CU President Bruce Benson shed light on the evolving 2009-2010 CU budget and the actions of the General Assembly in a message to faculty and staff this week.
Dear Members of the University of Colorado Community,
We have a better idea of our budget picture after several changes to our state funding last week at the legislature. We are also examining how mandated cost increases will affect our budget and are assessing the impact of the poor economy on our other revenue streams, including tuition revenue and fundraising.
Governor Bill Ritter has determined that $150 million is the maximum cut higher education can take without jeopardizing Colorado’s share of federal stimulus funding. Beyond that, he has asked the legislature to cut elsewhere. The governor has been a strong advocate for higher education and understands our contributions to the state’s economic health and our role in recovery. We have appreciated his support throughout this challenging budget year.
Last week, his budget director recommended to the legislature that federal stimulus funds be used to backfill $150 million in cuts to higher education (CU’s share is $50 million). We will use stimulus funding, as much as possible, as a bridge to a healthier economy. Yet as I have shared with you before, it is one-time funding, not a long-term solution. The cuts to our base are permanent, dropping it from $209 million to $159 million.
Making up for base budget cuts with stimulus money will keep our funding flat, but will not prevent further cuts. Mandated costs will increase and some of our other revenue streams (tuition, fundraising, investments) have felt the effects of recession. Additionally, when stimulus funding runs out in two years, we face a steep cut. It is prudent for us to begin preparing for that now.
In fiscal year 2009-10, CU will see significant mandated cost increases, including a rise in health/life/dental insurance costs. We will also have costs to bring new buildings on line.
While application numbers show our enrollment is holding its own, we won’t know how tuition revenue will fare until fall. The national trend of declining non-resident enrollment is worrisome. For context, 40 non-resident students attending our Boulder campus account for $1 million in tuition revenue. Small enrollment drops hurt us.
Our fundraising is understandably down from last year. Interest earnings on our investments are also down. Because a number of our endowments are “under water,” they are not distributing cash to the university. Research funding and auxiliaries (residence halls, parking, etc.) appear to be stable.
All this means it is responsible for us to make reductions now so we can position ourselves for sustainability in the near future and beyond. Stimulus money helps, but it does not cover our funding shortfall or address future funding difficulties. We will phase in cuts over the next two fiscal years.
In keeping with our plan we have been working on over the past year to keep the university sustainable, we have cut vacant positions or not filled them, and we will continue to do so. We are also examining how the university is structured, particularly how system administration interacts with the campuses, to determine the most effective and efficient model. Additionally, our Task Force on Efficiency has already identified savings and we will continue to look for more.
Making cuts is always difficult, particularly in an enterprise like ours that is heavily personnel dependent. But it is the right thing to do to ensure the overall health and long-term well-being of the university. We must sustain our academic and research enterprises. Our budgeting is campus-based, so the campuses and system administration will make announcements about reductions individually, but no later than mid-May.
There are still many questions about the possibility of furloughs and/or pay cuts. The state must make some decisions about classified employees that will guide what we do. We expect to learn more from the state soon. Until we do, we cannot make informed decisions regarding furloughs and/or pay cuts.
I would issue the same caution I have in previous communiqués: Our budget is a moving target still subject to change by the legislature. While we are reasonably confident the numbers above will hold, lawmakers are still searching for ways to balance the state budget and looking to the next revenue forecast (June 20) for guidance. Regardless, we will proceed with cuts we have been planning.
These are trying times for our state and our university. Our work is critical to Colorado’s long-term health and future prosperity, so we must make every effort to preserve our core academic and research missions. Yet budget realities require that we make hard decisions about how we operate. I am confident that those decisions will allow CU to emerge from these challenging times and continue our 133-year legacy of serving our state and nation. If you have feedback, you can e-mail firstname.lastname@example.org
Bruce D. Benson