current financial woes. In the past, long-term capital projects were built with short-term loans, says Larry Perryman, interim vice-president for business affairs.
In some situations, facility expansion was undertaken on the assumption that selling gifts of property and other assets would cover the short-term loans.
For instance, FPU took out a loan four years ago to fund the facilities management building. Plans were to sell a piece of land worth $1 million to pay off the loan. However, the land has not sold, leaving the University with loan payments it did not expect.
FPU hopes to remedy the situation and to address its cash flow shortage by restructuring $7.6 million of its $10,566,000 debt through a bond issue.
President Allen Carden and Perryman consider the University’s current debt load to be acceptable for a private institution with a $22-$23 million annual budget. However, they admit that the debt is higher than they would like for it to be.
FPU is owned by the Pacific District MB Conference and does not have a significant endowment nor does it enjoy “deep pockets”. Rather, it depends on enrollment income, charitable contributions and its own entrepreneurial ability to generate funds.
While the internal financial matters took centre stage this year, considerable energy has been given the last few years to restructuring the overall internal governance of the institution.
In January, Carden resigned as president of FPU. Harold Haak has been appointed interim president.
FPU uses a “strong dean’s model” in which the deans of the three schools take a major responsibility of their college.
Balancing the strength of the colleges with a strong central administrative structure is a priority for Loewen. He feels FPU has been successful because of its leaders. – The Christian Leader
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Last modified May 12, 2000.
© 2000 Mennonite Brethren Herald.
Published by the Canadian Conference of MB Churches.
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