Monday messages

State Budget: Outcome and Outlook for KU

The longest legislative session in Kansas history came to an end May 31, one day after Governor Graves signed a $252 million tax bill that helps fund the $4.4 billion FY 2003 budget bill he signed on May 21.  It now seems safe to talk about the budget, other legislation, and what it will all mean for the University of Kansas.

Higher education was not held harmless in the new budget.  At KU, the state's failure to fund real, ongoing costs will result in real, ongoing cuts.  Budget reductions imposed on all state agencies - the so-called "global" cuts - will also affect us.  Overall, KU's budget in 2002-03 will be about $7.1 million behind what it would cost simply to continue our current level of operations.  This amounts to about a 3% cut.

Nonetheless, we can be grateful that the damage was not worse, as it might have been without the tax bill.  The Governor was poised, during the week prior to Commencement, to impose required "allotment" budget cuts that would have extracted an additional $19.3 million from KU.  Had that happened, the tone of this message would be considerably different.  Passage of the tax bill prevented the playing out of a truly dire scenario, as has occurred in many other states.

Deans and other administrators have now submitted their proposals for how to deal with the $7.1 million budget cuts we will experience.  The details will be announced as soon as final decisions are made, but we all know some of the effects.  There will be no salary increases this year for faculty or staff.  (The only people receiving an increase will be faculty who have been promoted, and that will be a modest amount.)   Cuts will not be made across the board.  Rather, we will make strategic choices that protect academic programs first.

In many instances, we will absorb the loss of funding by eliminating vacant positions.  That will not always be possible, however.  Some staff could lose their present positions.  If that happens, we will do what we can to shift those staff into other vacancies at KU.

In some instances, an existing activity may be phased out in whole or in part.  Again, we will do whatever we can to assist the staff involved and to limit the impact on students and the public.

The next budget planning cycle has already begun.  While we hope the economic situation in Kansas will improve, we have to be prepared for the possibility of further budget cuts this fall or next spring.  We are by no means out of the woods.  For example, on Friday it was announced that the state's year-to-date revenue was $194 million - or 27%-- less than the official estimate made in March.  As a result, Kansas may have trouble paying its bills in June, and the likelihood of a budget rescission is increased.

At KU we are always trying to achieve our mission in ways that are more efficient and effective.  For that reason, because we plan well, we are in a strong position to deal with setbacks and seize opportunities.

One such opportunity is the $120 million University Research and Development Enhancement Act, approved by the Legislature and signed by the Governor in mid-May.  It will provide $65 million in bonding authority for a new Biomedical Research Center at the KU Medical Center.  It will also provide $5 million in bonding authority for laboratory equipment in proteomics research and bioinformatics at the Lawrence campus. 

It was heartening to me that, even in the midst of the budget crisis, the state saw fit to make an investment in research facilities that will pay off for Kansas for years to come.  Research projects such as this attract substantial federal grants.  They also generate high-tech employment opportunities. 

The response to our 2002-03 tuition proposal, which we and the other state universities submitted to the Board of Regents on May 15, has also been heartening.   A number of editorial writers across Kansas acknowledged that the proposed increases were warranted.  The University Daily Kansan, in a May 8 editorial, acknowledged, "The tuition increase that will take effect this summer will provide new revenue that the University desperately needs."

As I said at the Board meeting, "No one ever wants a tuition increase, but KU is seriously underfunded relative to our peer universities and relative to any other benchmark for universities with a teaching and research mission.  Our students, and the people of the state of Kansas, can't afford for that to continue.  They deserve a first-rate university at KU."

I am hopeful the Board will approve the tuition proposals at the June meeting.  The beneficiaries will be our students.  The increase will fund $2.2 million in KU Tuition Grants, and will be used to provide upgraded classrooms, additional faculty in key areas, larger stipends for graduate assistants, expanded access to technology, stronger minority recruitment and retention, enhanced library services, faster introduction of online registration and related services, increased operating budgets for academic departments, and additional support staff for student services in academic units.

As we move forward into the FY 2003 budget, beginning July 1, 2002, we have to think clearly about the future.  The state's budget situation is so perilous that future cuts could easily be imposed upon us.  We must begin today economizing, curtailing expenditures, and increasing productivity.  Across the entire institution we will need to find ways to do more with less, and we are likely to be forced into re-structuring priorities.  I ask all of you to think of ways to save money now because I believe we are likely to need your ideas as FY 2003 progresses.