Message from President Ramsey Regarding Budget, 7 January
As you know, the legislative session got under way this week, and I write to update you on early conversations and their implications. Please know that while we are concerned, the session is still very young and the situation could change rapidly. Still, I want to give you an early report, as some of this may be covered in the press in the coming days.
First, late last week, Gov. Fletcher signed an executive order permanently cutting higher education and other budgets by 2.5 percent in the current 2003-04 fiscal year. This cut, which was based on funding received from the state, totals $3.4 million for U of L. Given the status of the state's budget situation, we had anticipated such a reduction and have been working with units across campus to handle this cut on a one-time basis this year to allow for time to identify ways to make the cut permanent with next year's budget. The university is taking appropriate steps to comply with the governor's order.
Yesterday, we learned that the governor's budget proposal to the state legislature may include a provision that would apply the 2.5 percent to all university resources beyond those it receives from the state. It is our understanding that this amounts to an additional $45 million from the state's higher education institutions, but the largest amounts would come from the research universities because of the level of external funds we receive.
In our case, this would translate into an additional, one-time cut of more than $8.1 million, for a total of $11.5 million. We understand that this additional $8.1 million would be a one-time cut made in the current fiscal year. As I said earlier, there are many outstanding questions, and we will be working over the next week to seek clarification.
Meanwhile, we must realize that such a significant cut would have serious ramifications for the university. We are already more than halfway through the fiscal year and at the beginning of the spring semester. Identifying an additional $8.1 million would be a significant challenge. Furthermore, the actual state budget would not be passed until April, nearly at the end of the fiscal year, so we would not know exactly what our cut would be until then.
Remembering that we have made budget cuts the last two years, additional cuts of any size, permanent or otherwise, will be difficult. A cut of an additional $8.1 million in the current fiscal year would take away our budget flexibility and seriously impact our academic and support programs. While we will always make our best effort to move the university forward and to meet the teaching and research mission assigned to us by the state, such a cut would create tremendous challenges.
Once again, I must note that it is early in the process, and the situation may change. We understand that the state budget situation is serious and that the governor faces many challenges as he tries to address it. In the coming weeks, we will:
- Seek clarification of the governor's proposal.
- Work with the Council on Postsecondary Education and other higher education institutions to respond appropriately.
- Work with the governor's office and our state legislators to identify ways to preserve the educational progress we have made as an institution and a state by minimizing budget cuts.
- Continue planning for a one-time cut of $3.4 million this year and a permanent cut of $3.4 million next year.
- Begin contingency planning to identify possible sources of an additional $8.1 million, one-time cut in the current year.
I will keep you posted as we progress, and I continue to value your support of the university.
James R. Ramsey