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Office of the President
203 Owens Hall
1104 Seventh Ave. S.
Moorhead, MN 56563
(218) 477-2243

 

Presidentís Presentation to MSUM IFO Meet & Confer
April 23, 2009

Before presenting my formal memorandum of intent to retrench, I would like to discuss the nature of our current situation. I believe that I must express what I understand about the situation and the solutions in order to frame the discussion of retrenchment. To that end, I will address the following points:

  • The prioritization process
  • The perfect storm
  • Timing of retrenchment

The Prioritization Process
Many months ago, we embarked on a prioritization process. Through long hours of hard work by faculty and administrators, the process produced informative reports and good questions. Please know that I plan to use this information as I make my decisions. My decisions would be less accurate were it not for the data collected through the process.

As a leader, I believe that it is my responsibility to adapt my activities and processes as needed in order to accomplish necessary goals. Thus, I adjusted the process as new information became apparent. In this case, I have continued to search for additional cuts in order to consider a few positions for prioritization to search through the Academic Affairs Budget Advisory Process.

Of late, I have heard complaints that the process did not work as agreed or expected. Opinions differ on the relative success of the prioritization process, and I believe that few such processes are ever considered perfect from all vantage points. In addition, I have heard concern over what is perceived as a disproportionate weight of cost return ratios. Please know that all factors are considered. However, fiscal factors must receive special scrutiny in solving fiscal problems.

The Perfect Storm
The situation in which we find ourselves today is the result of a perfect storm. The two fronts that united were our own growing campus structural deficit, currently at $4.95M, and the recession caused state revenue shortfall and subsequent appropriation decrease of approximately $3.8M.

Student credit hour generation has declined each year for the past five years resulting in a decrease in our percent share of the state appropriation. At the same time our revenue was further limited by earlier decisions to hold tuition low and disincentives in our current tuition and fee structure. Meanwhile, fixed unit costs from compensation and utilities continued to rise during most of those years, and connections between resource allocation and revenue generation were too weak to promote fiscal stability. Finally, base budgets were not sufficiently reduced in keeping with the combination of declining revenue and increasing fixed expenses thus resulting in a structural deficit.

Clearly, this situation resulted from a variety of actions and decisions on many fronts and occurred before my watch. What is important now it that I understand what happened and how it happened; and, I will keep it from happening again.

It is counterproductive to cast blame. And, I have seen much too much of that lately.

Our current challenges are huge. Casting blame fractures our best hope for surmounting these challenges -- the dedicated and caring community that is MSUM. I ask you to join me in putting aside past differences, getting past previous mistakes, and committing to the future stability of this university.

We have a fine and dedicated group of faculty, staff, administrators, and students. Our solutions will come from harnessing the power of our combined strengths rather than focusing on our individual imperfections.

Timing of Retrenchment
Like many of you, I would like to have the budget cuts behind me. However, the following variables will be up in the air for a while, thus delaying my final decisions.

  • The budgetary savings resulting from early separation incentives and other resignations

  • The status of Board of Trustee approval of our tuition and fee structure proposal as well as the Board approved rate of tuition increase (July 2009)

  • The final numbers on the portion of our deficit resulting from the state appropriation (late May 2009)

  • The financial impact of the Stateís negotiated contract settlements with the classified bargaining units, and the financial impact of the negotiated health insurance plan.

  • Specific guidelines on use of federal stimulus dollars

  • The impact, if any, of legislatively approved severance incentives

Although some have suggested that I should delay my budget cuts until next year, I cannot do so without jeopardizing both the fiscal recovery of the institution and our efforts to increase enrollment. First, we are required to load a balanced budget this summer. Second, the uncertainty inherent in cutting budgets tends to negatively impact enrollment and thereby revenue.

Nonetheless, I plan to seek input on my plans through the Academic Affairs Budget Advisory Committee (AABAC), which has representatives appointed by the Faculty Association, and the University Planning and Budget Committee (UPBC), which has representatives appointed by all major bargaining units.

Those who are not on contract at the time of meetings in June and July will be compensated for their participation in AABAC and UPBC. I welcome the continued input, but will respect the decision of those who choose not to participate.

Following input from the AABAC and the UPBC, I will present my final budget plan to the leaders and executive committees of all bargaining units on July 16. On that same day, I invite the faculty association to meet and confer regarding the retrenchment. I will delay sending notices of layoff until after the conclusion of the July 21 and 22 Board of Trustees meeting and a subsequent, July, meet and confer with IFO if requested.

This has been a challenging year for all of us. I thank you for your hard work, your input, your patience, and your support. Together, we will continue the traditions of caring and excellence that characterize this community.

 

     

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