Cleveland State and the terrible, horrible, no good, very bad budget

It’s no secret that – like a lot of colleges and universities – Cleveland State has struggled with its budget in recent years, particularly as its enrollment has flagged when faced with regional demographic shifts and changing attitudes towards higher education.

Last year, the school projected a $34 million deficit for the 2024 fiscal year, though internal efforts were enough to get it down to $11.5 million, a gap that was eventually covered in September when the board of trustees allowed the use of financial reserves. Shortly after that, CSU leadership brought on Ernst & Young (EY) to analyze the university’s finances and help develop a strategy to guide the school back to stability.

On Thursday, the steering committee charged with managing EY’s work released a 144-page report of their findings, giving the public a first look at a plan to address what’s now projected as a $40 million shortfall that would chew up Cleveland State’s $147 million of reserves within five years.

Before going any further, I’d like to commend the efforts of Amy Morona at Signal Cleveland who, for whatever my opinion might be worth, is the clear leader on the local higher education beat. She’s been right on top of CSU’s budget crisis from the beginning, and it’s through her work that I’m able to share the steering committee report, as well as my thoughts on it.

There’s a ton of fascinating information included in that report, which primarily deals with things like marketplace trends, personnel and service redundancies, the employment outlook for specific areas of study, and important questions related to how to best position the university in a saturated, competitive landscape.

Of course, you’re here because of sports. So let’s talk about sports.

The Short Term

Pages 68 through 72 of the report cover the specific recommendations for athletics as a cost reduction area, and the surface level news, at least compared to other parts of the university, isn’t all that bleak. In all, the consultants found $475,000 of financial impact available from the department, with some of that coming through increased guarantee game money from basketball.

The specific guarantee gains cited were $20,000 from the women’s team and $63,000 from the men’s squad, with each of those numbers representing half of the projected total contract figure (in other words, the amount they believe can be given back to the athletic department after covering expenses). Obviously, guarantee amounts can vary wildly, but that roughly translates to one additional contest at a high-major venue for each team.

Other big chunks include reductions in assistant coaches ($99,000), graduate assistants ($26,000) and operating expenses ($25,000). Most of those changes are tentatively scheduled to take place during what the report calls “Stage 2” – essentially, this fall, ahead of the 2024-25 sports season. Elimination of scholarships and a continued examination of operations, through an ominous-sounding “additional reductions” category ($230,000), will be ongoing.

While any cuts are unfortunate, very little of that previous paragraph is likely to have a significant impact on basketball; the assistant coach savings, for example, probably won’t change the allocations given to Daniyal Robinson or Chris Kielsmeier, as those are contractual obligations for the university. It is probable that we’ll see an effect on both of their non-conference schedules in pursuit of more guarantee money. That might actually be a welcome change, particularly on the women’s side of things, where the Vikings’ 238th-ranked non-conference schedule last season prevented the same sort of NCAA Tournament consideration given to a Green Bay team that boasted the 47th-best schedule and tracked similarly in most other ways.

A More Fundamental Question

Still, it’s hard to shake the idea that there’s a giant black cloud looming on the horizon. Or maybe off the Horizon.

One of the harshest truths of the report is delivered on page 69, as part of a summary of findings related to the athletic department: “CSU’s Athletics programs, which serve less than 3% of the student population, have limited impacts on most student experiences,” followed immediately with ”student focus groups and community interviews suggested that Athletics programs are not central to campus culture or community relationships.”

If Cleveland State loses $6.9 million per year on sports (yes, that number includes tuition paid by student-athletes), the whole athletic department only brings in 3 percent of the school’s enrollment, and very few people care about any of it…what are we even doing here? Why does CSU participate in intercollegiate sports at all? Even with basketball programs that have been broadly very good over the last five years and plenty of successes elsewhere – men’s tennis and softball won Horizon League championships this spring – the Vikings barely move the needle within the student body or the local community.

That’s not meant to suggest that anyone’s finger is on the St. Francis Brooklyn self-destruct button right now, but it’s a pointed question that probably should be asked. Furthermore, the university’s reliance on international students to alleviate the enrollment woes (their share of the total has gone from 6 percent to 16 percent just since 2019), along with factors like the report’s suggestion that CSU “limit expenditure and capital investments driven by efforts to replicate a typical student life experience on a suburban or rural college campus” (p. 82) certainly won’t make changing any of those underlying realities easy.

Complicating all of that are the to-be-determined aftershocks of a glut of litigation, most notably the freshly-settled House v. NCAA case that distributes $2.8 billion in NIL backpay and broadcast revenue – a good chunk of that number unfairly coming from the Horizon League and other mid-major conferences – while also establishing a framework for future student-athlete revenue sharing. Back in February, the National Labor Relations Board ruled that Dartmouth basketball players are employees of the school, another outcome with far-reaching potential.

The nature of that potential is anyone’s guess at this point, but this much is clear: If it becomes significantly more expensive to run a Division I athletic program, even at the low end of the scale, $475,000 probably isn’t going to cut it.

Into the Unknown

There’s plenty of space between some light pruning and vaporizing the entire athletic department of course, and in sort of a backwards way, the report acknowledges that in its summary of findings related to athletics: “There are many requirements to maintaining a Horizon League program (e.g., significant scholarship dollars, continuation of 14 teams, etc.) that directly impact the ability to reduce costs.”

HL (and NCAA Division I) membership is a major reason why the athletic department wasn’t hit as heavily as some other areas in the recommendations, but what if that obstacle was removed? Could CSU conceivably drop to Division II to facilitate additional cuts, particularly if some clearer separation between divisions develops thanks to the House and Dartmouth cases?

The report doesn’t dive too deeply into the Wolstein Center, which reportedly loses $1 million per year, other than to suggest some cost-reduction maneuvers, many related to the NBA G-League’s Cleveland Charge. On page 27, however, it did broach the idea of the athletic department abandoning the oversized arena by the end of the decade.

Abandon it for what?

Cleveland State’s $650 million master plan, which includes a new arena, generated a ton of positive press when it was approved by the board of trustees in early 2023. But now, the entire thing seems like sheer hubris – particularly given that the board’s approval came just eight months before their authorization of the use of university reserves to cover a budget shortfall. For better or worse, Woodling Gymnasium would be the likely destination and, whatever it might lack as a facility, the 50-year-old barn’s capacity is in line with what the Vikings can realistically expect to draw for basketball games now and in the foreseeable future.

There’s also the idea that, if nothing else, the nature of CSU’s coaching searches might change the next time they come up. The current women’s and men’s basketball leaders came to town as, respectively, a proven winner in Divisions II and III with a couple decades of a track record and as a well-regarded assistant coach at several strong programs. Coaches with those resumes, obviously, cost more than others who could conceivably fill the position. Sure, the Vikings probably wouldn’t win nearly as much, but given what we’ve seen over the last five years, it’s hard to believe that matters a ton in terms of the bottom line.

Perhaps the most difficult reality to grapple with is the idea that none of the questions and doomsday scenarios are wrong at this point. There’s an unprecedented amount of uncertainly around college athletics and higher education generally, and Cleveland State doesn’t have the security of the big-money football schools, which are able to sleep at night knowing that however things shake out, they’ll be okay.

Of course, none of them are right either. It’s entirely possible that CSU solves its issues by trimming $475,000 from athletics and slashing academic programs to find some sustainable footing, student-athlete revenue sharing is only an issue for the schools with revenue to share, and the only tangible difference to basketball is an extra game against Penn State.

For now, all that we can do is wait and see.