Feb. 12, 2009
Welcome
Good afternoon and thank you for joining us at this spring convocation
and town meeting. I want to welcome, also, our folks at Southern Miss
Gulf Coast who are joining us via webcast. The topic today is budget
cuts. We will be respectful of the one-hour time limit, but I hope, if
your time permits, you will hang around after we adjourn for
conversation and fellowship.
My goal today is to give you an update on the status of the university's budget in light of recent budget reductions. I'll start with an overview, and then focus on the 2009 and 2010 budgets separately. Following that, I hope to share with you some ways we might address these challenges for the good of the institution. We'll close with some time spent in Q&A.
Before we begin I want to recognize the members of the Southern Miss leadership team who will lend support today:
This is a time for candor and for realistically facing conditions in our university budget. But it's not a time for hand-wringing or retreat. Frankly, I'm not the handwringing type. This university has weathered worse challenges in its 100 years of service to education and we will, no doubt, face others over the next century. When compared with the trials of our predecessors--The Great Depression, a time when salaries could not be paid, and even an attempt to close our doors--our present troubles seem small. We are still living in a land of plenty. As a nation, we are suffering because of the actions of the stubborn, the incompetent and the unscrupulous. We don't know who to believe and we don't know who to trust. But here at Southern Miss, I hope you will take heart, as I do, that smart people can solve problems and we are, in fact, smart people.
I hope you will take heart, as I do, that the problems before us today are only about money. Take heart, as I do, that the essence of this university remains intact. We are still a place characterized by a spirit of humanity: kindness, compassion, respect and support for others. We are still people who believe in our ability to produce necessary or desired results. We are still a university that can find the balance between the collective good and the good of the individual. We still enjoy traditions passed from previous generations. We celebrate our diversity and know the importance of respecting differences in race, culture, ethnicity, interests, thought, socio-economic background and beliefs.
Take heart, as I do, that we have strong and able leadership at the department levels and much improved communication between executive leadership and the governance groups.
Take heart, as I do, that we are a productive campus with much to celebrate. Just this past week I learned that we have doubled our number of NSF career award winners. Previously, we held two of these prestigious awards. Today we hold four, thanks to the efforts of Paige Phillips and Doug Masterson from the department of chemistry. David Butler, professor of political science, won $800,000 from the Department of Homeland Security. Gordon Cannon, Robert Bateman and Frank Moore received $700,000 $500,000 and $320,000 from the NSF for their work.
Just this past week we learned that our outstanding honors college senior, Paul Saputo, has already been accepted to law school at the University of Virginia and Duke. Paul is a great young man who has benefited from the boost our Honors College has given him.
Just this past week we learned that our student leader, Bentley Anderson, has obtained a summer internship in Sen. Wicker's Washington office.
Just this past week, we were able to sell the bonds for our new residence halls at a favorable rate and will break ground for this much-needed 900-bed facility on the Hattiesburg campus within the next 30 days.
Just this past week, I accepted the first gift for our Centennial scholarship campaign and we will soon kick off fundraising for that very important project.
Just this past week, I learned that the master plan for the new Southern Miss Gulf Coast campus at Cross Creek is ready for IHL approval in April, and a production crew from Animal Planet spent time taping and filming to do a segment on Dr. Robin M. Overstreet at GCRL.
Just yesterday I learned that our dean of students, Eddie Holloway, has been named the IHL Board's Black History Month Educator of the Year.
Overview
We are not the only university or state in trouble. But Mississippi is
facing a 5.2% budget cut from the general fund, compared to a national
average of 14.9%. Two states, Alabama and Tennessee, have cuts of 22.2%.
Grants, contracts, and gifts made up the largest portion of the university's FY 2008 revenue sources, at 33%. State appropriations (27%) and gross tuition and fees (26%) accounted for the bulk of the rest. Personnel costs make up 70% of University's FY 2009 education and general budget.
