Systemwide Communications - June 29, 2011
Dear university colleague:
As you know, on June 10 the governor announced an additional 1.1 percent or $4.37 million reduction in state support to the University of Missouri System. Since that announcement, our challenge has been to identify how we will balance the budget with this additional cut on top of the 7 percent, or $29.0 million, reduction in state support that we already had addressed in building our FY 2012 budget.
At the Board of Curators meeting two weeks ago, we discussed a number of options. Each of the options, if exercised, would have a negative impact on some important aspect of our mission of teaching, research, service and economic development. At the conclusion of the discussion, the Board asked me to consider the options and communicate my decision, which is set out below.
None of the options is appealing, but of the options discussed, I have decided not to impose a student fee surcharge or reduce institutional financial aid. We continue to strive to keep education affordable and I do not believe that students should bear the brunt of the latest reduction in state support. I do not intend to reduce the 2 percent salary merit pool for employees. We recognize that our faculty and staff are already undercompensated and that we suffer competitively as a result. I do not intend to increase employees’ contributions to the retirement plan. After almost two years of study, the Board took action recently that was, among other things, designed to reduce the possibility of additional employee contributions to the plan and better protect the benefits of our employees. I will not reduce funding for Extension’s 4-H program from the System level and will defer any decision on it to the Columbia campus.
Capping enrollment also was an option that was discussed. We cannot continue to take more and more students while state support declines and there are legal and practical restrictions on our ability to increase tuition. Without adequate resources, the quality of our academic and research programs is at risk. Capping enrollment on certain campuses is a strategy that already has been adopted or considered by public universities in several states, including Texas, Florida, California, Nevada, North Carolina, Iowa, Washington, Arizona, Michigan, Colorado and others. While we need to carefully study this option and its potential impact on each campus, it is a long-term strategy that will not solve our short-term problem.
Therefore, after careful consideration, I have decided that System Administration should buffer the impact on the campuses by covering approximately half of the $4.37 million cut, or $2.18 million. We will do this by reducing the university’s $5.0 million commitment to the Enterprise Investment Program (EIP). The EIP program is a key component of our research and economic development mission. The likely effect of this cut will be felt in the form of fewer new businesses and new jobs created as a result of the program. It also means a reduction in the likelihood of generating new revenues for the university from licensing new technologies—a source of funding that could help offset the costs paid by taxpayers, students and their families to support our core missions. Even with the $2.18 million reduction to the program, we will be able to fulfill our commitments for the first round of pending investments in early-stage companies that market technologies developed by our faculty and students, but this reduction will adversely affect our future ability to provide such funding.
The other half of the 1.1 percent reduction will be allocated on a pro rata basis to each of the campuses, Extension and System Administration. Each operational unit will be in the best position to deal appropriately with its share of the additional cuts.
This latest $4.37 million operating budget cut is in addition to $8.7 million in previously identified cuts, efficiencies and reallocations, and $53.2 million in cuts that we self-imposed in order to present a balanced budget at the last Board meeting. Of the $53.2 million in self-imposed cuts, the lion’s share, $37.1 million, again will come from deferring maintenance and repair on our labs, classrooms and building structures—bringing our backlog to more than $1 billion. Other major reductions include approximately $3.4 million in position eliminations or deferrals; $4.6 million in operating expense reductions across campuses and other units; $4.5 million in future capital investment; $1.5 million increase in net revenues; and $2.1 million in deferral of debt service.
In closing, let me say that these are challenging times for higher education in general and for the University of Missouri System in particular. Yet, I continue to be amazed at what we have been able to accomplish during the past decade in the face of declining state support, no doubt a result of the personal sacrifices and extraordinary contributions that all of you have made toward the successful execution of our mission. On behalf of the leadership across our system, let me extend our sincerest appreciation for your service, your commitment to upholding the university’s mission in a quality manner, and your dedication to being good stewards of funds from all those who invest in us.
Stephen J. Owens
University of Missouri System