Welcome back! I hope you took the break to refresh and recharge. I used my time to read, see family and friends, travel and visit the Crystal Bridges Museum in northwest Arkansas, which is well worth seeing.
I also hope you are back and refreshed because we have our work cut out for us as we get into the details of preparing the University’s internal budget for fiscal year 2013. It will not be easy, but we should not panic. Our prudent fiscal management during the past six years has us well positioned to address this challenge.
Tuesday night, the governor released his budget which included an across the board reduction in funding for all institutions of higher education, both two-year and four-year, of 12.5 percent from the state funding allocated for fiscal year 2012.
For Missouri State, the bottom line number from the budget of most importance is that our funding will shrink from $79,342,892 this year to $69,425,030 in fiscal year 2013, a reduction of nearly $10 million.
As you know, we had planned on a reduction of 5 percent. That was true until mid-December when we were notified that the reduction could be significantly larger. That was confirmed Tuesday night with a reduction that is 2½ times what we had expected.
For a recent historical perspective: Over the past three years, state appropriations for Missouri State have dropped by 12 percent — which amounts to nearly $11 million. If the budget for fiscal year 2013 is implemented as recommended, we face the biggest reduction yet — another 12.5 percent or $10 million. That means in the past four years we will have lost 25 percent of state funding or about $21 million.
We had based our initial plan on the 5 percent reduction in state appropriations. Given the dramatic change in the state appropriations, it will be necessary for us to change our plan.
The two most significant changes I will propose to the Executive Budget Committee are:
- Elimination of the 2 percent across-the-board salary increase we had hoped to fund beginning July 1, 2012
- Elimination of the strategic investment fund we had planned
Access the original assumptions and plan elements. I truly regret making these recommendations, because there is no question both of these actions are needed.
I have met with student leaders and Faculty Senate leaders to discuss tuition increases and other budget issues. I also will be seeking input from members of Administrative Council and the Board of Governors.
All of this will be in preparation for the next meeting of the Executive Budget Committee next Thursday (Jan. 26). Coming out of that meeting, I anticipate we will have a revised philosophy that will include addressing the budget situation with a combination of increased revenue from tuition and enrollment increases; cutbacks and reallocations; and use of reserves. I also anticipate we will soon develop specific targets for the various budget committees.
I will provide an update to the Board of Governors at its Feb. 17 meetings, both the Finance Committee and the general meeting.
In the meantime, we will be working with our elected officials to see if there are any options to reduce the reduction and/or to bolster the state’s budget with additional revenue. We will continue to emphasize the significant positive role Missouri’s four-year public universities play in advanced workforce development for the 21st century, the state’s economy and the quality of life in Missouri.
To repeat, because of your good stewardship, we are in a strong financial position. Not every institution in the state is as financially sound as Missouri State. We will weather this storm. Because of this, I am not instituting a hiring freeze at this time; however, until further notice, I have asked Provost Einhellig and other cost center heads to carefully review all position announcements and hiring.
Our two overarching goals continue to be 1) maintain quality and 2) keep Missouri State affordable for all students, while protecting the workforce. With the magnitude of the reductions in state appropriations for fiscal year 2013, achieving these goals will be a challenge.
That is why what we need now are everyone’s best ideas, diligence and positive attitude. It won’t be easy; but working together, I am confident we can find solutions.
As always, I will keep you informed of developments as we move through the process.