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Thursday, January 11, 2018

Budget Update and Deficit Reduction Model

Good afternoon,

I hope you all had an enjoyable and refreshing semester break. It sure feels good to have student energy back on campus. Over break I was able to get away and spend time with family, get schooled in Legos by my 7-year old grandson, and reflect on the last semester while looking forward to this new one.

Thanks for those of you who were able to make it to the budget town hall meetings today. This email is intended to recap that conversation and provide you access to the information presented.

We have come a long way in balancing our budget, from the $9.4 million recurring structural imbalance at the end of fiscal year 2014 to the $3.2 million imbalance we anticipate at the end of this fiscal year. But, we still have difficult work left to do.

This information relates only to the Operation and Maintenance (O&M) budget. This budget consists of tuition revenues and state allocations coming to us from the University of Minnesota leadership. This budget funds most of our salaries, instructional costs, and other general operational costs.  Not included in this discussion are our fee-based budgets, which fund activities like dining, residence halls, the bookstore, etc. The fee-based budgets are balanced, and for the most part, we are required to keep them separate from the O&M budget. We charge various fees for services, and we spend those revenues on the items for which we collect the fees.
 
It is important to emphasize that UMD is not broke, and we are paying our bills. We have large carry-forward accounts, and we receive ongoing support from the University of Minnesota system. There are many positive signs of our progress with increased enrollments, new and innovative academic programs, new facilities, and the ongoing excellence of our students, faculty, and staff. At this time, our Spring 2018 enrollment is up about 140 undergraduates and about 25 graduate students over this time last year. Our problem is that we have a structural deficit caused by our recurring expenses exceeding our recurring revenues.

The Deficit Reduction Model we are now sharing with you reflects our current plan to resolve the budget deficits within the next five years, and hopefully sooner. Please pay particular attention to the footnotes in the model. As well, Steve Keto has prepared a narrative to help explain the model. This and additional budget information can be found on the Vice Chancellor for Finance and Operations website.

In spite of the positive signs I just mentioned, the budget issues we have are real and we must resolve them. This model I am sharing with you is a guideline for how we will reach our goal of balanced budgets. We are now beginning to develop strategies, using good data and our strategic goals as guides. Your deans and directors will be working with you over the coming weeks to determine how we can best reach this 2023 balanced budget vision.
 
I must emphasize that the model is based upon our best assumptions at this time. It is also based upon our ongoing dialogues with President Kaler, Senior Vice President Burnett, and his financial team. The vice chancellors and I have had numerous frank and detailed conversations with our system leaders over the past several months, and Vice President Burnett and his team were at UMD Monday and held an all-day finance academy for our campus. 

I was frustrated with the way UMD's budget from the system unfolded last spring. However, I was pleased that President Kaler, Senior Vice President Burnett, and the University's budget team responded to our advocacy for new investments and allocated almost $2 million in recurring new revenues to UMD for Fiscal Year 2018.  These new investments included, among other things, new mental health counselors and $1 million for our strategic enrollment management initiatives. In addition, they allocated $1.7 million in nonrecurring repair and renovation funds for the UMD Sports and Health Center project and $500,000 for the Coleraine Energy Labs water line replacement. The UMD administration will continue to advocate for additional state revenues, both recurring and nonrecurring, as we continue to work toward resolving our budget structural imbalance and sequestered deficit over the next few years.

Each fiscal year going forward, we will adjust the Deficit Reduction Model and make decisions about what reductions need to be made based upon the changes in both recurring revenues and recurring expenses. For example, we are now planning for $600,000 in recurring reductions for Fiscal Year 2019 that will come from Academic Affairs, Student Life, Finance and Operations, and the Chancellor's Units. 

We anticipate there will be additional reductions of $1 million to $1.5 million each year in these areas for FY 2020-2023. However, these amounts will change up or down depending on changes in recurring revenues and expenses and depending on the multi-year approach we take to solve this $5 million problem. At the same time, we are planning to eliminate the nonrecurring sequestered deficit.
 
It is important to emphasize that we will not stop innovating and offering an outstanding education at UMD as we resolve these budget issues. Every day I see much excitement on campus, around the state, across the nation, and in many parts of the world about the growth and excellence of our programming and the incredible accomplishments of our students. Our future is bright, and we are well positioned to meet these budget challenges, as well as other challenges that may confront us.

This will not be easy, but we will get it done working together and staying focused on what is best for our students and for our long-term success.

Thank you for all you do for UMD.

Sincerely,

Lendley Black
Chancellor

Tuesday, December 12, 2017

Town Hall Meeting, January 11, 2018

Dear Colleagues,

As we near the end of the semester, I'd like to get an event on your calendar.  On Thursday, January 11, the Vice Chancellors and I will hold campus town hall meetings to overview our current and projected budget. At these meetings, we will give you an update on current financials and an updated deficit reduction model with future projections through fiscal year 2023.  Please save this date on your calendar and join us at one of the sessions.

Thursday, January 11, 2018
Kirby Ballroom
1st session: 9:00 - 10:00 a.m.
2nd session: 1:30 - 2:30 p.m.

