View the presentation

You need Adobe Reader to access this presentation.

Compromise needed to meet deadline

In order to pass the budget by the constitutionally-mandated deadline, which is today (Friday, May 11), the House and Senate had to compromise on a proposal that would have added $2 million to the budget of Southeast Missouri State University. 

In the end, the compromise that was approved consisted of approving an equity pool to $3,001,000, which was allocated to seven public institutions based on their relative funding per student. The amounts for the seven ranged from $55,000 to $886,000.

With this compromise made, the entire $24 billion budget passed.

Reasons for excluding Missouri State

There were three reasons given for Missouri State University not being included in the proposal. 

• The University of Missouri and Missouri State were identified as the two statewide universities, so they were separated from the other institutions.
• Missouri State had benefited from the $2 million allocated last year to the University of Missouri-Kansas City for the Doctor of Pharmacy degree in a year where other institutions did not receive similar funding.
• The inequity in funding for Missouri State was too significant for the pool of money that was available.

I was obviously disappointed in this decision. We were aware of the negotiations as they were occurring and aggressively lobbied our delegation to be included.

Committee to examine equity funding

While we were not awarded any additional appropriations, we were successful in having an amendment added to the bill that establishes a joint legislative committee to examine the question of equity funding for all institutions. Our legislative delegation has assured us that Missouri State will be a significant part of that discussion next year. This will be our first legislative priority next year.

You should know that several members of our area legislative delegation strongly voiced their concern that Missouri State was not included in the equity allocation. That is the primary reason the amendment was added. 

The data speaks for itself — Missouri State is relatively under-funded (third lowest) compared to the other institutions, and Missouri State will be included in any discussion about addressing that inequity.

Missouri State funded at same level as last year

On a positive note, the legislature has passed a budget which funds Missouri State at the same level as last year. Now we wait to see what withholding the Governor will make. We will know that within 45 days.

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.

Presentation

To make the best use of our time, please review the presentation before the open forum.

Access presentation slides

Agenda

The open forum will follow this agenda:

• Introduction — Clif Smart
• First-year highlights — Clif Smart
• Proposed changes to measures — Jim Baker
• Key performance indicators — Frank Einhellig
• HLC accreditation in 2015-16 — Tammy Jahnke
• Question and answer on any topics

In this issue of Clif’s Notes, I want to announce plans for an open forum on April 30, and encourage you to attend the Public Affairs Conference and some of the end-of-year events spotlighting our students.

Campus Open Forum

On Monday, April 30, Provost Frank Einhellig and I will host a Campus Open Forum. It will be from 3-4:30 p.m. in the Meyer Library Auditorium. I hope you will plan to attend. There are three topics we want to cover at this forum:

• Review proposed Key Performance Indicators (KPIs) for the 2011-16 Long-Range Plan: Fulfilling Our Promise.
• The KPIs will replace the old “scorecard.”
• They will be maintained and updated on the website.
• The KPIs will include the performance measures upon which future funding will be determined.
• We want campus input before we finalize these as a recommendation to the Board of Governors.
• Review proposed changes to the measures included in the long-range plan.
• We are approaching the end of the first year of the long-range plan.
• We had agreed that we would annually review the long-range plan to determine both the progress that had been made, as well as recommend any changes to the document.
• A year into the plan we want to affirm the objectives and our plan to work toward each of them. On the other hand, some of the recommended measures do not seem so clear or appropriate at this point, and we would propose some changes in several of these areas.
• Our commitment was to present these proposed changes to campus for input before taking the proposed changes to the Board for approval.
• Answer any questions you have on any topic for the remaining part of the 90 minutes.

We will post the KPIs and proposed changes to the long-range plan online several days in advance of the open forum. I will provide you with the links when these are ready to review.

Public Affairs Conference

The first meaningful experience I had with Missouri State University was attending the Public Affairs Conference. I was working at the Strong Law Firm, and Tom Strong recommended that I attend some of the sessions. I did, and I was hooked. I have not missed a conference since then. 

I am writing to remind you of the conference and to encourage you to attend. And, I ask that you encourage our students to attend.

This year’s Public Affairs Conference is April 17-20 at various sites across campus. This year’s theme is “Culture of Connectivity;” you can access the full conference program online.

The line-up includes a wide array of speakers and artists, as well as many panelists. The sessions run during the morning, afternoon and evening, so you have plenty of opportunities to attend. I hope you will explore the website to learn more about all of the options.

