March 29, 2017
As noted in President Dunn’s message earlier today, we must take immediate and significant steps to reduce our state-supported budgets for the fiscal year that begins July 1. This will be difficult, given the more than $20 million in reductions already taken this year (see July 5 memo for background), but it will not prevent us from fulfilling our core educational mission.
We will approach the cut of $30 million, or 15.9 percent of our state budget, in two ways.
- We will make $19 million in permanent cuts to state-funded accounts – those supported by state appropriations and tuition – to be implemented in the new fiscal year that begins July 1. This will amount to a 10 percent permanent reduction in state funding on top of the 10 percent already taken in the current fiscal year. This amount is based on the governor’s proposed budget for FY18 as well as conservative enrollment estimates.
- We must implement a plan to pay back the unrestricted funds we have been using to operate during the state budget impasse. We will need to take an additional $8.3 million to $11 million in the first year of a 10-year repayment plan. The exact amount will depend, in part, on whether there is a stopgap budget before the end of the year. These numbers can also be reduced if we minimize all spending for the remainder of the fiscal year.
Again, this will be challenging and painful, and it will almost certainly include layoffs. I cannot yet provide an estimate on the number of potential layoffs, as this will depend upon how units address their reductions. Overall, this will require us to rethink how we structure our work and our organization.
However, we will continue to fulfill our mission on behalf of students, offering a range of academic programs and other opportunities within and outside of the classroom. Every incoming and returning student will be able to continue and complete his or her academic program.
We will look different, and we will be lean. And we will be here for years to come.
As you know, we have already been anticipating and planning for a leaner budget, although our hope was that cuts would be made more gradually. We have been reviewing academic and non-academic initiatives and receiving feedback from individuals and groups across campus. Now that we have been charged with a specific reduction and timeline, we must move forward.
Following is how we will approach both cuts. Please note that these apply only to areas covered by state-funded accounts. Some units, such as housing and other auxiliaries, receive no state funding. Others receive a mix of funding from the state and other sources.
Regardless, the steps below will apply to all state accounts in both academic and non-academic units. I should note that the numbers may not end up being exact, as we may be able to make greater cuts in some categories, allowing us to make fewer in others.
Finally, it is important to note that these are not across-the-board reductions. While I am defining the general areas of cuts and will assign overall targets for the vice chancellors as well as the chancellor’s office, the vice chancellors and I will have significant latitude to work with our units to assign specific cuts per area. The areas covered by vice chancellors include academic affairs, development and alumni relations, finance and administration, research and student affairs.
PERMANENT CUTS, $19 million
The following will apply to all units on campus.
- Vacant positions, $10 million: As with any university, our largest expense is in the people who help us fulfill our mission. To minimize the number of layoffs, our first step will be to look at vacancies. Any vacant salary budget lines funded by state resources will be swept permanently into a central account as of July 1 and going forward. All future approved positions, new or vacant, will be funded out of this account. This approach gives us more flexibility in filling positions where the needs are greatest, regardless of a department’s ability to fund a position within its own budget. We anticipate, however, that many vacancies will go unfilled, contributing to $10 million in permanent reductions. We estimate that this could equate to a reduction of about 158 vacant positions in addition to the 293 already reduced during the budget impasse.
Please note that the sweep will not include positions that have already been approved to move forward or will be approved before July 1 (although this will be a very small number). In addition, it will not include graduate assistantships that are currently filled, even if they will be filled by a different student next year.
We will develop an updated process to fill vacancies or add positions after July 1. Until then, we will continue to follow the process that is in place.
- Equipment, supplies and contractual services, $1.5 million: Units across campus will be asked to lower operational costs by reducing spending from state accounts on equipment, supplies and contractual services. Vice chancellors and the chancellor’s office will be given a target they will need to meet.
- Campus work opportunities for students, $1 million: Unfortunately, we cannot make our cuts without impacting some of our student employees. Again, we will give vice chancellors and the chancellor’s office a financial target to be reached either through reduction in student hours or positions. We anticipate that this will affect approximately 200 of our more than 3,700 student positions.
- Travel, $535,000: We have already limited travel on state funds significantly, and we will now eliminate it entirely. No travel on state funds will be approved; we will implement this immediately rather than wait until July 1.
