Just months after announcing a more than $24 million budget deficit, Northern Kentucky University offered $222,500 in raises and bonuses to the university’s presidential cabinet, which is mainly composed of the university’s vice presidents.
The raises and bonuses were offered in January under retention agreements three months after the university abruptly parted ways with its president, Ashish Vaidya, and announced it had a more than $24 million budget deficit — a number that’s since been reduced to $9.6 million, with further plans to reduce it another $5 million by 2025.
The bonuses and raises were discussed at a July 2023 meeting for the university’s Staff Congress, according to meeting minutes. The university has governing bodies representing the different populations, including the staff congress, faculty senate, student government association, and the board of regents, with the latter being the arbiter of decision-making at the university.
University staff said this is bad optics, according to the meeting minutes, especially as it looks to continue to reduce its deficit — they also said that it’s financially rewarding the same executives who knew of the budget issues.
Rich Boehne, the chair of the Board of Regents, which approved the raises and bonuses, said that the university can both work to reduce the deficit and provide financial incentives to retain staff to move the university through troubled waters at the same time.
The bonuses will be distributed over the course of 18-24 months from the signed contract dates in January and February. The raises were immediate. They were based on seniority and performance, and Boehne said they were made on an individual basis.
Here is who is scheduled to receive a raise and/or bonus and how much, as well as their hiring date:
- Vice President for Legal Affairs and General Counsel Grant Garber: $20,000 bonus after 18 months. Hired in June of 2022. Salary: $216,000
- Vice President of Administration and Finance/CFO Jeremy Alltop: $25,000 raise and a $25,000 bonus after 24 months. Hired in June of 2022. Salary including raise: $275,000
- Provost and Executive Vice President Matt Cecil: $10,000 raise and $25,000 bonus after 18 months. Hired in February of 2021. Salary including raise: $288,100
- Vice President of University Advancement Eric Gentry: $37,500 raise and a $60,000 bonus after 18 months (Gentry also sits on the LINK nky managing board). Hired August 2013. Salary including raise: $309,317
- Executive Assistant to the President and Secretary to the Board of Regents Tammy Knochelmann: $5,000 raise and a $15,000 bonus after 24 months. Hired in 2008. Salary including raise: $88,430
Northern Kentucky University’s presidential cabinet members declined to comment on this story.
In the July Staff Congress meeting, meeting minutes detail a discussion amongst the staff with information on the Faculty Senate Facebook page regarding the January bonuses for the presidential cabinet.
“The BOR (Board of Regents) gave some retention monies to the Cabinet members because what they did not want to happen when they named the interim President was for everyone else to leave the ship, if you will, and leave just one person trying to do all the things with everything that we have going on,” the minutes read. “They were really jut [sic] trying to be mindful and thoughtful to ensure that interim President (Bonita) Brown had a team of folks that were going to work with her to allow us to hand off the torch, if you will, to the next President. So that was the reason behind those retention monies for some of those executive members.”
Then, Staff Regent Cori Henderson fielded questions from NKU’s staff about the bonuses.
“Cori stated that it was just more coming of a consensus that we wanted to ensure that we were retaining folks on the Executive Committee and making sure that we had people helping us through what we’re going through in terms of our financial distress,” the meeting minutes read.
Staff Congress member Chris Witt took issue with the optics of giving raises and bonuses at this time, according to the minutes.
“Chris Witt commented that the optics of this are terrible,” the minutes read. “They want to reduce the budget by $5 million, but here we are shoveling money to people who were aware of the issue that happened. And it happened on their watch. And it seemed to him (Witt) we are rewarding them for staying to help us through it, even though they were probably more than likely aware of what was going on.”
Who discovered the budget issue?
The university hired Alltop in June of 2022, and the budget issues started to become apparent in August, according to emails obtained by LINK nky.
Roughly two months after being hired, Alltop emailed Vaidya that there were deep issues within the budget.
Please see the attached slide, which outlines final PRELIMINARY FY 22 Financials. I wish I had better news on how we finished the year …” the email starts.
Toward the bottom, Alltop details that besides the $5.5 million the university had planned to spend from reserves, and factoring in revenue shortfalls and overspending, they spent more than $21 million over what the university had taken in from revenue. It also considered $11 million from the Higher Education Emergency Relief Fund and Kentucky Employees Retirement System refund interest.
“We can discuss next week when we meet about how to discuss this with cabinet and prepare for the November board meeting,” Alltop writes to Vaidya. “We are also going to need to start our budget process early this year to uncover the true reality and involve the units in budget planning/discussion. From what I can tell, many items are done ‘off budget’ when in reality, they are recurring expenditures. This leads to overspending and surprises at year end. Changes to this year’s budget were also made to balance with little to no input from units or even communication that such changes had taken place.”
Vaidya sent a response five minutes later.
“Am I to understand that we are likely to end the year in a deficit of $15 million instead of the projected $9.5 million?”
Alltop forwarded that email to Karen Mefford, NKU’s associate comptroller.
“This answer is YES, correct?”
The budget deficit later swelled to $24.2 million.
On Nov. 8, 2022, the night before the Nov. 9 Board of Regents meeting, the board had dinner with Vaidya. Boehne said that the board and the president didn’t discuss Vaidya’s exit at that dinner, but the discussion of it did start the next day.
Eight days later, on Nov. 17, the board held a special meeting where they announced Vaidya’s departure. The meeting was swift, the president wasn’t available for comment, and the board immediately went into executive session.
The university offered Vaidya a $1.3 million severance. This amount was about two times Vaidya’s base salary of $450,000 per year, and then adds around 30% to reflect benefits, Boehne said. He elaborated that Vaidya’s salary and separation agreement are pretty typical for university presidents.
