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President's Remarks & Updates
Institutional Key Performance Indicators
Vision Task Force
University Reaccreditation 2007
Office of the President
203 Owens Hall
1104 Seventh Ave. S.
Moorhead, MN 56563
Balancing the Budget for the Coming Academic
Year and the 2012 Biennium
July 28, 2009
Thanks to the hard work of many of you, we have
closed our budget gap without layoffs and are well on the road to
preparing for the potential 2012 budget cuts. Yes, we are down 5% in
personnel, which is 38.8 FTE or 43 positions. However, we have preserved
the affordable excellence of MSUMís education while also saving jobs.
Further, by not using layoffs, we have retained flexibility and
efficiency that would have been lost through bumping and other
contractual restrictions, and we have avoided the costs of unemployment
The purpose of todayís town meeting is to
provide an update on the 2010 biennium, which began this month, and to
discuss preparations for the 2012 biennium. We will cover the following
- The Balanced Budget for the
- The Board Early Separation
- The Universityís Revenue Engine
- Program and Services Reviews
- Preparation for the 2012
The Balanced Budget for the 2010 Biennium
The projected budget gap for the 2010 biennium is $9.08M. As you recall,
$4.95M of that resulted from our own structural deficit and the
remainder resulted from the state revenue shortfall.
The stateís budget deficit continues to grow. Thus, we have learned
recently of the possibility for another unallotment or a rescission in
the coming year.
Given the nature of the current recession and its impact on the region,
we chose to work as hard as possible to reduce layoffs. In the end, we
were successful due to the hard work of many of you. You reduced
expenses, increased efficiencies, and began the process of increasing
revenue. I cannot tell you how very proud I am of this community for
coming together to save jobs. I do not think any of us could have
forecasted the tremendous success of your efforts.
After the 30 day enrollment numbers are in, I expect that we might have
a very small amount of funds to replace a few critical positions. We
plan to use the Academic Affairs Budget Advisory Committee to advise the
prioritization for IFO positions and a similar committee, comprised of
the other bargaining units, for non-faculty positions.
Unfortunately, given the forecast for cuts in 2012, it may be some time
before many critical positions are replaced. We recognize and truly
appreciate the hard work of so many staff and faculty under these
The Board Early Separation Incentive
Right now, there is a lot of confusion about the new Early Separation
Incentive just approved by the Board of Trustees. Following is a quote
from the Chancellorís Office explaining this incentive.
ďThe purpose of this early separation incentive
program is to give presidents and the chancellor tools to address the
budget issues with targeted reductions. Unlike most
early separation incentives offered to state employees, the use of this
incentive is discretionary on the part of the president or Chancellor
and is not an entitlement for all employees meeting general age and
length of service requirements.Ē
In line with the Board's policy objectives, the
university's implementation plan for the early incentive program is
strategically focused to achieve budget savings. We regret that we are
not able to offer this incentive to all employees who may have wished to
utilize it, but hope all employees will understand that decisions were
made with the goal of strengthening the university's future.
Following is a very brief explanation of how the
incentive will work on campus.
We will use federal stimulus and other
one-time funds to cover the payments to individuals.
We only have a limited amount of such
funds. Thus, we will offer the incentive in four tiers,
with the extent of each tier dependent on how many
individuals took the incentive in the previous tiers.
For example, if after Tier 1 has closed, enough money is
available for Tier 2, we will authorize it. If not, we
will be unable to offer the incentive beyond Tier 1.
Similarly, opening Tier 3 will depend on funds available
after Tier 2 closes, and so forth for the decision on
Individuals in each tier will receive
a letter indicating their eligibility and their
incentive. They will then have 21 calendar days to
respond. In some tiers, we may not have enough money for
all potential takers. In those cases, the letter will
indicate that a lottery may be used to determine who
will receive the incentive. Note that the lottery is
part of the System guidance we have received on the
To be eligible, individuals must be at
least 55 years of age and have a minimum of 5 years of
service. The incentive will be 4% of salary for each
year served up to a maximum of 100% for full time
employees in AFSCME, MMA, and MAPE, and 90% for IFO.
