Update to Colorado State University Community, October 2, 2009
Colleagues and Students:
My apologies in advance for an overly long message, but I wanted to update campus on a couple of important issues:
- In talking with deans, faculty, and others, I’ve heard very strong support for the work Rick Miranda has done as interim provost and executive vice president, and I certainly echo this support. But as Rick himself has often reminded me, unless there are compelling reasons to the contrary, our University is best served by open, competitive searches. We have decided to move forward with an open search for a permanent provost and executive vice president, and I’ve appointed a search committee — meeting for the first time today — that is representative of all of our employee groups, students, Council of Deans, Cabinet, all of the academic colleges, and the University Distinguished Professors and University Distinguished Teaching Scholars. Senior VP Tom Gorell has agreed to serve as chair. I anticipate the search will move rapidly, and that on-campus interviews will be conducted when faculty and students are on campus so our entire community has an opportunity to engage in the process.
- Joe O’Leary, Dean of the Warner College of Natural Resources, has decided to step down as Dean and return to the faculty, effective November 1. Please join me in thanking Joe for his service and commitment to advancing the excellence of WCNR. We wish him only the best as he resumes his faculty career, continuing the important scholarship and research program he established during his previous tenures at Texas A&M and Purdue.
Now I’d like to shift gears and focus in some detail on another issue. After talking with quite a few people over the past couple of weeks, I think it might be useful for us to take stock of what we do and don’t know about the University’s current budget situation. For those who don’t want to read any further, this long-winded e-mail could be effectively summarized as, “We don’t know anything new and we didn’t know much before.” But in the midst of much uncertainty, let’s do what we can to model various scenarios and plan as strategically as possible.
Many of you have likely seen in the papers that state revenues dropped again for the first quarter of the current fiscal year, and some legislators have mentioned again the “defunding” of higher education. While revenue declines and pessimistic comments always garner headlines, there was no surprise in these numbers as state revenues typically lag national economic trends by some time. While we may all enjoy reading that the national recession may be at or near its end, the economic ripple into our state’s revenues isn’t over yet.
It’s not completely clear what impact these latest revenue shortfalls will have on us at CSU. You’ll recall that Colorado has applied for a waiver under the federal ARRA legislation that would allow an additional set of cuts to higher education. For those of you who have had the good sense not to commit these numbers to memory, the state first cut higher ed by the maximum amount allowed under ARRA legislation — that brought a $30M cut to CSU out of the $130M we receive from the state of Colorado. The waiver the state has requested, if granted, would result in an additional $14M-$16M cut to CSU, and we began planning around that possibility a few months ago. The amount of that “2nd cut” may or may not really matter to us because the ARRA legislation essentially would require the state to restore this second cut in the FY11 budget. Under this scenario, the 2nd cut becomes a backroom exercise that’s a big deal for us in the Admin Building but should be transparent to the campus. This would leave us focused on a total reduction of $30M that we’ve already begun to attack and could be managed with relatively small annual reductions over the next 3 years.
Enrollment increases, tuition policy, improved state revenues, and enhancements to our non-traditional revenue sources would all, when coupled with cost containment, dramatically mitigate the cut. One could legitimately look at this scenario and suggest that our best course of financial action is to minimize our up-front cuts and see what the future holds.
On the other hand, I’m reluctant to believe that a group of very smart lawyers won’t find some exception that would allow the 2nd cut to remain after the backfill is finished. If this were to happen, we’d be dealing with a $46+ M total cut that would necessarily push our annual cuts higher. One could legitimately look at this possibility and reach the conclusion that our best course of financial action, rather than minimizing up-front cuts, is to begin to aggressively cut our expenses, even with the understanding that this would cause harm to our University in at least the short term.
It’s precisely because of this wide range of potential outcomes that Interim Provost Miranda and I are and will be working with Cabinet, the Council of Deans, the Faculty Council Committee on Strategic & Financial Planning (which includes student, state classified, and AP representation), and ASCSU leadership to model a wide variety of financial scenarios over the coming year. In general, these will fall under the heading of “planning for the worst,” even if we realistically think that we’re not likely to wind up on the worst end of the spectrum of outcomes. It still makes sense to be prepared.
To this end — and to kick-start a necessary dialogue about options even in the face of considerable uncertainty — we’ve asked units to think about a 6% reduction for FY11 (July 2010-June 2011). This % is applied to a budget number assigned to each unit that includes only the portions of the education & general fund budget that can be responsibly reduced — for example, utilities and on-going benefit costs are exempted. This is clearly at the high end of what an annual reduction would need to be, and I’m hopeful it can be far less. We’ve also asked everyone to consider what we see as the very far end of the worst-case scenario: similar cuts continued for 3 years. Under this scenario, we asked the question: “If you had no choice but to take a 17% cut (a scenario based on our worst-case projections) and you had to take it all in one year, what would you do?” Clearly there will be no easy answers to this question and, equally clearly, our University would be worse off in terms of quality and in a programmatic sense were we forced to institute most of the choices your departments would have to put on the table under this scenario. Our purpose in asking people to consider this scenario is not to signal in ANY way that we really think we will be looking at cuts of this magnitude…but because we believe that having asked and answered the question in a planning format will allow us to frame a context for our discussions and choices.
I want to try and be very clear on this point. We have a responsibility to plan for all contingencies, but I also understand that the current mix of uncertainty and worst-case scenario planning creates exceptional fuel for the campus rumor mill. I will be doing everything I can to keep you accurately informed about the budget as we learn more.
It may also be useful to share a couple of other observations with you. The Colorado Commission on Higher Education, with the full support of the Governor, has launched a long-term strategic planning exercise for higher education that aims to address the overarching needs of our state’s colleges and universities given current budget realities. The planning process is designed to produce a report by November 2010. Many people believe this will serve as the foundation for a long-term funding strategy for Colorado’s public higher education system, possibly including some form of November 2011 ballot initiative. Many legislators are increasingly concerned about a long-term solution to the state’s fiscal situation and chronic under-funding of higher education, and I think this is a good sign. Our Board of Governors is keenly aware of the budget situation and the Board’s finance committee is very active in understanding our University budget processes and the pros and cons of various choices. This level of Board engagement is a very positive sign.
That annual Planning & Budgeting process remains the next step in our financial future because we are not anticipating mid-year cuts in the current fiscal year — we believe any additional cuts would come with backfill from the state’s ARRA pool. This means that the Planning & Budgeting process will provide the fullest opportunity for all members of our campus community to engage and weigh in on the budget discussions, and I encourage all of you to do so.
Finally, I think it’s useful to keep our eye on the broader perspective. We’re talking about $30M-$46M in reductions over the next four years on a total university budget of greater than $800M. While the cuts come in areas that support our core educational mission, we are not without alternate resources on which to lean, and we are examining all revenue sources to see what options are available to us. This magnitude of cuts, coming at the end of a few years of solid budget growth, is nothing like the magnitude faced by our colleagues in places like California, Arizona, and Nevada. We will clearly be able to face whatever the future holds and move forward.
As I said in my inauguration remarks, our University has a legacy of transformation in the face of challenge. I remain firmly convinced that so long as we never lose our focus on excellence in the fundamentals of our mission, we will — over time — fulfill our responsibility to make Colorado State University a stronger University, despite the challenges of our day.
Thanks for your commitment to CSU and our mission. I’m inspired by it and grateful for your support.