On Nov. 19, The Northerner, NKU’s student newspaper, reported that Alltop was pursuing a new job.
After appearing in front of the Kentucky legislature’s Budget Review Subcommittee on Postsecondary Education committee in March, Alltop declined to answer whether or not he was still pursuing a new job.
“I’m not going to provide a comment on that,” Alltop said at the time.
‘Two things can be true at the same time’
Boehne said that two things can be true simultaneously — that the university can try to reduce the deficit while also giving out raises to its executive staff.
“One of those is working through a budget issue and doing pretty well at it,” Boehne said. “And the other is that we need to secure some of those folks through the transition, especially cabinet members.”
But, Faculty Senate President John Farrar said if it’s about retention of university leadership, he doesn’t know how raises makes sense.
“Raises contribute to the current budget deficit, while the bonuses will be paid in a future budget year, presumably when the budget is better,” Farrar said. “Plus, the bonuses are only paid if the employee stays at NKU.”
The university announced in June that it had cut its original budget deficit from $24 million to $9.6 million, with plans to further reduce the deficit by at least another $5 million by fiscal year 2025.
But, in attempting to address budget issues, Alltop said that the university had used a considerable amount of reserves — the reserves sit at roughly $81 million, which equates to 105-110 days of unrestricted cash, though this is a simplistic number as cash fluctuates — but can’t sustain that level.
“It is not advisable from the CFO that we can continue operating losses at this level as proposed in the budget,” Alltop said.
At the meeting, the Board of Regents Vice Chair Nathan Smith said the university should work to cut more than $5 million from the deficit.
“I don’t think $5 million is enough,” Smith said, though he acknowledged that this is the current state of higher education nationwide.
After the university announced its budget deficit late last year, it parted ways with Vaidya — something the university claims isn’t due to the deficit, though the Faculty Senate has said the two are related.
The university still faces a $9.6 million deficit that it continues to dig itself out of, and the new budget will help them do that, though the faculty senate recently criticized the board for its role in the deficit.
The new budget includes an expected operating amount of $280,590,172, with projected revenue expected at $264,483,089 — NKU plans to use $16,107,083 from its reserves to cover the difference.
Of the more than $16 million expected to come from the university’s roughly $81 million reserve pool, $9.6 million will be recurring, and $6.5 will be non-recurring — meaning the former amount will continue to occur unless NKU plugs that leak. At the same time, the latter will be only a one-time cost.
“This is not a sustainable situation,” Alltop said in June. “That $9.6 million has to be addressed sooner than later.”
NKU’s revenue is primarily based on the money it makes from student tuition and fees, Alltop said. The budget also included a 3% tuition increase for the 2023-2024 school year.
NKU expects to pull $164.9 million from tuition revenue — or roughly 61% of its budget.
The next largest revenue source is $64.9 million from the state of Kentucky. The university received an additional $1.3 million under the state’s new performance model established in 2016 by the Council on Postsecondary Education.
NKU cut 100 faculty and 25 staff positions as part of its budget process. However, Boehne said they’re restructuring to pull in some of those positions elsewhere in the university — essentially reallocating some parts of the university into other parts.
NKU has seven open full-time faculty positions currently listed on its website and numerous other opportunities for part-time or adjunct faculty.
The Faculty Senate also recently criticized the university via a resolution after the board voted to pass athletic raises as the university cuts faculty and staff.
“Recently, the Board offered raises to certain athletic coaches just one week after 23 tenure-line faculty members were paid to resign and 17 additional faculty members were laid off,” the faculty senate said in the resolution. “This decision and its timing suggest the success of the basketball program is more important to the Board than the success of the academic programs that have been devastated by cuts.”
Boehne said in June that the athletics department had made significant contributions and revenue commitments. The athletics department budget is rolled in with the university’s overall budget, but he said that “athletics has made a big commitment, and we believe they’ll follow through, and we expect them to follow through.”
NKU faculty member and regent Michael Baranowski said during the June Board of Regents meeting that with the faculty cuts, the university expects them to do more with less.
“There comes a breaking point, and it ends up falling on students, and that’s not OK,” Baranowski said.
But, the cuts to faculty and staff are already causing morale issues at the university, Faculty Senate President John Farrar said.
“We understand that this is necessary, but these budget cuts and employee reductions are awful-tasting medicine.” Farrar said in June. “It’s really difficult to see valued people leaving. So far, however, most of the cuts have come from academics — faculty and staff; this won’t work unless all divisions of the university participate.”
Farrar said the news of the of the raises and bonuses further cause trust issues between the faculty — the faculty senate weighed whether to give a vote of no confidence in May, but ultimately decided against it in order to take a measured approach.
“With everything going on at NKU, the raises and bonuses further erode the trust of faculty for the Board, and they generate more anger among the faculty,” Farrar said. “We’re starting this academic year with around 100 fewer faculty than 2022-2023. That’s after the reallocation.”
Boehne acknowledged the cuts to faculty and staff would cause morale issues.
“I would expect it would if you take out that many positions at the same time,” Boehne said, though he said that the university added faculty positions leading up to 2019 and the COVID-19 pandemic.
He said he further understood the staff’s position on the raises handed to the university’s presidential cabinet.
“I fully understand their angst and their uncomfort and their displeasure and in some cases their personal pain,” Boehne said. “There’s no debate about that.”
Does this type of spending suggest a pattern?
When asked how the university plans to further reduce its budget by $5 million, and whether the bonuses seem similar to how NKU got itself into a budget deficit in the first place, Boehne said he doesn’t know that they’re exactly the same.
He said it was hard to predict during the pandemic what spending would look like on the other side.
“That’s the big difference in revenue there,” Boehne said, elaborating it’s hard to speculate on the following year.