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UM System to reduce strategic investment in economic development in light of most recent reduction

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UM System to reduce strategic investment in economic development in light of most recent reduction in state support

Campuses also face tough budget reduction choices

The University of Missouri System will nearly cut in half its commitment to the Enterprise Investment Program, a key component of its research and economic development mission, to help address the additional 1.1 percent—or $4.37 million—reduction in 2012 state appropriations announced by the governor on June 10.

The cut in this economic development program—from $5 million to $2.8 million—will cover approximately half of the latest cut in state support.

“While the university will be able to fulfill its commitment for the first round of pending investments in early-stage companies, the cut will adversely affect future funding of collaborative ventures among the university, entrepreneurs and businesses,” said University of Missouri System Interim President Steve Owens. “In all likelihood, the cut also will reduce the amount of new revenues from licensing technologies that support the university’s economic development mission. This was not a choice we wanted to make, but it was the least objectionable option.”

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 throughout the system will make the decision about how to deal with its share of the cut.

Owens said he decided against other budget cuts discussed at the board of curators meeting in an effort to underscore the institution’s commitment to its people—its greatest asset.

After discussions with campus chancellors and others, Owens opted not to impose a student fee surcharge or reduce institutional financial aid because students should not bear the brunt of the latest reduction in state support, he said. He also decided not to reduce the 2 percent salary merit pool for employees given already lagging competitive salaries and will not increase employees’ contributions to the retirement plan in light of the board’s recent efforts to protect retirement benefits. Owens also decided not to reduce funding for Extension’s 4-H program at the System level and will defer any decision on it to the Columbia campus.

Capping enrollments—another option presented at the board of curators meeting—is a long-term strategy that will require careful study, Owens said.

“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,” he said.  “Without adequate resources, the quality of our academic and research programs is at risk.”

Owens noted this strategy has been adopted or considered by public institutions in several states, including Texas, Florida, California, Nevada, North Carolina, Iowa, Washington, Arizona, Michigan, Colorado and others. 

The most recent 1.1 percent reduction in state support is in addition to $8.7 million in previously identified cuts, efficiencies and reallocations and $53.2 million in cuts self-imposed by the university to balance the FY12 budget. These reductions include:

  • $37.1 million from deferred maintenance and repair on labs, classrooms and buildings, bringing the university’s deferred maintenance backlog to more than $1 billion
  • $3.4 million in position eliminations or deferrals
  • $4.6 million in operating expense reductions across the campuses and units
  • $4.5 million in future capital investment
  • $1.5 million increase in net revenues
  • $2.1 million in deferral of debt service

Reviewed 2011-06-29