This will be in addition to any other contractually
stipulated benefits. Payments will be made first to the
health care savings accounts and then in cash according
to specific agreements with each bargaining unit.
We are not offering the incentive to
MSUAASF. After a successful early separation incentive
offering in the Spring, we cannot afford to lose any
more MSUAASF employees.
We have planned the following 4 tiers,
although we may not reach the later tiers if there are
many takers in the earlier ones:
Tier 1 AFSCME (only Office
Administrative Specialist [general fund] and Customer Service
Specialist), all MMA, and all MAPE.
Tier 2 Highly compensated IFO (>$72,182) in low cost
recovery departments and all eligible non-college IFO.
Tier 3 IFO with annual base salaries of more than
$96,960 in departments that are not low cost recovery.
Tier 4 IFO with annual base salaries from $90,000 to
$96,959 in departments that are not low cost recovery..
The University Revenue Engine
As we will discuss in the planning for the 2012 biennium, we must
increase our tuition revenue by at least 6% before Fall 2011 or we will
face additional cuts.
We cannot accomplish this increase on the backs of our
students with an extraordinary boost in tuition. Rather, we must
accomplish it through increased enrollment. Specifically, we must
achieve significant increases in new freshmen, new transfer students,
Using Fall 2008 as a base, our FTE, which is directly
related to revenue, was 6,416.3. Each 1%
increase is 64 FTEs and approximately $340,000. We need to increase our
FTE by at least 6% or 384 student FTEs.
The two largest pieces of the university budget pie
are tuition revenue and the appropriation. In the Fall of 2008, tuition
revenue comprised 51% of our total budget, and the appropriation
comprised 49%. As a result of the unallotments, the percent for tuition
has increased while the percent for the appropriation has gone down.
Direct ways in which we increase our student FTE are
Recruitment of new students
Retention of current students
Increased credit generation in
Critical contributors to these direct actions are
Increased marketing and visibility
Increased availability of scholarship
scholarship that helps recruit a student
who would otherwise not come to MSUM
generates ~$4,500 per year in revenue
per year. (30 credits of tuition is
Banded tuition is a new tool. By
encouraging students to take between 12 and 19 credits,
we increase our FTE while also helping students to
complete sooner with less debt.
Program Reviews and Reorganizations
Right now, we are in the midst of a few reorganizations, and I know
there are some concerns. I will try to provide a context and summary of
our current efforts.
First, to provide context, let me recall two of the
four goals that I started with last year. They were
Since those goals were first articulated, our
structural deficit grew as did the stateís recession-caused revenue
shortfall. Thus, our budget gap worsened.
MSUM is a wonderful institution, and I believe
strongly that we must work hard to preserve the availability of this
excellent education. Thus, rather than downsize the institution to meet
the next budget gap, I have chosen to build revenue. To that end, I have
been forced to move more quickly than I might have done otherwise to
stimulate the revenue engine. To make the money we need, we must spend
some money strategically and right now.
Second, I would like to thank everyone for their hard
work in the review of programs and services. The reports have really
helped guide our reorganizations.
Third, it will be 12-18 months before we are finished
with these reorganizations. The new early separation incentive will
provide additional opportunities for reorganization. Further, some units
are just beginning to explore possible collaborations and
Finally, the following is a list of some of the
significant changes or reorganizations at this time:
In the Academic Affairs division, the
masterís programs in PHSHA and Community counseling will
be phased out, admission to the DNP program will be
suspended, and the 3 year accelerated BSN program will
be phased out to enable production of more BSNs through
the BSN completer degree. We will continue annual
reviews by the Academic Affairs Budget Advisory
Committee of all departments and programs with low cost
The Alumni Foundation has asked Gina
Monson to move over to a vacant fundraising position,
which will specifically address mobilizing recent alumni
and increasing scholarship dollars. The Foundation will
also take over the graduate survey.
