A budget update from President Bounds
January 12, 2017
I’m writing to update you on our budgetary challenges. In his State of the State address today, Governor Ricketts proposed a 2017-19 budget package that includes reductions for a number of state agencies, including the University of Nebraska. Under the Governor’s proposal, our state funding would be reduced by $12 million next year, with half of that amount restored in the second year.
“We have two options: cuts and revenue enhancement. The extent to which we will rely on each depends on the budget that state leaders approve. Tuition, jobs and university services are certain to be impacted.”
Let me explain what that would mean for us. The proposed cuts must be viewed in conjunction with unavoidable cost increases that we will face in the next biennium. Salary and health insurance increases alone will grow our costs by more than $40 million over the next two years.
The bottom line: The Governor’s proposed cuts, combined with rising expenses, mean the University of Nebraska would have a budget gap north of $50 million by summer 2019.
These numbers are not final. The Governor’s proposal now moves to the Appropriations Committee and the full Legislature for consideration. I will do everything I can in the months ahead to make the case that an investment in the University of Nebraska is an investment in the state’s economic vitality and quality of life. I will remind them that the state’s partnership with its public university has helped ensure affordable excellence for nearly 150 years.
And I will remind them that the consequences of any cut are exacerbated by the funding trends of the past several decades, in which the university’s state appropriations have grown at a far smaller rate than other agencies’ and our share of the overall state budget pie has shrunk significantly. Today we spend less per full-time student than we did at the turn of the century, even as our enrollment and research enterprise have grown.
Nonetheless, it has been clear for some time that the state’s fiscal uncertainties would impact us to some degree. I have pledged to the Governor and members of the Legislature that the university will be a partner in navigating this downturn. There is no question that we have difficult choices ahead.
I am working with the chancellors to finalize a university-wide approach for managing budget cuts and will share more with you soon. I will be candid. The scale of the budgetary challenges ahead is well beyond what we could manage with a hiring freeze, travel restrictions or efficiencies alone. Slowing our spending has been a prudent initial step. But we can only go so long without, for example, hiring enough cancer doctors to meet the needs of patients at our medical center. And while we will look for every opportunity to do business even more effectively, budget cuts of the past have forced us to become a lean institution already. If there was low-hanging fruit before, it’s gone.
That leaves us with two options: cuts and revenue enhancement. The extent to which we will rely on each depends on the budget that state leaders ultimately approve. But tuition, jobs and university services are certain to be impacted. This process will affect real people, with real families and livelihoods.
We have already engaged the leadership teams on each campus in discussions on budget reductions. Those conversations will continue and we will involve faculty, staff and students every step of the way. While I don’t yet have all the answers, I do want to hear from you directly. The week of January 30, I will join each chancellor for an on-campus open forum where we will be able to have an in-person dialogue about our budget planning. The dates of the budget forums are as follows, with more details to come:
Because of your good work, the University of Nebraska is in a strong position today. We will emerge from this downturn a strong institution. Getting there will not be easy. I am hopeful that together with all of you, our partners at the Capitol, and the many university friends and alumni across this state, we will identify responsible solutions that are in the best interests of our university and the people of Nebraska. I will continue to provide frequent updates and invite you to visit our website here for information on our budget planning.
I hope to see you on campus soon. Thank you for all that you do for the University of Nebraska.
Hank M. Bounds, Ph.D.