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University Reaccreditation 2007
Office of the President
203 Owens Hall
1104 Seventh Ave. S.
Moorhead, MN 56563
Budget Challenge and Recovery
May 13, 2009
In today’s town
meeting, we present material on the budget challenges along with a
description of the plan for stabilization and recovery. More specific
details on portions of the plan are available on recent budget and
planning documents on this web site.
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
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, resulting in a
It will take us at
least a few years to recover from the state appropriation front of the
storm. Tax revenue funds state appropriations. Thus, if the economy
recovers in Year 1, the tax revenue rebounds in Year 2, and the
appropriation would hopefully catch up in Year 3. The most recent state
economic forecast suggests both a slow recovery and a potential
additional problem for the 2012 – 2013 biennium. See
Stabilization and Recovery
Our approach to fiscal stabilization and recovery has been multifaceted.
In the following paragraphs, I outline our strategies under the
categories of communication and information gathering, budget reduction,
improved fiscal processes, improved revenue generation, and planning for
Fiscal Year 2012.
- Starting in September, we began
regular meetings with bargaining unit leaders and a
series of regular town meetings to discuss budget issues
with the campus community. These meetings, normally held
at three times during a day, were well attended and
accompanied by a web posting.
- We initiated a campus wide
review of all academic, support, and administrative
- In addition, we charged an
energy task force and have already implemented some of
- To address part of the problem,
we initiated a review of our tuition and fee structure
through a multi-divisional task force including
representation from the student senate and the faculty
- We initiated a hiring freeze.
- We developed and are in the
process of implementing a plan for retrenchments and
layoffs. The plan uses the federal stimulus for one-time
costs from layoffs and separation incentives, resolves
the structural deficit, and uses information from the
program review process to selectively eliminate or
reduce programs and to remove duplication.
- We will start FY 2010 with a
balanced base budget rather than deferring cuts through
the use of one time funds. However, stimulus dollars
will be used for one-time costs relating to layoffs and
early separation incentives.
Improved Fiscal Processes
- With help from Chancellor’s
Office staff we developed a revised tuition and fee
structure that removes some current disincentives. The
proposed structure will convert some fees to tuition,
spread fees over the first 12 credits, band tuition from
12-19 credits, and charge differential tuition for some
programs. The proposal, which was supported by the
student senate, is scheduled for Board review.
- We restructured our summer
school schedule and process to significantly increase
- We changed our fiscal processes
to institute stronger spending controls, use more
conservative revenue assumptions, and better connect
resource allocation to revenue generation. Specifically,
we will continue to examine academic programs for their
cost recovery ratios; we will use credit generation and
enrollment data as part of the process of prioritizing
resource allocation; and, we will not hire ongoing
positions without firm evidence of actual, ongoing
Improved Revenue Generation
- To address the enrollment
issue, we enlisted consultants from Noel-Levitz for a
focused review. They identified clear areas of concern
and needed improvement. We are addressing those areas.
- We have added additional
oversight to enrollment management.
- We are investing in the
following positions specifically related to increasing
enrollment: a marketing director, a webmaster for
marketing, a Twin Cities recruiter, and one FTE for data
management related to enrollment management.
Planning for Fiscal Year 2012
- Recent state economic forecasts
suggest the potential for an additional cut in the state
appropriation in fiscal year 2012.
- By balancing the base budget
for 2010 and using stimulus funds only for one-time
purposes, we have removed the deficit and decreased the
budget challenges going forward to 2012.
- We are planning to increase
enrollment and therefore tuition revenue by 2% by Fall
2010 and an additional 2-4% by Fall 2011.
- We are planning to maximize the
University Reserve by Fall 2011 in order to provide
bridge funding until the economy recovers and the state
- We plan to continue strong
fiscal processes and controls in order to anticipate and
avoid future deficits.