I regret to inform you that despite our best efforts to avoid this eventuality, the University will need to retrench tenured faculty in order to address our budget deficits. I doubt that this news will come as a surprise to you, given the extensive conversations that have occurred on campus and at meet and confer concerning the serious nature of our budget situation. Still, I recognize the gravity of this announcement and that this news cannot be welcome. I have and will continue to consult with the Chancellor and his staff regarding this most serious of decisions.
Let me briefly recap some of our prior discussions. At the January 15th meet and confer we discussed the deficit and the need for a prioritization process to inform retrenchment. More recently, at the April 9th meet and confer, I provided the Faculty Association with a handout describing the overall budget issues. It is attached in Appendix A. At this time, I also provide Appendix B dealing with the history of decreasing enrollment and appropriation share, Appendix C listing frozen positions, and Appendix D showing trends in enrollment and credit generation over the last five years. Additional appendices relating to retirements, positions, and other personnel information are included in supplemental hard copies.
The frozen faculty positions represent all faculty positions for which funding exists at this time. As I indicated at the January 15, 2009 meet and confer, all tenure stream positions will go through the Academic Affairs Budget Advisory Committee process in the future.
Since the time of the Appendix A handout at the earlier April Meet and Confer meeting, we have learned that our tuition revenue shortfall exceeded the amount previously projected. The current shortfall is $833,396, which is almost 3% of tuition revenue. Thus, this amount not only adds to our current deficit itself but also requires a downward change in the tuition revenue assumption underlying the previously projected 2010 budget. As a result, the current structural deficit, including tuition revenue shortfall and revised tuition revenue assumptions, is now $4.95M. In addition to our own deficit, we expect a state appropriation decrease of approximately $3.8M, with the exact amount depending on final action by the legislature. Thus, our total deficit is approximately $8.75M.
Following are some actions already taken or underway that will address the deficit:
Although I listed the unalottment in previous presentations, I do not list it now. In reviewing our cuts, I have determined that many were one time rather than base. Thus, they do not contribute to the necessary base reduction.
Other divisions are continuing their budget reductions at this point. However, they, too, are waiting to see the totals of early separation incentives before proceeding further. I expect a contribution of at least $.45M from this effort. Even with this addition, the total of the above actions and possibilities is not sufficient to address the deficit of approximately $8.75M. Further, it is important to note that we are required to prepare a balanced budget this summer.
I should note that some hiring is continuing in the revenue fund areas and in positions related to growing enrollment and better managing our resources. Specifically, we are in the process of searching for a housing director and area coordinator. These positions are supported by increases in student fees and do not impact the general fund. We are searching for a marketing director to help us better market the university and attract students. In addition, pending further work on enrollment management with Noel Levitz, we will search for an additional twin cities area recruiter. We will also add .5 to 1 FTE in the area of data management to support both enrollment management and better resource monitoring. The latter positions will be supported by the general fund. However, it is my intention to ask for support from the Chancellor’s Office for the first two years of those positions.
Although I had hoped to have more specifics by this time, the following key data points are still up in the air and will be needed to determine the exact extent of our required retrenchment.
At this point, it is clear that we will need some retrenchment in order to balance the budget. The actual amount will be determined by the above variables. We plan to continue to examine cuts and formulate plans throughout the months of June and July. We will again ask the assistance of the Academic Affairs Budget Advisory Committee and the University Planning and Budget Committee in providing feedback to our intended budget plans. Consistent with the requirements of the IFO Agreement, no department or program, as applicable, in which the retrenchment of tenured faculty will occur will be permitted to hire or retain adjunct, fixed-term, non-tenure track or probationary faculty.
Following is a tentative schedule for the remainder of the process:
May 15-June 2
June 3 & 4
July 8 & 9
July 16 AM
July 16 PM
This Year and the Next Four Years (Definitely Not To Scale)
Plan (From April 7 Town Meeting)
Stimulus money is likely to replace part of the decrease in state appropriation during the coming biennium. However, it is only one time and will not continue into the next biennium. Thus, cuts are still necessary. Fortunately, the stimulus can offset some of the tails on the reductions. Following is an explanation of our deficit and plan.
Current Estimated Total Deficit $8.2 – $9.2M
Planned Base Budget Correction $8.2 - $9.2M
Use of Stimulus Dollars (one time)
Building the Revenue Engine and Planning Forward
Even as we decrease our infrastructure, we still must attend to our revenue engine. Increasing enrollment is critical and may be somewhat challenging given our recent media coverage of the flood. To that end, we are planning to invest in a marketing director as well as additional recruitment activities targeted to the Twin Cities metro area.
In the future, resource allocation will be much more closely associated with revenue generation, thus decreasing the probability of a structural deficit.
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