The Public Affairs Conference is one of the signature events at Missouri State University. The inaugural conference was in 2005 as part of the Centennial Celebration to draw attention to the University’s statewide mission, which it has had since 1995. The conference has grown in both numbers and stature over the years.

I hope to see you at 2012 Public Affairs Conference. Gail and I plan to attend the Larry Kirwan event Tuesday evening and the plenary address by Naomi Wolf Wednesday evening. I also will attend the student presentations in the distinction in public affairs program Tuesday afternoon.

Spotlighting student accomplishments

This is the time of year when we highlight many student accomplishments. I ask that you consider attending not only the ceremonies in your colleges/units but also others open to the entire campus. I will draw your attention to three such activities:

• The 16th annual College of Health and Human Services Student Research Symposium is today, Thursday, April 12, from 3:30-5:30 p.m. in the Plaster Student Union Ballroom West. The goals of the symposium are to promote student research and to provide a forum for students to gain experience presenting their research.
• The College of Natural and Applied Sciences Undergraduate Research Day is Friday, April 13, from 10 a.m.-1:30 p.m. in the Plaster Student Union Ballroom. This event features poster presentations by undergraduate students.
• The Graduate College Interdisciplinary Forum (IDF) will be on Saturday, April 14, in the Plaster Student Union Ballroom and Theater. Oral and poster presentations from graduate students across the campus are scheduled from 8 a.m.-2 p.m., with refreshments provided. Frank and I will have the honor of bestowing the awards during the awards presentation at 2 p.m. in the PSU Theater.

Obviously, this is just a sample of the many such activities that are occurring in the next few weeks. Again, I encourage you to seek out and attend as many as you can.

Of course, the ultimate recognition occurs on Friday, May 18, in Springfield with three commencement ceremonies, and on Saturday, May 19, in West Plains with that campus’ commencement. I hope you will plan to attend those as well to honor the students you have worked with over the years.

Conclusion

The end of the semester and the year are within sight. I hope all of us will finish strong so we feel good about what we collectively accomplished in 2011-12. Thank you. 

In this issue of Clif’s Notes, I want to update you on the budget for both fiscal year 2012 and fiscal year 2013, review major outcomes of the Board of Governors retreat, designate additional leave days for staff and highlight recent private investments in Missouri State University.

Budget updates

First, for the fiscal year 2013 budget, not much has changed since the last issue of Clif’s Notes. The Missouri General Assembly is on spring break until March 19 at which time the full House will discuss the budget.

There have been some amendments made to fully restore the higher education budget to this year’s level. It is unclear how likely those amendments are to prevail. For now, we need to continue to plan for the 7.78 percent reduction discussed in the Feb. 14 issue of Clif’s Notes. 

Proposal process

For the current year (fiscal year 2012), you have heard that Governor Nixon has released about $2.3 million to higher education. For Missouri State, that means $200,000. I want to explain how we intend to allocate those one-time funds.

Of the total, $150,000 will be for academic-related projects and $50,000 will be for non-academic projects. Our intent is to make these dollars available through a grant process, with the money available to spend through June 30, 2013.

Soon, Provost Frank Einhellig will distribute more detailed instructions and a timeline for the academic proposal process, and I will do the same for non-academic. I can tell you this much:

• Academic — Frank has agreed to match the $150,000 with $150,000 from his reserve for a total pool of $300,000; the priority for proposals will be for initiatives that continue to enhance enrollment; proposals for summer school 2012 may be included.
• Non-Academic — I will match the $50,000 with $50,000 from the president’s reserve for a total of $100,000; this will account for two-thirds of any proposal; the unit making the proposal must commit to funding the other third (i.e., if a proposal is $30,000, the grant will cover $20,000, and the unit will be expected to cover the other $10,000). The deadline for submitting non-academic proposals is March 30.

We look forward to seeing the proposals that come forward during this process.

Board of Governors mid-year retreat

The Board of Governors met for its mid-year retreat March 1-2 in St. Louis in conjunction with the men’s Missouri Valley Conference Basketball Tournament, which has become a tradition in recent years.

The primary purpose of the retreat was to update the Board on our progress in implementing the long-range plan, Our Promise. This was especially helpful to our new Board members. The Board also touched on several other items.