The search for a Marketing Director is
almost complete, and the search for a marketing web
strategist is underway. The Marketing Director will
report to the Alumni Foundation VP. The web strategist
along with the printing and publications offices will
report to the Marketing Director.
Doug Hamilton is taking on the role of
Assistant to the President for Media and Community
Relations, and will help us to continue to expand our
In Athletics, we are hiring an
Assistant Director for Media and Public Relations.
In the Student Affairs Division, we
have a number of changes or consolidations:
Instruction and Academic Fitness Offices
have moved from the Counseling Center to
the Academic Resource Office in the
Division of Academic Affairs.
The Counseling Center
now reports to the Hendrix Health
We are forming a new Center for
Student Support with the leadership position funded by
MnSCUís Access & Opportunity initiative. Units included
in the Center will be Career Services, Disability
Services, Multi-Cultural Affairs, TOCAR, Womenís Center,
Student Support Services, and GLBT, and the Safe Zone.
Greg Toutges is taking responsibility for Career
Services as well as Disability Services and planning
some special initiatives for undecided students.
AVP Diane Solinger will now supervise
the enrollment management component of Student Affairs,
which includes admissions, financial aid, housing,
orientation and transitions, and international student
services. (Note that international student services will
also work with the Center for Student Support.)
Heather Phillips has
been hired as Director of Housing, and
we are preparing to consult with
students and others on our new
Residential Life Master Plan, which can
be funded through the revenue funds.
Further, we are proud to note that we
have four new living learning
Instructional Media is moving to the
Information Technology unit.
The Post Office will now be supervised
by the Bookstore.
A data practices group is working to
coordinate data collection and use across divisions.
Preparation for the 2012 Biennium
Currently, the state forecasts a revenue shortfall of over $7B,
including inflation, for the 2012 biennium. There is little chance that
the majority of this shortfall will be made up with new revenue (e.g.,
new taxes). Therefore, it is likely that we will face some budget cuts
in the 2012 biennium. To that end, and consistent with the
recommendations of the Chancellorís office to prepare for a potential
cut, we are implementing a multi-faceted strategy to increase revenue,
decrease base budget costs, and maintain or increase quality of service.
This strategy includes the following components:
Increase revenues through increased
effort and accountability in marketing, enrollment
management, fundraising, and residential life with
special attention to increasing new first time freshmen
and new donors.
Realize the benefits of the new
tuition and fee structure.
Continue improvements in the
profitability of the summer session.
Decrease base budget personnel costs
controls on hiring that directly
restrict expenditures to levels
consistent with current and predicted
incentives coupled with replacement at a
lower salary level and/or unit
reorganization for efficiencies, which
would be marked by fewer overall FTE
and/or lower paid positions, and
reorganizations to take advantage of
collocations or collaborations.
Continue focus on efficiency of
expenditures (e.g., department cost recovery ratios) and
Increase the reserve to the maximum
allowed by Minnesota State Colleges and Universities
policy in order to assure a more stable operating
environment during this time of economic uncertainty.
Continue to implement assessment plans
in academic units, and develop assessment plans for
Although it is early to approximate, we think that our
budget cut for the 2012 biennium could be in the $4M per year range.
Given that estimate, we expect to address the cut through:
$2M increase in tuition revenue (6%
increase in enrollment)
$1M base budget cut, primarily from
early separation incentives
$.5M from increased summer session
$.5M of reserve each year as a bridge
if the economic forecast suggests recovery.
The above plan did not include bargaining unit
settlements, which may require us to raise additional revenue. Please
note, however, that all of the strategies we have discussed contribute
to a stable fiscal model that will sustain the university through the
2012 biennium and poise us to thrive over the coming years.
At this time, I would like to thank everyone for their
hard work that made todayís outcome possible. Given the size of our
budget gap, we have achieved a great feat together. We have preserved
this wonderful place and managed to decrease our budget without layoffs.
Because it is our collective hard work that sustains
MSUM, I plan to continue regular town meetings as well as my monthly
meetings with bargaining unit leaders. In the interim, please let me or
any cabinet member know if you have concerns or suggestions.