Update on Kansas' budget situation

Dear Colleagues,

In September, I wrote to you about a request from the State of Kansas to cut 2 percent from the current Fiscal 2009 budget. The request for cuts came as a worsening economy clouded the state revenue picture.

As you know, the national economy has continued its downturn this fall. As a result, Governor Sebelius recently revised her request, asking that state agencies reduce current year spending by 3 percent instead of the original 2 percent and warned that, "Deeper reductions in FY 2010 will almost certainly be necessary." The "deeper reductions" means that 2010 may see cuts of 7 percent.

While there have been news reports about potential reductions, we are still awaiting the Governor's official budget recommendations. Keep in mind that KU receives only a quarter of its funding from the State General Fund, yet cuts of 3 percent equal $4.6 million for the Lawrence campus and $3.7 million for the Medical Center.

I know many of you are wondering how these cuts will affect you and KU. Based on the information we have now, it is my belief that with your help we can get through this year without seriously damaging the high quality education that Kansans expect. However, this would be much more difficult should deeper reductions be required.

There is still much uncertainty about what steps the Governor and Legislature will take when the latter convenes in January and we expect a wide variety of proposals to be considered over the course of the session. For example, some projects, such as the expansion of the School of Pharmacy, may be funded through other sources.

In the meantime, I want to review with you the management steps we've taken so far. This summer as units reviewed budgets, we said the university would follow three basic principles:

• Protect key instructional programs and avoid harming research endeavors;
• Protect scholarship funds, library acquisitions and utilities; and
• Give campus units the flexibility to make decisions about how to reduce spending, rather than simply cutting across-the-board.

In August KU presented to the Board of Regents our plan for how we would handle the proposed two percent cuts. That reduction plan gives us a base from which to work now.

We also have redoubled our efforts to make KU more efficient. Next month we will be making a presentation to the Regents on the efficiencies we've implemented. These may require some sacrifice and I will share that information with you.

I also ask that you continue to take steps to make your own unit more efficient. Every effort, regardless of size, helps. There are the larger steps that have helped us save on everything from computer purchases to insurance costs, but keep in mind that turning off computers at night and lights in unoccupied rooms will save on electricity, while switching from printed to e-mailed publications will save on printing costs.

As our state's leaders discuss the budget situation, it is important to remember that we now have not only a record number of students to educate but also two classes of undergraduates whose tuition is fixed by the Four-year Tuition Compact. We cannot close any budget gap with higher tuition.

Also, while KU Endowment makes significant investments in the university, most of its funds are already dedicated to specific scholarships, professorships and projects, meaning it is not a source of revenue to patch a budget hole.

Kansas is not alone in its budget woes, with many other states facing significant shortfalls. President-elect Obama on Friday signaled his support for another economic stimulus package and indicated it should include support for state governments. Such assistance might help mitigate Kansas' budget problems, but we cannot assume that this package will be enacted or that the specific components will alleviate the nature of our budget challenge.

As KU talks with our elected leaders, and as you talk with friends and family, it is important to remember that while we face a definite short-term budget problem, universities over the long-term will be critical to creating the educated workforce needed to grow the Kansas economy.

The graduates that KU adds each year to the Kansas workforce and the cutting-edge research conducted here are an engine for the state economy, and the state's long-term future is put at risk if budget cuts slow or damage that engine.

I pledge to keep you informed of the budget situation as it develops and to vigorously advance the interests of KU as these budget discussions unfold. With the strength of talented faculty and staff, engaged and loyal alumni and passionate, energetic students, we will aggressively demonstrate the value of KU to our state.

Sincerely,
Bob Hemenway
Chancellor