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Friday, October 22, 2010

Campus Budget Update

In the next several months we will be asked to begin budget planning for the next two years. While we have been given no specific instructions concerning the planning process, there are some things we know which should be taken into consideration as we begin the process.

Current budget projections suggest that the State of Minnesota has a budget shortfall of $5.7 billion for the next biennium. Three years ago UMD received $50 million of its total budget of approximately $200 million from the State. Now our state allocation is $37 million, and it is likely that additional cuts will be made. To provide a sense of scale, the retrenchment that occurred during the current biennium was $11 million. However, that figure significantly understates the true impact on the campus, because we also had to make adjustments to cover increased costs in compensation, utilities, student scholarships, etc. At this time, we do not know how much our additional cuts will be for the next biennium, but we anticipate the cuts will range from 3% to 6% of our operations and maintenance (O&M) budget.

I am committed to broad-based involvement in developing the budget for next year. However, that commitment comes with the caveat that often budget decisions need to be made quickly. To date, we have received no budget instructions from the State or the University of Minnesota system. When we receive those instructions I expect our timeline for response to be brief.

That being the case, I am meeting with the deans next week to begin the budget discussions. In addition, I have invited Richard Pfutzenreuter, Vice President for Budget and Finance for the University of Minnesota, to come to the campus on November 5 and meet with the Chancellor's Cabinet, deans and other administrative leaders, and the Campus Assembly Budget Committee. He will give us his perspective on what are likely to be the budget planning parameters for the University System. The administrators, faculty, and staff who meet with Vice President Pfutzenreuter will then share the information with their constituent groups. Since that meeting follows the November election, the outcome of those elections will likely give us more clarity about the way the State will decide to address its financial priorities.

Soon after the November 5 meetings with Vice President Pfutzenreuter, I will meet again with the Cabinet, the Council of Deans, other administrative leaders, and the Campus Assembly Budget Committee to seek their input and advice regarding budget strategies for the next budget cycle. I will send additional campus budget updates and keep you informed on budget information as it becomes available.

In spite of these challenging and uncertain economic times, UMD's overall financial health is strong.

We have many needs and aspirations for many things that we cannot afford at this time. However, we are fortunate to have a solid financial foundation which will help us respond well to the difficulties ahead.

Please contact me or the campus leaders in your area if you have questions or would like additional information.

Lendley C. Black, Chancellor