The primary purpose of this issue of Clif’s Notes is to provide an update on the budget for fiscal year 2013.

Executive Budget Committee

The Executive Budget Committee met on Wednesday, May 2, to hear a budget update and to discuss options for fiscal year 2013. The group agreed on the major decision points, which are described below. The committee members also agreed that there was no need to meet again until early in the fall semester when we have more complete information to guide our decisions.

State appropriations

One of the major considerations is the level of state appropriations. The final decision on that will not be available until mid- to late June. I will tell you where the discussion stands at this moment.

First, a little history. As you recall, in late fall, we were advised that there would likely be a 5 percent reduction in state appropriations for fiscal year 2013. In January when the governor announced his budget, the reduction was 12.5 percent. In February, the governor amended his budget recommendation so that the reduction was 7.78 percent. This is what we have based our budget model on since that time.

As the budget has moved through the Missouri General Assembly, first the House, and then the Senate, reduced that cut so that the higher education budget would be the same for fiscal year 2013 as it is for this year — i.e., no reduction. It now appears that will be the Missouri General Assembly’s final decision.

The next step, as required by state law, is for the governor to ensure the proposed budget is balanced and decide what, if any, holdbacks he needs to make. We are hopeful he will make that decision by mid-June.

There are so many factors that must be considered and so many events to occur before mid-June that it is hard to predict what the governor will do. Most “experts” think that he will withhold at least some amount, perhaps 4 to 5 percent, but no one knows for sure.

Dollars and sense

This subhead is correct — let me try to make some sense out of the dollars for you so you know what we are talking about.

• Based on the current total funding for higher education in Missouri, each percent of state appropriations is equal to about $800,000 for Missouri State. So, a 12.5 percent reduction is right at $10 million (12.5 x $800,000) compared to $6,224,000 for a 7.78 percent reduction (7.78 x $800,000). Ultimately, the range of reduction in state appropriations for Missouri State will be between $0 and $6,224,000.
• Another number you need to know is that every 1 percent across-the-board increase in salary and benefits for all Missouri State full-time employees (faculty and staff) amounts to about $1.4 million. So, to determine the cost for an across-the-board raise, you would multiply $1.4 million times the percentage increase — i.e., a 2 percent raise would cost $2.8 million, a 3 percent raise would cost $4.2 million and so on.
• The total state appropriations for this year, fiscal year 2012, is $79,417,892.
• The total income from student tuition and fees for this year is budgeted at $111,942,509.
• The amount of income we lost because of the drop in enrollment from 2010-11 to 2011-12 was about $1 million. (Remember, all of our budget models are based on the assumption that the fall 2012 enrollment will grow back to the fall 2010 level or higher.)
• The total Educational and General (E&G) budget is about $186 million. When you add the auxiliary units (residence halls, bookstore, Taylor Health Center, etc.), the total University budget reaches about $260 million.

Options and opportunities

With that background, the Executive Budget Committee has endorsed the following plan:

• Concurred that the fiscal year 2013 budget that has been prepared based on the 7.78 percent reduction should be recommended to the Board of Governors on June 22
• Agreed to wait until early fall to make recommendations on any adjustments to the fiscal year 2013 budget in order for the committee to have more complete information
• Committed to use the first additional $1 million in additional funds to replace one-time monies currently planned for the fiscal year 2013 budget, should the ultimate reduction in state appropriations be less than expected
• Agreed that any additional monies received should be banked until later in the fall to allow the committee to have more precise information about the governor’s decision on state appropriations, fall enrollment, health care costs, etc., allowing us to make a more informed decision on expenses

As has been the case from the beginning, I will keep you informed about our progress on the budget.

I do want to take this opportunity to publicly thank the Executive Budget Committee members for their work this year. They took their responsibility seriously, they surfaced good ideas, and they made every administrative proposal better with their discussion. They represented all of you very well.

Closing out the semester

The days remaining in this school year are dwindling quickly. I hope the remainder of the semester is productive for you. I also hope you will attend one or more of our three commencements on Friday, May 18, to help our graduates celebrate their significant accomplishment. After all, our graduates are the evidence of our work.

So you know, a couple of days after commencement, Gail and I will travel to China for 10 days. We will participate in commencement ceremonies at Liaoning Normal University, help host three alumni events in three cities (the first-ever for Missouri State) and work on developing additional educational agreements with Chinese institutions.

Conclusion

It has been a great privilege to serve as your interim president for the past year. I want to thank you for your support, your cooperation, your positive attitude, your good ideas and your helpful feedback. As I said many times since June 27, there is no limit to what we can accomplish if we don’t care who gets the credit. You have helped me prove that this year. Thank you.