With this edition of the President’s Notes, I would like to share with the campus community the evolving status of the budget. We do not yet have enough information to form a clear picture, but it is my hope that this update will help to describe the current situation and our actions for the immediate future.
Each year, the campus develops a budget to direct our spending in the next year. Under normal circumstances, the Cabinet completes its budget deliberations by late April, when we receive details from the state on the level of support we can anticipate in the next academic year. This year, due to the substantial cuts we already received and because the governor’s budget request has so many provisions that may adversely affect the campus, we began to develop budget scenarios much earlier in the cycle. The variables that can significantly affect our budget include the tuition increase, central support for collective bargaining agreements, the cost of utilities, and our continuing enrollment levels.
One of the largest variables that must be considered is the level of tuition we retain on campus. As you know, the legislature approved a deficit reduction plan for 2008-09 that included provisions for the capture by the state of 90 percent of the tuition increase. In fact, the state is asking us to send back 116 percent of what we actually collected. The tuition increase for 2009-10 potentially could bring approximately $2.8 million to our campus to offset a reduction of approximately that much in the current fiscal year (08-09); nevertheless, the governor’s recommendation is to allow campuses to retain only 20 percent of that increase. SUNY System Administration and the campus presidents are lobbying the legislature to allow all of the tuition increase to remain on the campuses in the next fiscal year (2009-10). Otherwise, we will ask to retain as much as possible on campus and that the percentage formulas be abandoned in favor of actual dollars collected.
The governor has called for the state to provide the funds to support the collective bargaining agreements between SUNY and the unions.The salary increases mandated by those agreements amount to some $1.4 million on our campus. Since these agreements were negotiated in good faith by the state and the unions, SUNY believes that it is the obligation of the state to provide the funds to support those agreements. In the past, legislatures have mandated that the salary increases be awarded but did not provide the funding to do so.That would require SUNY and the individual campuses to find the money for the salary increase from within their own resources.
Currently, our utilities costs are running nearly $1 million over projection because of the high cost of energy last summer when we needed to make our purchases. In past years, SUNY had given us money as part of our base budget to handle fluctuations in the cost of energy. As part of the budget settlement last April, that money was removed from our campus budget and put into a central fund of some $26 million. We were promised that, should our utilities run over budget due to fluctuations in the market, we could request assistance from SUNY. Several weeks ago, we requested assistance, only to be informed that the money was no longer available, having been lost in one of the rounds of budget reductions imposed earlier this year. As a result, we also need to include in our planning funds for fluctuating utilities costs.
Lastly, we are increasingly dependent on enrollments for our financial well being. The good news is that our enrollments look solid. The number of students who did not return to the College between the fall and spring semesters was smaller than average, and we enjoyed an exceptionally large cohort of new transfer students in January. As we look to the fall, our new freshman class is on track to be one of the largest in the history of the College, with no decline in profile. Applications and admittances of transfer students are also running significantly higher than in years past. The only area of concern is our graduate program, where we are seeing fewer applications and have seen lower enrollments already this year. As a result, the overall enrollment picture is mixed. While we will probably see higher undergraduate enrollments, that will be offset by lower graduate numbers.
Taken as a whole, then, we have begun to make assumptions about next year’s budget. The scenarios we have developed present us with a range of budget shortfalls of from $2.5 million to $7 million. Using our best judgment, the Cabinet and I anticipate that at the end of the debate, our budget will reflect a $5.7 million gap. Of that figure, we can cover approximately $2 million through central actions using campus reserves and centralized accounts. Yet, after having satisfied $2 million centrally, we still have an approximate $3.7 million shortfall which needs to be resolved. In a spirit of equity, this shortfall has been allocated to the various divisions of the College in proportion to their part of the overall budget. Thus, Academic Affairs accounts for 69.9% of all costs, after central costs are removed. Business Affairs represents 15.3%, Advancement 5.5%, Institutional Effectiveness and Enrollment 5.3%, Student Affairs 3%, and my office 1%. This means that approximately $2.57 million will need to come from Academic Affairs, $564,000 from Business Affairs, and so forth. I am asking each vice president to develop a plan of reductions for their particular area. Accordingly, the restraint model applied to Academic Affairs might be somewhat different from that applied to Student Affairs, for instance. All budgets will include a freeze on positions. All frozen positions will be analyzed by the Cabinet every quarter to see which positions might be filled. It is likely that all divisions of the College will also see restraint on OTPS (expenses), including reductions in travel and the purchase of equipment. Individual vice presidents will also analyze the staffing needs of their areas as part of the budget restraint.
Upon completion of their particular plans, the vice presidents will make presentations to the full Cabinet. In turn, working with the Cabinet, I will create a financial plan for the campus. This process should be concluded within a matter of weeks. I will then meet with the Business Affairs Committee of the Faculty Senate, the Executive Committee of the Faculty Senate, and other groups to explain the final proposal. It is important to make some of these decisions as quickly as possible before we conclude our planning for the next academic year. The budget restraint will have a direct impact on our ability to hire adjuncts and other temporary faculty members to deliver some of our classes, as well as temporary and casual employees in all divisions.
I need to repeat that we may not know the exact details of the state budget until well into April, or even later, depending on negotiations in Albany. Nevertheless, we must prepare what we believe to be the probable scenario for the budget and move forward.
I am confident that we will weather the current financial storm. I hope that we can use this opportunity to prepare ourselves for the eventual attainment of the goals outlined in the Bicentennial Plan. The immediate and short-term future will be difficult, yet in all adversity there is also opportunity. We must seriously consider how best to reduce our programs now to position ourselves for the future. Beyond that, I believe that the economy will improve and resources will again flow to the campus. As we began to prepare for this difficult time when things were relatively good, we must now begin to think about the times of prosperity ahead. The Cabinet and I are already planning how we can use whatever small resources we can muster beyond this austere financial plan to move us toward the goals of the Bicentennial Plan. As a community where we work together to achieve a common goal, there are no limits on what we can accomplish.