Presidential search

One of the main outcomes of the retreat was the Board’s decision to move forward with the presidential search. This was described to you in some detail in an email last week from Board Chair Gordon Elliott. In the near future, there will be a presidential search website that will contain all of the pertinent information as the process moves forward.

As you probably know, I will be a candidate for the position, so I will maintain some distance from the process, which I started by excusing myself at the retreat during that discussion.

Open forum

Another outcome of the retreat will be a campus open forum sometime later this spring. The purpose of the forum will be to gain campus input on recommendations to revise or eliminate several targets originally identified in the long-range plan. Prior to the forum, I will circulate the recommendations and the rationale for the changes. We will seek campus input both in writing and at the forum before finalizing and making the changes.

Scorecard

Finally, the Administrative Council and I will be working on preparing our scorecard to measure our progress on goals in the long-range plan. We will keep the main scorecard to 10 to 12 key indicators, with individual units continuing to measure a broader array of goals specific to their work.

The importance of private gifts

On many occasions, I have spoken and written about the increased importance of private contributions given the budget challenges we are facing. Private support is critical to our ability to advance the University in many areas. That is why it was so gratifying to recently announce two significant gifts.

What started as a friendship with the staff in the Garnett Library at Missouri State University-West Plains ultimately led to a $4 million gift to support students with financial need who attend that campus. It is the largest single gift for student scholarships in the University’s history, and we very much appreciate the generosity of Lorene Thompson Brooks.

When JQH Arena was built, the budget did not allow for the completion of the Bears and Lady Bears office and locker room complex. A conscious decision was made to create “shell space” under the south lower bowl which could be completed when private gifts were available. That has now occurred, thanks to the generosity of Mr. Jim D. Morris. His leadership gift will be coupled with a gift from the McQueary Family and other donors to make that project a reality.

Speaking of the McQuearys, on April 20, we will officially open the new wing of the McQueary Family Health Sciences Hall. This new wing is a major asset for the health programs at Missouri State.

Private gifts also have assisted us in moving forward with the Gohn Hall project in West Plains, the Science Scholars’ Laboratory addition at Greenwood Laboratory School and the Robert W. Plaster Center for Free Enterprise and Business Development, the first phase of which will be completed in late fall of this year.

Two points: First, I want to offer my public congratulations and thanks to all who have made these gifts possible. In some cases, these commitments were the result of relationships built over many years. Second, please know that we continue to work with potential donors on other buildings and initiatives in support of our academic programs and our co-curricular programs. Every investment by a donor moves the University forward.

Additional leave days

As you know the president has the discretion to provide up to four additional days of leave for staff. For these two days, the University will close as it would for any holiday leave. The two additional leave days are as follows:

• Friday, May 25, 2012 — this is the Friday before the Memorial Day holiday, thus providing a four-day weekend
• Wednesday, Nov. 21, 2012 — this is the day prior to the two-day Thanksgiving holiday, thus expanding this to a three-day holiday for staff

Closer to the end of the calendar year, we will address the possibility of granting additional leave days during the December/January mid-year holiday break.

Conclusion

I continue to be honored to serve as your interim president. I appreciate all you do to help Missouri State University succeed.

• Public universities develop the advanced workforce of the 21st century.

• Public universities “teach the teachers.” Our graduates are educating the state’s next generation of leaders, from preschool through doctoral programs.

• Public universities fuel the economic engine of Missouri every day of every year.

• Public universities improve the quality of life in Missouri by providing public benefits, as well as personal benefits.

I encourage you to read and share this publication as we continue to make the case for investing in Missouri’s public universities.

About COPHE

Missouri’s 13 public four-year universities comprise the Council on Public Higher Education in Missouri (COPHE). Brian Long is the COPHE Director.

In this issue of Clif’s Notes, I want to update you on the budget for fiscal year 2013 and share with you the new Academic Administrators Return to Faculty Policy.

Fiscal year 2013 budget

I am sure you heard about Governor Nixon amending his budget recommendation for fiscal year 2013 by adding $40 million back into the overall higher education budget. The funding is part of a lawsuit settlement from which Missouri benefits.

That means the overall reduction for higher education is now proposed to be $66 million (7.78 percent) rather than the original $106 million (12.5 percent). For Missouri State, that means the reduction is $5,988,547 rather than $9,620,332, a difference of $3,631,785.

