May 17, 2021

To: Faculty Council

From: Faculty Council Budget Committee
Re: 2021 Budget Process
The Faculty Council is deeply concerned about the outcome of this year’s budget planning process and
the breakdown in shared governance that it represents. What we have observed has been a breakdown
of the shared governance process, a process that has been the hallmark of SRAC and the
budgetary process. The following exemplify this breakdown:
• For the first time, SRAC approved two years’ worth of budgets (FY21/22 and FY22/23).
It is important to recognize that this change was made during a time of economic turmoil
that made forecasting future revenues especially difficult. All we needed to do, all we
have ever done up to this point, was to have the Board vote on next year’s budget only.
Moreover, there is also no roadmap and considerable difference in opinion on when or
how future budgets will be determined. Since this process was imposed on SRAC (by
whom it is not clear), the degree of shared governance in designing SRAC’s own budget
process is much lower than it has been for years.
• Most importantly, despite the unanimous vote by SRAC (including positive votes from
representatives of the administration), SRAC’s proposed FY22/23 budget was rejected
by President Esteban and was not sent to the Finance Committee of the Board.
Moreover, SRAC was never informed of this fact until after the Finance Committee
meeting. The Finance Committee approved their own more austere budget without
further discussion or negotiation with SRAC as the representatives of the University
community. In effect, the BoT Finance Committee imposed their own budget on the
University in a stark break from the traditional norms of shared governance.
• This year, the chair and former chair of the FC budget committee were permitted to
attend during SRAC budget hearings but not for the executive sessions, a change from
previous practice. For the past several years, both the chair and former chair had been
were allowed to participate but not vote in all meetings.
• Deviating from established precedent, the board mandated that gift and grant revenue and
expenditures be excluded from the budget process. Part of the 2018 Strategic Plan
directly sought to expand gift and grant activity to diversify the sources of revenue going
into funding our so-called “tuition dependent” University. Not only was this change in
process inconsistent with our longer term strategic planning, but particularly troublesome
at a time of pandemic-driven revenue uncertainty.
• The concept of “return to principal,” where part of the 4.5% draw from the endowment is
returned to the endowment as a separate budget allocation, was suspended by the Board
of Trustees for a two-year period (20-21 and 21-22). For the FY 22-23 budget, half of
the return to principal was restored, removing $8.8 million from the budget that had to be
made up elsewhere. Faculty representatives to SRAC strongly opposed this policy
because: (1) It is still uncertain what will happen to revenues in the FY 22-23 fiscal year,
making it therefore premature to reinstate it; (2) NACUBO data show that the average
 endowment draw for Universities like us is slightly over 4 percent; and (3) the
endowment has grown to over $900 million and is well on its way to the $1 billion target
for 2024 set in the Strategic Plan.
Finally, it should be noted that there is no consensus on whether a financial crisis exists at all, or
how it will end. Over the past three budget cycles, the University’s debt has been reduced by
$60 million with another $18 million in debt reduction expected to occur this year. At the same
time, the endowment has grown to over $900 million. The reduction in debt combined with the
larger endowment has meant that from 6/30/2018 to 6/30/2021, the difference in available funds
minus debt (a key indicator of financial health) has increased by $345 million dollars. With the
BOT Finance Committee’s apparent drive toward budget austerity and continued reinvestment of
operating surpluses, as well as gifts and return to principal into the endowment despite an
increase in available funds, who knowns when such austerity measures will cease impacting both
shared governance and faculty’s ability to provide a quality education.
The Faculty Council presents these facts and strongly condemns the steps taken
by President Esteban and the Board of Trustees Finance Committee that undermined
shared university governance in budgetary matters this year. We stand with our SRAC
representatives and call on President Esteban, the Finance Committee of the Board of
Trustees, and the Trustees of DePaul University to respect shared governance in all areas
of the university and to follow past practice in the budgetary process.