University Budget Planning Update
The 2010 legislative session will be under way in two weeks, and already we have begun to present our capital needs in committee hearings. Our request provides state leaders with an honest assessment of our current and future needs in terms of facilities, utilities, and infrastructure, and is strongly aligned with our long-term goals to advance education, research and innovation, and public service. We must continue to advocate for public investment, not only because the ongoing state support we receive cannot realistically be replaced by private support or other funds, but also because maintaining past state investments is the mark of good stewardship and is essential to the future of the University and the state.
Given current economic realities and the state's historic budget shortfall, however, it is now difficult to retain our current budgets, let alone press for stronger state support of higher education. As I stated in my December budget message
, this is not a short-term problem. The University currently faces a near-perfect storm: a severe economic recession with no evident policy solutions in sight, rising costs in several areas of the budget, and growing resistance to tuition increases.
All of these issues weigh heavily on the future of the University of Minnesota. Clearly the pace of our efforts to advance the academic excellence of the University will need to be adjusted during these difficult times, but we must continue to deliver on our threefold mission of education, research, and outreach. Our students and the state need us. We must not abandon our long-term plan and aspirations; indeed, these are the very things that continue to guide us forward when so much is uncertain.
The budget planning guidelines for the next fiscal year have been developed to respond to another likely reduction in the University's state appropriation for next year, as well as cost increases and very modest investments to continue to meet our most critical long-term goals. These guidelines will be distributed shortly to the appropriate budget personnel in the units. In addition, we have updated the guiding principles
that inform and shape our budget planning guidelines in order to address the new normal of reduced public support.
The budget planning guidelines for FY11 represent a beginning framework for units to use as they commence planning. They are designed to address approximately two-thirds of our budget challenge through reduced spending. As in the past, the framework is subject to modification as the legislature begins to act and additional information is available. The budget planning guidelines include the following:
- A 2 percent compensation pool. While this very modest compensation pool may be delivered in different ways to different groups, it enables us to treat all employee groups in a similar way, improves employee earnings to cope with continued rising costs over the long term, and helps us maintain competitiveness.
- Average academic and support unit budget reductions of 2.75 percent to meet internal cost pressures and to respond to a potential additional state budget cut. This is not insignificant, considering that this planned reduction comes on the heels of an average reduction of nearly 5.5 percent required of units to meet this year's budget. The final size of the reductions for the coming year will be differentiated by unit.
- An increase of all tuition rates by an average of 7.5 percent, subject to market conditions. It is important to note, however, that the net tuition increase for all Minnesota resident undergraduate students will be just 4.4 percent after the application of federal stimulus funds.
- Support for current financial aid programs, including the University of Minnesota Promise Scholarship, which helps to ensure affordability for Minnesota students from low and moderate incomes who wish to attend University of Minnesota campuses. This innovative program is the combination of the former Founders Free Tuition program and the new middle-income scholarship program that was begun in this year's budget.
- A modest investment pool to be distributed through the compact planning process, largely in the form of one-time transition funds to help units cope with these challenges while preserving the University's quality and service.
- Payment of the 27th pay period for all eligible employees. A typical fiscal year (July 1 to June 30) has 26 paydays. However, with a bi-weekly payroll schedule, every 11 years we experience 27 paydays in a fiscal year. The financial impact of this anomaly is significant and will be felt in the coming year.
Even with these principles and planning guidelines in place, there is no easy way to absorb the expected state reduction and meet all of our other financial obligations in the coming fiscal year. We must seriously consider all of the budget tools at our disposal. As a result, in recent weeks there has been a great deal of discussion about implementing a furlough strategy. I do not take the notion of employee furloughs lightly, and we are weighing the impact such a plan would have on our various employee groups, colleges, and units versus the impact of deeper cuts to programs and positions on those same entities. Our goal is to address our budget challenges in a way that is as fair and humane as possible, while positioning our employees well in terms of future employment and compensation. As our plans evolve, we will share more details.
Obviously we recognize the gravity of the current economic situation, but it is critically important that state leaders not lose sight of the essential role the University plays in ensuring Minnesota's economic vitality. I also recognize that these are also difficult times for you and your families. By keeping true to our shared values and priorities, I believe we can address the challenges we face. Doing so will not only secure the University's long-term future and vitality, but help to bring a sense of stability and peace of mind to the entire University community. Thank you for your continued hard work on behalf of the University, our students, and the state.
Robert H. Bruininks
Statement Regarding My Personal Health
I want to share with you some personal news that will impact my day-to-day work and schedule in the short term. Recently, University of Minnesota doctors diagnosed me with stage one prostate cancer. We are fortunate to have found it in its early stages, and my condition is highly treatable with an excellent prognosis for a quick and complete recovery.
Without a doubt, it is always nerve-racking to hear the word "cancer" from your doctor, but I am extremely fortunate that the University is home to a world-class cancer center. I plan to undergo surgery on Monday, February 1; as a result, my work schedule may be somewhat limited in February. I have every confidence that the University will not miss a beat during this brief period, and I expect to resume my regular work schedule after a few weeks of recuperation. Please be assured that I will continue to work hard on behalf of the University of Minnesota until my planned transition from the Office of the President back to my faculty responsibilities in June of 2011, as previously communicated to the Board and the public.
Of course, I would prefer not to have this news to share, but Susan and I feel blessed to have such a strong community of support. Best wishes for a healthy and happy 2010!
Robert H. Bruininks
Prostate cancer is a male-only disease and is the most common non-skin cancer among men in the United States. It occurs primarily in men over the age of 50. Information about prostate cancer can be found on the Masonic Cancer Center Web site at www.cancer.umn.edu/cancerinfo/NCI/CDR258032.html
New Year's Greetings ... and Gratitude
The transition to the New Year and a new semester at the University of Minnesota brings into sharp focus the tremendous blessings and responsibilities that come with stewarding our state's most precious assets: young minds and new ideas. All of usfaculty, staff, and studentsplay an essential role in advancing the excellence of this great institution and ensuring that our colleagues, classmates, and communities reach their full potential. While I try to convey my gratitude for your hard work and support as often as I can, that message is sometimes lost in the flood of details and data.
So permit me to take this opportunity to say thank you for all you do, each and every day. The past year has been like no other, and 2010 promises more challenges. While we may disagree from time to time about strategies and decisions, I know we all agree that our work here is worth doing well. Together, we will create a better future for our students, our state, and each other.
Happy New Yearand thanks again for your help in moving the University forward.
Robert H. Bruininks