Have a great finals week and a safe and restful holiday.

Best wishes,

Chancellor Black

Monday, November 20, 2017

Engagement Survey Response Rates and Gratitude

Dear colleagues,

Last month our campus participated in the University of Minnesota employee engagement survey. I want to thank those of you who took the time to complete the survey. UMD had an impressive overall survey response rate of 74%. That breaks down to a response rate of 67% from faculty and 78% from staff.  

Here is a breakdown of response rates by college/unit:
Chancellor’s Units: 88%
Student Life (VCSL): 83%
Finance and Operations (VCFO): 56%
Academic Affairs* (EVCAA): 75% (83% Staff 67% Faculty)
LSBE: 81% response (Staff: 87% Faculty 78%)
SCSE: 63% response (Staff: 79% Faculty 55%)
CLA: 75% response (Staff: 91% Faculty 73%)
CEHSP: 74% response (Staff: 78% Faculty 73%)
SFA: 64% response (Staff: 68% Faculty 62%)
(*Includes colleges)

This is an important measurement tool that provides critical feedback for UMD. I am very proud of the work that has occurred across campus as a result of previous survey results. Early next semester we will get the 2017 results. I look forward to continuing to work together to address the challenges and opportunities identified.

Thank you for sharing your valuable input.

Have a wonderful and safe long Thanksgiving weekend.

Sincerely,

Lendley C. Black
Chancellor

Monday, October 23, 2017

Driven - The Campaign for the University of Minnesota Duluth

Dear Colleagues,

During homecoming last week, I felt tremendous pride and excitement about our students, our alumni, and our entire campus community. Not only was our campus filled with activity, but across Duluth you could see Bulldog pride on full display. I know it was a huge undertaking for faculty and staff, and I want to thank all of you involved in the planning and execution in what was an extremely successful homecoming celebration. Watch a short and touching homecoming video.

The week culminated Saturday evening as we formally launched the public phase of our capital campaign entitled Driven - The Campaign for the University of Minnesota Duluth. We are seeking the adventurous and the generous as we bring together support from our alumni, friends, and campus community to further help us fulfill our mission.

We are joining forces with our philanthropic partners and friends to raise $120 million and strengthen our role as the region's premier public research university. The campaign will focus on these four areas:


  • $42.5 million in student support
  • $27.5 million in experiential learning
  • $30 million in faculty & research
  • $20 million in outstanding facilities
I am pleased to share that we are well on our way, having raised $84,839,441 million or 71% of our goal thus far. Along with this, I am extremely pleased to announce that we have secured a generous gift from Kurt & Beth Heikkila to name our new building the Heikkila Chemistry and Advanced Materials Science Building.

Please take a minute to watch this inspiring Driven campaign video. You can also learn more about the campaign at d.umn.edu/give.

I'd like to thank the development team for their impressive work and leadership throughout this campaign, and I invite you to join us in this important effort.

Best wishes,

Lendley Black
Chancellor

Thursday, October 19, 2017

Update on Enrollment and Legislative Bonding Request

Good morning,

It is homecoming week, and campus is filled with activity. I hope you'll find time to experience a number of events. You can find more information on the homecoming website

I'm pleased to report that our fall 2017 total student headcount is 11,168. This is our largest campus enrollment since fall 2013. The official fall undergraduate enrollment headcount is 9,199, which is an increase of 1.6 percent from last fall and three percent from fall 2015. Thank you to everyone who contributed to creating a welcoming and supportive community for this new freshman class of 2,275, our largest freshman class since 2010.

Improving the success and persistence of our current students remains a priority and provides one of our best opportunities to stabilize and grow our undergraduate enrollment. I encourage everyone to consider actions at course, program, unit, and campus levels to further support student engagement and learning. Your SEM Subcommittee member can guide this conversation. It is always worth reminding ourselves that one of the strongest indicators of persistence is whether a student can identify a faculty or staff member who cares about their individual success. This is a role that all of us need to play.
 
Recruitment of our fall 2018 new students is already well underway. Today and Friday, the Office of Admissions will welcome 2,000 visitors for our annual Campus Preview event. This is a campus-wide effort to help prospective UMD Bulldogs learn more about the tremendous academic and co-curricular opportunities we offer at UMD. Please help welcome these visitors to campus and if you see anyone who looks lost, please help them find their way to the Kirby Ballroom.

Last week, the Board of Regents approved the University of Minnesota's 2018 legislative capital request . The emphasis this year is on asset preservation with a strategy to not ask for any new buildings, but to focus on renovating and preserving existing facilities. The request includes:
  • $200 million in HEAPR (Higher Education Asset Preservation and Replacement); targeted UMD facilities in this project request are Chemistry, Humanities, and Ward Wells Field House.
  • $10.5 million in Greater Minnesota Academic Renewal, which is a package for system campuses to renew existing space. The targeted project for UMD is AB Anderson.
  • $24 million for Pillsbury Hall on the Twin Cities campus.
  • $4 million for Glensheen, in the form of a challenge to match state funding with outside support. The Glensheen request was added at the last minute due to the critical state of the property and expressed interest from the legislature.
If you have questions about these items or any other matters, please do not hesitate to contact me or one of the Vice Chancellors. 

