The University of Denver’s current $11 million budget shortfall has made the news recently. The shortfall and proposed budget cuts were covered extensively by the campus newspaper, The Clarion, and, more broadly, The Denver Post. As we have written in the past, the University, as a private school, is highly dependent on tuition dollars (about 80%) for its operations. Additionally, demographic trends show a shrinking pool of college entrants nationally, due in part to a declining birth rate. DU’s enrollment peaked in 2022 with 13,815 overall students and has been declining since then. The projected enrollment for DU’s 2025 fiscal year is 12,043 students, 10% lower than Fall 2023’s enrollment.

The causes for the shortfall are powered by a variety of factors. Besides the aforementioned national demographic ‘enrollment cliff’ of fewer prospective students, an unexpected shortfall was created by a federal delay in the processing of Federal Student Loan (FAFSA) applications. Other factors such as declining numbers of college males, students staying closer to home and saving money by enrolling in public universities, and the perceived bashing of the public value/relevance of a college education have also hurt DU. Finally, although DU has not mentioned this fact publicly, the fallout from the handling of campus encampments last year has also adversely affected Jewish enrollment, a significantly important audience for the University.

Undergraduate headcounts have also become harder to project. The College Common Application allows students to apply to as many colleges as they want to attend, all with a single completed application sent to multiple schools. As a result, DU and other colleges try to select the best student applicants and estimate incoming headcount. It becomes a challenge to accurately project acceptance vs. attendance (known in the admissions world as “yield”).

Based on recently published updates, the University projects incoming undergraduate first-time first-year enrollment of 1,350 students per year and a total graduate enrollment of 6,200 students per year, consistent with enrollment projections while preparing for a potential total enrollment decline of nearly 8% in 2026. Several years ago, DU had the opposite problem – it accepted too many students and thus faced a housing shortfall. You see the issue – undergraduate admissions headcounts are an increasingly inexact science.

To answer concerns about the shortfall and how it plans to manage it, the University has held recent Employee ‘Town Hall’ meetings and posted FAQs here at this green text link.

To ensure long-term financial stability, DU must increase the top of the funnel for incoming revenue. Critical to that revenue increase is increasing the admissions appeal of DU to the full-pay families (and companies for graduate students) around the country, whose tuition dollars support the entire enterprise and who enable the financial aid packages for so many others.  For this audience, academic quality, safety, and student experience are crucial.  And yes, DU Athletics is a critical piece of the awareness for the university and the student experience for those who choose DU. Increasing tuition and fees, research grants, improving rankings, and fundraising are vital tools to increase the size of the pie to mitigate such future shortfalls.

Additionally, DU must address the expense side of the ledger – better known as cutting costs. According to internal communications within DU, “Colleges and units have been working hard to address their specific financial objectives. This has included eliminating eight staff positions from across the university, including three in CAHSS and five additional in the chancellor’s office, University College, SAIE, and the Josef Korbel School of International Studies (one of these individuals quickly found another position at the University). These efforts have also included eliminating some vacant positions, limiting travel and other discretionary spending, and taking additional actions to address needed cuts.”

While the human impact is very real, especially for those directly affected, small cuts like these are fairly standard operating procedures in such times of transition.  DU has made similar kinds of cuts many times over the years, and making cuts always sounds louder than the thousands of hirings that DU has made over the many years when the school was growing.

In response to the recent cuts, the faculty leaders in the College of Arts, Humanities and Social Sciences (CAHSS) — the university’s largest academic unit and the one facing the largest deficit — reportedly took a recent ‘vote of no confidence’ against DU Chancellor Jeremy Haefner. 14 faculty members voted ‘no confidence’ with five abstaining. CAHSS is being asked to reduce its future operating budget by $8 million over the next few years and is currently searching for a new Dean. A presumably student-run Instagram page that includes anonymous faculty quotes and was created in October of this year, is echoing the CAHSS faculty vote:

In our opinion, a public ‘vote of no confidence’ is not the proper response. True leadership in times of difficulty is displayed when stakeholders manage their differences directly and transparently, rather than creating a public show of division to the University community and beyond. This merely exacerbates an already difficult situation and does little to identify actual solutions. It potentially shakes the confidence of parents and students who are vital stakeholders in the university.

Many of us, especially those of us with career experience in the private sector, understand the stress and turmoil created by downsizing. Over 52% of companies in the Fortune 500 list have disappeared over the last 20 years – yet the structure of colleges and universities has remained relatively unchanged over that same period. Leadership often must make difficult decisions for the benefit of the whole.

In the future, colleges – especially private universities – must change and adapt, because their revenue sources are largely market-based and not state-funded. According to DU, many of the changes to CAHSS will have a limited impact on students and professors. “There is a staffing reorganization underway in CAHSS, involving 20 departmental assistants. Five of the positions were vacant and have been eliminated. The 15 remaining positions are being restructured, and the affected individuals are encouraged to apply for 15 new roles. The revised positions will create more consistent and reliable support for CAHSS faculty and students, ensuring dependable services across the college. They will also involve increased salary and advancement opportunities.”   In reality, many of the changes appear to be more of a restructuring than a major elimination of jobs, especially student-facing positions.

Another major issue on campuses today is political polarization, which generates campus tension and conflict. The Denver Difference, the University’s capital campaign, is focused on bolstering the University’s endowment but also includes a program to encourage the open sharing of different perspectives. This is a necessary approach to diffuse campus polarization and broaden thought and debate to include an open exchange of ideas. A more inclusive and open dialogue on campus will take time to implement but, if done correctly, should provide longer-term benefits to admissions and retention.

An additional complaint waged online (Instagram) by an anonymous student group cites the size of Chancellor Haefner’s salary. Chancellor Haefner’s salary, at about a million dollars per year, and some senior staff are highly compensated as well. However, Haefner’s compensation package is quite appropriate for a higher education institution of DU’s size and complexity. It is also well-benchmarked by the Board of Trustees against peer school leadership. To retain top administrative talent, DU must pay the market rate or risk losing talent and continuity.

DU’s recent R1 research designation, the Kennedy Mountain Campus, 4D experience, the stability of school rankings (US News, Princeton Review – #1 Students love DU, etc. ) and The Denver Difference are important focus areas under Haefner’s leadership to help transform the University. Should Haefner depart, Denver would likely have to pay his replacement at the same or, let’s be honest, a much higher level. His predecessor, Dr. Rebecca Chopp, was also compensated similarly.

One “solution” proposed by CAHSS faculty was to tap into the University’s $1 billion endowment, which indicates a fundamental misunderstanding of what an endowment is. While most endowment funds are restricted by donor agreements and a small percentage is earmarked for University operations, this option does not address the short-term causes of the deficit nor does it address long-term demographic trends. Finally, Denver’s bond rating and ability to borrow capital for future projects or emergencies could be adversely impacted, should DU tap more of the endowment for ongoing University operations.

Under today’s environment, DU can use the current financial shortfall to reshape the University for long-term success. Yes, this is a precarious time for some university employees and families. However, no institution can survive without transformation and change. Now is a time for thoughtful discussion and practical solutions – not meaningless ‘votes of no confidence’. The mostly administrative job losses here are rather small relative to an $11 million budget shortfall. Unlike the faculty and a handful of student malcontents who are squawking about these minor job losses, we trust the DU administration to handle this situation well as we move forward.