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.