Based on this new information, we are adjusting our initial plans:

• First, and most importantly, with a 7.78 percent reduction in state appropriations, we believe we can keep the increase in tuition and fees for undergraduate resident students to 3.1 percent or less, which will not require Missouri State to request a waiver.
• Second, in an attempt to further protect the quality of our academic programs, we are reducing the amount colleges have to reallocate for fiscal year 2013 by $490,869.
• And third, since we are reducing the reallocation target for colleges, we are encouraging colleges to consider using as few one-time funds as possible to cover the reallocation.

Here, in admittedly simplified terms, is the summary I shared with the Executive Budget Committee at its Feb. 10 meeting:

Decreased appropriations and cost increases

Increases in revenue and expense reduction

You can tell there are many details yet to be worked out, but this provides a summary that I hope is helpful.

I have presented this plan to the Executive Budget Committee and the Administrative Council, and both groups gave unanimous approval for it. I plan to brief the Board of Governors on it at the Feb. 17 meeting. I believe we are now to a point where the various budget committees, working with the cost center administrators, should finalize their specific reallocation plans. Those plans will be reviewed by the chief financial officer and moved up the academic budget process. The goal is to have a firm plan in the next 45 to 60 days.

Special kudos to our student leaders

I want to give special recognition to our student leaders.  On Feb. 7, the Student Government Association had a first reading of a resolution that supported the University and indicated the students’ willingness to support an increase in tuition and fees on undergraduate resident students of up to 6.5 percent to help cover the proposed 12.5 percent reduction in state appropriations.  In short, the students chose quality over absolute price.  I am providing a link to that resolution here.  I thought you would want to be aware of this.

Reminders about the budget

Finally, let me provide four reminders.

• 

  First, there have not been any changes to the budget decisions I shared in the last Clif’s Notes. Please review those.

• Second, remember that our budget model is predicated on recouping the 146 students we lost in the fall of 2011. And, if we are able to increase enrollment, that helps the budget even more. So, enrollment and retention remain a high priority.
• Third, while it is great news that the reduction has been decreased from 12.5 percent to 7.78 percent, the $5.99 million reduction in state funding is real money and I don’t want to minimize the challenge we will have in filling that hole.
• And fourth, please note that the $40 million added to the higher education budget is one-time money, which means we will have to revisit that issue next year. The hope is that the state’s economy will continue to improve so that the hole is filled with on-going funding. For now, the one-time $40 million helps bridge the gap for fiscal year 2013.

The legislative session continues through May 18 and I will keep you informed of other developments as the budget moves through the process. Thanks for your patience and understanding as we adjust to new information.

Academic Administrators Return to Faculty Policy

Committee reports

One of the first things I did as interim president was to ask Drs. Einhellig and Gallaway to appoint an ad-hoc committee to review and improve the Academic Administrators Return to Faculty Policy. That committee was led by Dr. Sue George and included members Drs. Richard Biagioni, Janice Greene, Terrel Gallaway, Tom Kane, and Kent Ragan. The committee completed its report in late November.

Related, the Faculty Senate Ad-Hoc Committee on Heads/Chairs completed its report in December. 

New policy

On Friday (Feb. 17), I will report to the Board of Governors that we will soon have a new administrative policy on Academic Administrators Return to Faculty. This policy adopts a significant number of the specific recommendations made in these reports, especially related to administrators returning to faculty.

The issue of administrators returning to faculty remains an important, sensitive topic. One of my first pledges to you was that we would address it. The key was to balance the University’s goal of attracting and retaining outstanding administrators with paying returning administrators appropriately upon their return to the faculty. Thanks to the ad-hoc committee reports and the insights of many, both faculty and administrators, I believe we have found that balance. I invite you to review the new policy and judge for yourself.

We will implement the policy beginning with appointment letters beginning in the fall 2012 and we will monitor it closely to ensure it is achieving the multiple goals we have for it. All of us should reserve the right to revisit the policy if we find adjustments need to be made. I anticipate that many of the principles adopted here will also be incorporated into the contract for the next University president.

I want to thank all of you who contributed to this policy. It is a better policy because of your involvement.

Conclusion

Please be assured that I appreciate all you do and I will continue to keep you informed.

In this issue of Clif’s Notes, I want to update you on the budget for fiscal year 2013 and also comment on two recent internal audits we have completed.

Fiscal year 2013 budget

The state appropriations picture for fiscal year 2013 remains “fluid.” As you recall, the governor’s recommended budget includes 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.

