January 14, 2010
Dear Colleagues:
Happy New Year! And welcome back to campus for what I‘m sure will be another highly productive and exciting semester. As we move forward into a new year that promises to be one of continuing accomplishment, we must remain vigilant and mindful of the University's budget outlook.
While our nation continues to struggle with one of the most challenging economic periods since the Great Depression, Michigan leads all other states in unemployment, and the overall deficit in our state‘s budget is alarming. Gov. Jennifer Granholm has proposed more significant budget reductions—upward of 20 percent—for state agencies in the next fiscal year. The direct impact of the state‘s looming shortfall on University funding remains to be seen, but there is general agreement that our immediate future will be challenging.
As you know, Michigan‘s public universities have suffered significant budget reductions during the past few years. In 2002, Western Michigan University received state support of roughly $125 million. Our 2009 allocation was $109 million. This is a decline in real dollars of $16 million, or approximately 13 percent. During this same period of time, we have experienced increases in personnel costs, health care costs, utilities, and other goods and services that are outside our immediate ability to control.
Our budget shortfalls have been met through increasing revenue (primarily tuition), as well as by stepping up our efforts to control expenditures. We have imposed reductions on operating budgets affecting all units within the University. Last year, we were able to recapture $5 million through budget cuts, and this year, we are reducing the operating budget by another $3 million. While cuts of this nature are painful, the impact has been mitigated greatly by the overall effort of our University community to dig deep, stay focused, and do everything possible to deliver a top-caliber academic experience to our undergraduate and graduate students.
The budget situation for 2009-10 was also enhanced by federal stimulus funds provided to the University. These funds, amounting to $3.2 million, are one-time dollars that will not be available next year. They served as a temporary patch. For that and other reasons, our budget outlook over the next few years remains troubling.
But, we‘ve been fortunate. Thus far, we have not had to deal with some of the strategies employed by sister institutions within and outside of Michigan. For example, a number of universities have employed or are planning furloughs, salary reductions, layoffs, program closures and variations of these to manage the current crisis. Our strategy has been to continue to curtail spending, but to sustain the employment opportunities for those on our campus who serve our students and advance our mission and goals. Thus, the number of layoffs imposed has been minimal.
Now, however, we are entering some new and uncharted waters that will require our best collective thinking to sustain and strengthen our University. We‘ve been at this process for some time now, and with each passing budget year, finding new ways to cut budgets or enhance revenue becomes more difficult. Increasingly, we must objectively examine our organizational structures and procedures. We must be willing to adapt, cooperate, collaborate and share ideas, equipment and resources. The road ahead will not be easy, but I am convinced that if we deal with the issues in a collective and thoughtful manner, the pain factor can be softened.
There are a number of areas that can and should be explored to further reduce our expenditures. Some of the thoughts and ideas surfaced thus far include the following:
The above represent only a few examples of ideas that have surfaced thus far. We are accepting any and all suggestions and analyzing each idea for its true cost saving as well as its impact on the University as a whole.
We, of course, are also extremely interested in suggestions and thoughts that will help to enhance revenue. Some thoughts already shared in this area include:
In no way are ideas to increase revenue limited to those above. The bottom line is this. We need your help. I invite you to submit your observations and suggestions about specific ways the University—your University—can reduce expenditures and/or enhance revenue. Ideas will be vetted with others, including employee groups, to ensure that the collective wisdom of our campus community is engaged. All viable input will be considered with the understanding that the needs and expectations of our students will not be marginalized nor will the quality of their academic experience be sacrificed. Comments will also be weighed in light of the strategic plans formulated by academic affairs and other major units in the University.
To that end, I invite you to submit your recommendations related to cost cutting strategies and/or revenue enhancement to Dean Honsberger, our chief budget officer, at dean.honsberger@wmich.edu. Please submit your suggestions by Monday, Feb. 15.
Also, because of the complexity of higher education funding issues, I want each member of the campus community to have the opportunity to become well versed in University finance. To help you, we‘ve constructed a Web site with some basic information—Budgets 101. You will find “The WMU Budget: Questions and Answers“ at www.budget.wmich.edu. The information includes details on such items as the state appropriation/tuition ratio and how it‘s changed over time, the elements of the operating budget, the relative impact of revenue source increases or decreases, and the role of grant funding and private fundraising.
Despite the seriousness of economic matters, I remain very optimistic about 2010 and the academic years beyond. Our future as a world-class university is dependent upon our ability to work and think collectively and creatively in the months ahead, with a constant attentiveness to conserving resources, positioning ourselves for change, and upholding the standards of excellence that have sustained our great university for more than 100 years. We are determined to be efficient, effective, agile and very successful in the years ahead.
Thank you for your suggestions and willingness to be part of this process.
Best regards,
John M. Dunn
President