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« Year-End Budget Update | Main | The Research Infrastructure Investment Initiative »


June 22, 2010

Strategic Reductions Key to Balanced Budget


Dear Colleagues, 

On Tuesday, June 22, the University of Minnesota Board of Regents approved a budget for fiscal year 2011 (July 2010 through June 2011) that included nearly $105 million in recurring and non-recurring reductions. As I outlined in my year-end message, balancing this budget was no small task, and planning for the next biennium will be equally challenging. I'd like to take a moment to summarize what we've accomplished as a community in the face of a 10-year rollback in state funding at the University.

  • We have balanced this budget via careful long-term planning and strategic reduction and reinvestment to protect academic quality. For the coming academic year, we faced a budget challenge of $152 million. Following average budget cuts of 5.6 percent for all academic and administrative support units in fiscal year 2010, all units modeled additional budget cuts of 2.75 percent for fiscal year 2011. Actual budget reductions, however, were targeted and strategic; these differential reductions reflect the academic and support service needs and priorities of our diverse units, colleges, and campuses.
  • We have maintained a strong commitment to affordability. Too often, discussion of the University budget centers on the tuition rate increase, but that is only a fraction of the tuition story. Our budget planning framework included an average tuition rate increase of 7.5 percent, but in fact, no Minnesota undergraduate will pay an increase of more than $450 next year (or 4.4 percent on the Twin Cities campus). Our newly expanded need-based financial aid strategy, the University of Minnesota Promise Scholarship (or U Promise), helped 13,000 Minnesota students from low- and middle-income families last year alone--and since both state and federal law require that the University use much of its federal stimulus support for tuition mitigation, many students have seen the price they pay actually decrease over the current biennium. Thanks to strategic tuition reform, careful cost control, and strong investment in need- and merit-based financial aid, the net price for a University of Minnesota education has increased an average of just 3 percent per year over the past nine years.
  • We continue to leverage state support and the productivity of faculty and staff to garner strong external support. Today state support comprises 18 percent of the University's budget--the remaining 82 percent is generated through the hard work and creativity of talented faculty and staff like you. Our courses and degrees are in demand, and next year, tuition revenue will exceed state support by $159 million. We also garner approximately $700 million a year in sponsored research funding, and last year, we outcompeted many of our peers for federal stimulus research grants. Finally, despite the economy, the University of Minnesota has had several record years of private support, and rates of private giving continue to be strong.
  • We all are playing a role in reducing costs and preserving jobs. I am particularly proud of the willingness of all of you to share in the sacrifices necessary to balance the budget for fiscal year 2011. We continue to consolidate offices and functions, and have reduced a number of senior administrative positions, both centrally and across the state. The approved budget also includes a temporary pay reduction equivalent to 1.15 percent for all employees (and a 2.3 percent reduction for senior administrators). Faculty and staff may also take voluntary furlough days, the savings from which will benefit their respective units. This compensation plan is progressive (higher-paid employees contribute more) and fair (everyone is paid for their work and contributes to the solution), and it provides the substantial and predictable savings required to balance the budget while helping to preserve jobs.
  • We are taking a strategic approach to space and capital planning. While we are able to move forward with essential capital investments such as the Biomedical Discovery District, the University is not focused solely on building new space. We have also deferred or canceled approximately $200 million in planned capital projects; we are taking unused or outdated facilities offline; and we are recommissioning many other older buildings, such as Folwell Hall, for improved energy and operational efficiency.
All of these decisions have been made with an eye on the deep state budget shortfalls projected for the next biennium (fiscal years 2012 and 2013). Make no mistake: we still face the strong potential for significant budget challenges as we move forward, but we should not overlook the tremendous accomplishments of today. Balancing a budget of this magnitude and complexity in the face of competing "goods" for our students, our colleagues, and our mission requires everyone's best effort. I continue to be inspired by your commitment to the University and to each other, and I thank you for your ongoing work to advance our shared values, historic mission, and academic quality.

Sincerely,

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Robert H. Bruininks
President