Happy homecoming! Go Dogs!

Lendley C. Black
Chancellor

Tuesday, October 10, 2017

Supporting You In Your Work At UMD

Dear Colleagues,

Your feedback on your experience working at UMD is very important to me and our leadership team. The University will conduct its fourth employee engagement survey this fall and we will begin a new cycle of discussing the results and taking action based on our survey results. This year's survey will allow people who work in groups where five or more faculty or staff complete the survey to see their results, so more people will see survey results that reflect the environment within smaller departments.

Since the 2015 survey, our campus has made a number of changes to how we operate based on your feedback and responses. Individual units have implemented changes based on their specific responses. As a campus, our actions based on the survey results include:
  • Shared our employee engagement results more broadly
  • Implemented a new staff orientation
  • Hosted informal gatherings to bring faculty and staff together in order to foster better relationships within the campus and to enhance collaboration
  • Created a recognition program to acknowledge years of service and employee awards
  • Implemented unit level awards to recognize the hard work done by employees across campus

As we look around, there are many other efforts that support engagement every day that your direct manager or supervisor may share with you over the next few weeks.

When you take the survey, you'll find two open-ended questions at the end which are very helpful to me as a leader who may not be aware of your day-to-day work experiences. Open-ended responses are redacted by Korn Ferry Hay Group so no personally identifiable information is shared with me, but your responses provide important ideas for improvement within UMD. The questions are, "What is one thing that has been done to help you succeed within your department?" and "What one thing, if changed, would enable you to be more successful in your work?" If you prefer, you may pick a more general response from the drop-down menu which will still provide me with important information.

If you have any questions, please reach out to me, one of the Vice Chancellors or Karna Kurtz in HR/EOAA.

Sincerely,

Lendley Black
Chancellor

Thursday, September 21, 2017

Update on Campus Budget & FY18 Allocation

Dear colleagues,

I hope your school year is off to a successful start. Like me, I'm sure your schedule has suddenly become very full. There is no shortage of activity around campus and taking a minute to slow down and enjoy it always helps remind me how important our work is. 

Last week, the Vice Chancellors and I met with the Strategic Planning and Budget Committee and my Senior Leadership Council to discuss our budget allocation and next steps. At the end of August, I received UMD's final budget allocation letter from President Kaler for the current 2017-18 fiscal year. With that information, I am providing an update on our budget projections.

Our campus made significant progress in addressing our budget deficit last year. We identified $2.3 million in recurring reductions that we are implementing this fiscal year. At the time, those budget reductions along with some one-time budget actions, would have brought our projected fiscal year 2017-18 (FY18) annual structural imbalance (recurring budget deficit) down to $1.3 million. From there, we looked at changes to the budget based on tuition, our budget request, state funding, U of M allocation, and expenses. 

This current fiscal year, our O&M (state) allocation has increased by almost $2 million which includes $878,000 in one-time funds for repairs and renovations. The recurring amount of $1.1 million will help fund two additional mental health counselors to provide critical support for our students. It will help fund a scholarship match and Federal Perkins Loan financial aid program. This funding will also provide nearly half a million dollars to address a portion of our structural imbalance and other increased costs. In addition, our positive enrollment growth and one percent tuition increase has resulted in nearly $1.7 million in additional resources. 

Another positive outcome of our budget allocation is we will be able to fund the Sports and Health Center renovation and enhancements. This funding comes through a mix of state-allocated HEAPR funding, one-time U of M funds, private gifts, and UMD. That project will go to bid this fall with work scheduled to begin during spring break in March. 

However, instead of ending FY18 with a $1.3 million structural deficit, the actual year-end deficit will be closer to $3.2 million. The reasons for this higher than anticipated deficit are FY18 merit pay, increased fringe benefit costs, growth in the cost pool, and lower than anticipated state allocation. Our projected structural imbalance at the end of fiscal year 2016-17 was $4 million, and we are still making progress by reducing that recurring deficit to $3.2 million. However, increased costs have kept us from making as much progress on the deficit as we anticipated. You can read the complete FY18 UMD budget allocation letter. 

Adding this additional $3.2 million annual shortfall to the FY18 sequestered deficit (cash balance deficit) means that the projected sequestered deficit will be almost $11 million by June 30, 2018

This leaves us in a difficult situation and I'm sure that it is as frustrating for you, as it is for me, to not see more progress being made on reducing our deficit. The U of M System did recognize the reductions we made, and we will continue to work with President Kaler and his team at resolving the structural imbalance and sequestered deficit. We will continue to be advocates for UMD, ask tough questions, drive innovative solutions, and work to ensure as minimal negative impact on our students as possible.  

The next step in the process is for Vice Chancellor Steve Keto to model an updated budget resolution plan. Then we will provide more information on our timeline to balance our deficit, targeted reduction amounts, and begin work at identifying savings to be implemented in fiscal year 2019. 

Thank you for your commitment to UMD. Please feel free to contact me or any of the Vice Chancellors if you have questions. 

Sincerely, 

Lendley Black
Chancellor