In subsequent conversations, both the governor’s office and legislators have expressed a desire to reduce the amount of the cut if at all possible. It is early in the legislative session, and we are hopeful that the reduction might be modified before the budget is finalized.

Handling the budget reduction

When we met with the Executive Budget Committee on Jan. 26, we discussed how we might handle the 12.5 percent reduction, as well as options should the cut be less. Once we have more details on state appropriations, we can be more precise in our planning.

However, the Executive Budget Committee did come to agreement on several elements of the plan, and also addressed some rumors that have begun to circulate on campus. I want to share that information with you here.

• The mid-year raise has been approved and is being implemented. This raise is secure and will continue as planned.
• All cost centers (provost, colleges, CFO and vice presidential units) will not be asked to reallocate more than the $3.7 million originally identified several weeks ago before the 12.5 percent cut was announced. Cost centers can continue to work on plans for funding their pro-rata share of this amount, which covers the mid-year raise and related benefits. The cost center plans may use one-time funds for up to one-third of the amount, provided the plan is approved in advance by the CFO. Any additional reductions required to cover the reduced state appropriations will be handled centrally, through increased revenue and through limited use of the reserves. By using this combination, we help protect the academic programs and essential services provided by the costs centers.
• As indicated previously, it is unlikely we will be able to fund the additional 2 percent across-the-board raise we had hoped to begin July 1, 2012.
• Summer school will not only continue, but it will be expanded in areas where there is demonstrated student demand.
• Faculty sabbaticals, tenure and promotion will be funded.
• Searches for open positions will continue. I have asked Provost Frank Einhellig and the other cost center heads to review all open positions to determine how best to proceed with searches where the cost center has the positions as the highest priority and also has the capacity to fund them.
• We will not have another retirement incentive program for faculty or staff in 2012.
• It is unlikely we will be able to increase the stipend for graduate assistantships as we had hoped.

I will continue to keep you informed, especially as we get more precise information on the state appropriations. Thank you for your continued thoughtful input and support as we work through the budget.

Internal audits

Internal audits were recently completed on two important programs at the University:

• Pride Marching Band
• China Programs

I want to provide some context for you.

It is important to understand what an advantage we have with our office of internal audit. This office reports directly to the Board of Governors and is a key component of our commitment to continuous improvement. The office of internal audit reviews and reports on many University functions each year. The reports provide recommendations for improvement for the good of the programs and the University.

It would be rare — maybe impossible — to have an internal audit (or any comprehensive audit, for that matter) without some recommendations. No one is perfect, and even if we are doing things well, there is always room for improvement. In all cases, the feedback from the internal auditors should be viewed as positive “value added,” not as a negative

Premier programs

As for the programs most recently audited, they are two of our premier programs.

The Pride Marching Band has been and continues to be a signature program for Missouri State. It has touched the lives of many students, has been a source of pride for our alumni and community, and is an excellent example of the kinds of outstanding music and performing arts programs we have at Missouri State.

Likewise, the China Programs distinguishes Missouri State, not only in Missouri, but nationally and internationally. The mission of the China Programs is to develop educational, research and cultural opportunities and exchanges between Missouri State University and its partner universities, and to promote understanding and friendship between the two countries. When the University made the commitment to develop educational partnerships in China, the Board of Governors and administration understood the University was entering uncharted waters, and they were aware of factors such as cultural differences, time required in building relationships and financial challenges. In the end, however, it was determined that the benefits of developing the China Programs outweighed the risks.

As a result, the China Programs are now among the distinctive features of Missouri State University as evidenced by the number of businesses, organizations and educational institutions that seek advice and assistance from Missouri State. The University’s new long-range plan calls for continued development of the China Programs over the next five years. As such, the China Program continues to be a work in progress.

Findings and recommendations

In the Marching Band audit, there were findings and recommendations related to financial aid, enrollment of students and band fees. In the China Programs audit, the findings and recommendations dealt with finances, planning and budgeting, business purpose of expenses, gifts and accounting policies and procedures. We are committed to following the recommendations and improving in all of these areas.

Conclusion

Thank you for all you do to advance Missouri State University. It is a privilege to serve you as interim president.

As always, I will keep you informed of developments as we move through the process.

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.

State appropriations

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.

Budget assumptions

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.

Next steps

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.

Conclusion

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.