The current cuts for FY 2009 are outlined below:
November cut from State of Mississippi appropriation: $1.9M
January cut from State of Mississippi appropriation: $2.85M
Educational Enhancement funding shortfall: $1.5M
Fixed Cost increases above budget: $2M
Total: $8.25M
Budget '09
The only thing worse than a budget cut is an unanticipated mid-year
budget cut because we have either spent or committed our money. Faculty
contracts have been signed, travel funds have been encumbered and lease
agreements for services ranging from copy machines to airplanes have
been made. We cannot break these agreements.
Finding the funds to balance this year's budget is not a tidy process because pockets of unspent revenue are not spaced out evenly across campus. The result is that some units are going to take a harder hit than others. It's not equitable. It hurts. But it can't be avoided.
People have asked me, why can't we use our savings? The simple answer is, we can. Unfortunately, accessing our savings is a little complicated. At some places I have been, unspent monies were swept at the end of the year into a central reserve fund or (as in Georgia) returned to the state. At Southern Miss, our current policy is to allow colleges to retain year-end surplus or carryover funds (defined as the year-end surplus of operating funds). This surplus is transferred from operating accounts to designated funds at year-end. Presently, this university has almost $31 million in designated funds, dispersed about the University. The sources and uses of these designated funds are varied, and some cannot be tapped; but generally these are accumulated funds, often referred to as savings or reserves, that are set aside for one-time expenditures and emergencies. If you consider this your "rainy day" savings, I don't need to remind you that the rain is falling.
In-year cuts, by necessity, must be handled differently than adjusting expenditures downward as you build a budget for a year ahead. Our plan to meet the in-year cut of $8.25 million is to capture those dollars in the following manner.
Travel reduction: $450,000
Essential in-state travel may occur on a limited basis with the
approval of your vice president, who also may approve needed travel if
funded from designated funds.
Commodities: $450,000
Equipment savings: $1 million
Savings from constricting contractual service: $1.2 million
Reduction in designated funds by 4%: $1.4 million
This 4% reduction will not be across the board, but rather decided at the dean and non-academic VP level.
Hiring freeze and savings from unfilled positions: $3.75 million
In years past, when times were good we have been able to use unfilled
position savings for one-time needs, and to help the deans grow their
designated funds. That will not be the case this year. ALL salary
savings will be applied to this budget cut.
'09 cuts outlined
These cuts are a stop-gap
measure until we can examine our situation more closely. The true
"remodeling" of the budget will be for '10.
Budget '10
Looking ahead to fiscal year 2010. First, please note that as of this date we have not received a funding cut for 2010. We anticipate one, but will not have a clear picture of our revenues for next year until after the state Legislature has made its appropriation for higher education and, subsequently, our IHL Board has made decisions about the allocation of that appropriation and the status of tuition for the year to come. Those decisions come in April and early May. That said, we do anticipate the shortfall in state tax revenue to continue into fiscal 2010, and that forebodes further cuts in state funding for higher education. We must be prepared, but as I mentioned earlier, reducing the budget for a coming year is a far different exercise than making in-year cuts as we have just reviewed. For planning purposes, I have asked the provost and vice presidents to anticipate a $10 million reduction in state appropriation for next year. We must evaluate all we do, look at every area of expenditure and be sure as we prepare for 2010 that we make decisions in consonance with our strategic planning and central academic mission.