The following will apply to specific units. With the exception of the sweep of vacant positions, which will apply across all academic and non-academic units, these cuts may be in addition to the cuts above at the discretion of the vice chancellors or the chancellor (if the unit reports to the chancellor’s office).
- Plant and service operations, $1.5 million: The vice chancellor for administration and finance will identify $1.5 million in savings by reducing operational costs, reducing our footprint, and possible outsourcing.
- Partially self-supporting units, $1.2 million: The status of state funding for units that have opportunities and ability to generate support from other sources has been a contentious issue. One of these units is athletics. Others include some research and service centers and areas that contribute to the culture of our campus and the economic well-being of our region. We will need to move forward with cuts to some of these area. Targets will vary by unit and will be given to the appropriate vice chancellor or the chancellor’s office for implementation.
- Academic administration, $1 million: We must reduce academic administrative costs through college or department mergers or other means. I ask the provost to work with the deans on a plan that can be implemented to generate $1 million in savings effective July 1. This figure represents approximately 0.76 percent of the state budget for academic affairs.
- Non-academic administration, $750,000: I will also ask the other vice chancellors and the chancellor’s office to cut state-supported administrative costs and give them each a target to achieve. The overall $750,000 target represents about 1.7 percent of total state budgets for units outside of academic affairs. Some of the steps the units may take are already in the planning stages as guided by the State of the University address or the Non-Instructional Program Review report. I note that cuts made in other areas, such as the reduction in equipment and supplies or the salary sweep, will not count toward this target.
- Information Technology, $500,000: Information Technology will reduce its state support by $500,000. IT has other funding sources, although this will still be a challenging reduction.
- School of Law, $465,000: The School of Law is the only academic unit on campus that retains 100 percent of its tuition revenue, so it requires a different approach to budget reductions because tuition is not included in the funding of its state accounts. For this reason the dean will be asked to reduce the school’s state-appropriated budget by $465,000, or 15 percent, reflecting the governor’s proposed 15 percent reduction in state funding to higher education for FY18.
- Library, $400,000: Library Services will reduce its state support by $400,000. This may result in reduced hours and a reduction in materials.
- Development and Alumni Relations, $166,000: State support for this area will be reduced by $166,000.
REPAYMENT OF FUNDS, $8.3 million to $11 million, first year
As noted earlier, we will have to pay back, over a 10-year period, the funds we have used from other sources in order to maintain operations this year. How we will do this may vary from year to year. We anticipate that the figure will be closer to the $8.3 million or possibly less, but we must plan for a worst case scenario. Again, it will ultimately be based on total spending from state budgets for the fiscal year, meaning than any funds we save from now until the end of the year could reduce these numbers.
For FY 18, we plan to address this reimbursement as follows:
- Campus units, $4.3 million to $7 million: This will likely be prorated by unit based on its spending from state funds.
- Unrestricted plant funds, $2 million: These are funds budgeted for but not spent on areas like small capital projects.
- Central allocation of Distance Education tuition, $1 million: A percentage of revenue from our distance education programs comes to the central administration to help with operational costs. We will apply $1 million of anticipated FY 18 revenues to the repayment plan.
- Central allocation of summer semester tuition, $1 million: Similarly, a percentage of revenue from our summer programs comes to the central administration to help with operational costs. We will apply $1 million of anticipated FY 18 revenues to the repayment plan.
The cuts above do not address the elimination of academic programs, since savings from program elimination will be generated more slowly. However, we must move forward and complete the academic program review process and make program decisions accordingly if we are to continue to evolve as a university. We need to make decisions sooner rather than later. Again, it’s important to note that every student who enrolls in a current program will be able to finish that program within a reasonable time frame.
I know that you will have a lot of questions about the difficult task ahead, and I will be working with the vice chancellors to address the details in the next two weeks. We will have targets identified and communicated to vice chancellors on April 10 and expect to have reduction plans in hand no later than mid-May.
Finally, in the difficult days ahead, it may be tempting to look at other areas and raise questions about their operations, budgets and cuts. I would say simply that this is a time when we need to come together as a community, providing support and working toward our shared goal of advancing the mission of this great university.