Dear Colleagues,
As the month of January comes to a “frosty” close, the normal biennial U of M budget process is in full swing. The vice chancellors and I are working to develop UMD’s budget compact request for system leadership. Our proposal will overview UMD’s current financial situation and identify several challenges and opportunities we intend to prioritize. We will meet with system leadership in early March to go over our budget compact request letter. Depending on many factors, including the state legislative action on the University’s request, we will likely hear back from system leadership on our budget allocation for the 2023-2024 fiscal year later this summer.
After years of good work, we balanced our budget before COVID. During the pandemic, we were able to utilize federal COVID support to manage financial challenges. However, we can expect and should plan for a budget shortfall next fiscal year. While the exact amount is uncertain at this time, actions to address that shortfall will be necessary.
Since 2018 when our total enrollment was nearly 11,200, we have witnessed steady enrollment declines. UMD now has just under 9,700 undergraduate, graduate, non-degree, and professional students. While the pandemic played a significant role in these declines, long-term consequential challenges affect the marketplace from which we primarily draw our students. As I told the Board of Regents on December 15, UMD competes for students with other regional public and private universities in a severely oversupplied market. The demographic upon which we have traditionally depended will soon begin an extended, decade-plus decline. While our cost of living and fees are extremely competitive, our tuition is high relative to our primary competitors. In fact, our tuition is closer to the average for Big Ten public flagships than it is to the average for public regional schools in MN, WI, or ND.
Developing a path forward that will enable UMD to find long-term stability begins with reversing our enrollment declines, finding additional cost savings and productivity enhancements, and pursuing new revenue streams and growing some existing ones. We will also need to rethink our value proposition, increase our investments in student success, and re-evaluate our longer-term strategic plans.
None of this will be easy but we are a strong institution and we have much to build upon, including being part of the University of Minnesota. It is worth noting that in the past six years, UMD has received almost $12 million in new recurring funding and almost $5 million in non-recurring funds from the U of M System. We also benefited greatly from nearly $7 million in one-time funding to retire our sequestered deficit in 2020-21. I am very grateful for this past support. I expect that our budget proposal for fiscal year 2023-2024 will again seek additional system resources while looking internally as well for near-term funding while we work together to address the bigger structural challenges we face as an institution.
As a campus we must work together on short-term, intermediate, and long-term strategies to address our deficit and continued enrollment challenges. Our work will be consultative and involve the campus community. Our challenges are not insurmountable rather they are solvable through campus collaboration. To be sustainable over the long run, we need impactful strategic moves to align financial expenditures with available resources and demand.
We are in the early stages of this process. As we move forward, we will follow a framework that seeks to ensure minimal impact on student success and support, maintains academic excellence, and leverages resources and support from the U of M System. It is my commitment to be transparent and timely regarding communication about this process. In that spirit, I expect that we will soon schedule several campus forums to discuss the budget and the longer-term initiatives we must embark upon. I am hopeful that we can hold these forums later this spring.
We look forward to collaborating with the campus community over the coming months to position our campus for future success and financial viability. Thank you for your support and commitment to UMD.
Sincerely, | 
