FHSU Budget Bulletin

Dec. 4, 2008

The details are not yet clear, but it is certain that falling revenue for state government is going to have a profound impact on our university. Further, the impact will continue into the foreseeable future.

Already, based on recommendations the state budget director made to the governor, we are planning to cut 3 percent from the FHSU budget for this year. (Fiscal Year 2009 began July 1 of this year and ends on June 30, 2009.) By making the decision to suspend action-plan funding this year, we will be able to use one-time money to address that shortfall. Unless the Legislature orders cuts beyond 3 percent when it convenes in January, we will be able to avoid reductions in operating budgets and labor during FY2009.

However, FY2010 presents far more serious challenges. That budget must include the 3-percent cut in base budgets from FY2009 plus additional cuts.

I know that each of you are watching and wondering as you hear media reports about the budget crisis and that you are listening to speculation -- sometimes, wildly irresponsible speculation -- about what the future may hold. In hopes of quelling the rumor mill and giving you solid information, I will issue this Budget Bulletin at least once a month for the foreseeable future. No one can predict with certainty what the future holds for the world economy, the U.S. economy or the Kansas economy in the coming months and years, but I will keep you informed about the facts as they unfold.

On Wednesday, I gave a report to my Cabinet in the morning and to the university community as a whole during a special University Open Forum in the afternoon. This first issue of the Budget Bulletin summarizes that report.

Background

The last time we faced a budget crunch was in FY2002 and FY2003. Budget cuts and unfunded mandates from the state created a shortfall of more than $3 million during that period. Faculty and staff went without raises one of those years, you experienced significant increases in health-care premiums, and we made some fairly small reductions in the operating budgets of offices and departments. For the most part, though, we were able to deal with that crisis without significant cutbacks in daily operations.

Unfortunately, the state of Kansas is now out of balance by an estimated $1 billion. This is sure to create a budget problem of a magnitude we've never dealt with before at FHSU. Business as usual will not be possible. We are all going to feel the changes.

Guiding Principles

It is important to emphasize that we do not know how deep and lasting this budget crisis will be, but as I worked with my administration to develop a plan, it was important to first set down some planning assumptions. We have agreed to keep these four principles in mind as we move forward:

• Serve more students -- We must take advantage of the historical trend that shows growth in higher education enrollments during economic downturns.
• Hold down costs for students -- We must resist pressures for large tuition increases and thereby preserve our position of lower costs than our peer institutions.
• Protect faculty and staff -- To the extent possible, we are determined to preserve jobs, but I must warn you that we may not be able to protect everyone.
• Ask people to do more -- As we strive for continuing growth, greater demands will be placed on faculty and staff in a climate of dwindling resources.

Budget Strategy

We will pursue the following steps to deal with the FY2009 and FY2010 budget shortfalls:

• Suspend action-plan funding -- We will use this money to cover cuts in the current fiscal year.
• Position holds -- I am putting a hiring freeze into effect immediately. No vacant positions will be filled without my direct approval.
• OOE release -- The full 40 percent of the Other Operating Expenses that is withheld from office and department budgets during the first half of the fiscal year will be released in January.
• OOE rollover -- Offices and departments will not receive full OOE funding in FY2010. However, in a departure from our normal policy, all remaining money in their FY2009 budgets will be carried forward into FY2010.
• Summer school change -- In order to create savings in energy costs, there will be no on-campus classes during the 2009 summer term. All summer classes will be taught through the Virtual College.
• Four-day summer workweek -- The campus will be closed on Fridays, Saturdays and Sundays during the summer term. No final decision has been made on whether employees will work four 10-hour days or four 8-hour days.

Finally, I have directed all budget managers to submit plans by Feb. 1, 2009, that address two steps: 1. A plan to reduce their base budgets for FY2010 by 3 percent; and 2. A plan to make an additional 3-percent reduction in their FY2010 base budgets, although the second 3 percent can be a combination of cuts and efficiencies. These cuts are based on the total budget for each unit. Because a university is labor-intensive by nature, we recognize that in many cases it will be necessary to make some reductions in personnel costs in addition to reductions in OOE.

Instead of imposing travel freezes and other cost-cutting directives from the top down, I want to empower budget managers across campus to set priorities and make recommendations for changes that will be most effective and least harmful within their offices and departments.

I know this information is a lot to absorb, but you deserve to know the economic circumstances and their implications for the university as a whole and for you personally. I will continue to keep you informed as these circumstances evolve.

Please remember that many of the details will not be clear until the Kansas Legislature makes decisions in April or May next year.