You have all heard by now that the State of Kansas has a budget problem -- a $200 million problem. Between now and the last week of April when the legislators return for their wrap-up session, you will hear many proposed solutions to this problem.
On April 6, the Legislature adopted its FY 2002 budget knowing it would have to re-visit the budget because revenue forecasts reduced estimated receipts to the State General Fund. That budget included money for faculty (6%) and staff (3%) salary raises. The base 3% for both faculty and staff would be paid for FY 2002 as 1.5% beginning July 1, 2001 and a second 1.5% beginning Jan. 1, 2002.
The consensus revenue estimating group, a group comprised of State economists and budget officials, released their revised State General Fund revenue forecasts on April 3, reducing previous receipt estimates by $74 million for the current fiscal year and $111 million for FY 2002. This $185 shortfall will require the Legislature to make modifications to the earlier approved budget.
What will happen to KU?
It is too early to tell, and certainly too early to assume the worst. The Legislature and Governor have a number of options available to them as they cope with this new fiscal reality. We continue to work with statehouse officials to advance the case for higher education. While the State's fiscal condition has eroded over the last six months, there are options for addressing the problem besides merely imposing a new round of budget cuts.
In the end, the legislature will be forced to set priorities, and some programs may be cut. Among other things, at risk for KU will be faculty and staff salaries. We will work hard to secure the budget's recommendation for salaries, and no one can predict what may happen.
I believe that eventually, if not this year then in subsequent years, at least some of the revenues lost in the large tax cuts of the late 90's will have to be restored. The state budget has a structural deficit, and this will have to be addressed. Those who argued that tax cuts could be paid for by future revenue increases have been proven wrong.
In the meantime, there are many ideas which will be explored, such as:
• Selective budget cuts
• Across the board cuts
• Tax increases
• Reducing the state1s ending balance requirement from 7.5% to 5%
• Accessing other fund sources in the "tobacco" payments to the state, or in various trust funds established previously, or in excess highway monies.
This will be a complicated process and I urge you to keep track of what occurs. Please help press KU's and the Regents' case for investment in higher education. Also, please help show how tightly managed KU's budget is each day. At a difficult time like this we must do everything possible to curtail expenses, tighten our belts, and obtain the maximum effect from our limited dollars.
Every dollar spent at KU generates $4 in the state economy. KU is a good investment for the people of Kansas, and will pay dividends for the state long into the future. But we must demonstrate that each one of those dollars will be very carefully used within the university, both today during our budget crisis, and tomorrow as we find a solution to the problem.
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