To this end, Provost Lyman, with the able assistance of CFO Joe Morgan, has already established a committee to begin this careful examination. The committee includes representation from across campus and consists of the following people:- Rusty Anderson, President-elect, Staff Council (Career Services)
- Michelle Arrington, Director, Institutional Research
- Bob Bateman, Chair, Chemistry & Biochemistry (CoST) & Council of Chairs
- Ann Billings, Director, Student Services, GC
- Melissa Cirino, Student Government
- Allyson Easterwood, Controller
- Jeff Evans, President-elect, Faculty Senate (Chemistry/Biochemistry, CoST)
- Liz Haynes, Chair-elect, Academic Council (Library & Information Science, CoEP)
- Sabine Heinhorst, Chair, Graduate Council (Chemistry & Biochemistry, CoST)
- Brett Kemker, Chair, Speech & Hearing Sciences; and Associate Dean, College of Health
- Ernie King, Char-elect, Graduate Council (Economics, Finance, & International Business, CoB)
- Tom Lansford, Academic Dean, gulf Coast (PSIDIA, CoAL)
- Bob Lyman, Provost
- Joe Morgan, Chief Financial Officer
- Kristi Motter, Associate Vice President, Enrollment Services
- Mandy Nace, President, Staff Council (MCJ)
- Joe Paul, Vice President, Student Affairs
- Steve Oshrin, President, Faculty Senate (Speech & Hearing Sciences, CoH)
- Bill Powell, Interim Associate Provost (DFLL, CoAL)
- Lynn Smith, University Budget Manager
- Denise Von Hermann, Dean, College of Arts & Letters (PSIDIA)
- David Walker, Chair, Academic Council (CISE, CoEP)
- Russ Willis, Human Resources
Our full intention is to be open and transparent and inclusive, but at the end of the day, some tough decisions are going to have to be made.
In the spirit of transparency, the provost tells me he has established a Web site to keep you informed of his progress.
What next?
There are two obvious responses to
a budget shortfall. The first one is to spend less. We are doing that
through these painful cuts. The other is to make more, and I want to
talk with you a bit about that.
Reducing expenditures is not the only way to combat reductions in
state appropriations. We have a greater sphere of influence over
revenue generated from student tuition. We have dedicated the last year
to strategic enrollment planning, and will continue through the spring
developing enrollment plans for the Gulf Coast and graduate school. We
have talked about this, but I will say it again: student success is my
number one priority. By increasing our market share of new students by
just 2% and increasing freshman-to-sophomore retention by 2%, we can
realize an additional $1.2 million dollars in revenue next year; and
that number can grow exponentially if we keep working at these goals.
What will retention get us? One way to express it is 250 new students
equal five faculty lines. Another is 700 new students equal raises.
Student retention is EVERYONE's job, and everyone has a role in
recruiting students as well. Improved retention is an urgent need. Our
strategic enrollment planning council has recommended that we create an
Assistant Provost for Student Success. This is a position we badly need
and will work toward funding, but in this current climate of in-year
cuts, we will have to find another way. For now, I will be leaning on
the continued good work of the Strategic Enrollment Action Team to
assist in the implementation of our retention strategies. I will
appoint a point person from that group to keep the provost and me
advised. We will be contacting some of your for help and I hope you
will respond.
Another approach to increasing revenue is through increased external funding. Toward that end, Vice President for Research Cecil Burge and I are working with our contacts in Washington to position the institution to benefit from any stimulus monies that may become available. There are a lot of unknowns, but we are preparing for every opportunity we can foresee to benefit from these funds.
Through the efforts of Vice President for Advancement David Wolf and the University Foundation, we have launched a Centennial scholarship fund drive to assist us in raising much-needed scholarship money for our students.
And, with the assistance of Chief Financial Officer Joe Morgan and his staff, we are identifying efficiency measures daily. One recommendation I have accepted, as a way of cutting costs, is to close the campus for spring break.
I know I have thrown a lot of numbers at you today in a very short time. I trust the provost's new web site will give you the specifics you need. We are preparing for the worst but working for the best. Please remember these points:
- The '09 budget and the '10 budget are two separate events. In '09, we are finding one-time money to balance our budget. The real work comes in constructing the '10 budget to meet the reductions.
- The '09 cuts do not include any personnel cuts.
- The '10 budget will be approached thoughtfully with an eye toward protecting productivity and those programs central to the mission of the institution.
- We will spend less, but we can also make more if we pull together with the recruitment and retention efforts.
- There will be a brighter day. We are going to get through this. I believe we will be a better place when we come out on the other side of this for having identified what we value and protect.
Thank you for your attention. I'll take your questions.