Appropriations Committee
Testimony of NU President Hank Bounds
March 4, 2019

Chairman Stinner and members of the Appropriations Committee, my name is Hank Bounds (H-A-N-K B-O-U-N-D-S) and I am president of the University of Nebraska. Thank you for the opportunity to speak to you in support of the two-year budget request for the University and the Nebraska College of Technical Agriculture approved by the Board of Regents.

I’ve spent a lot of time thinking about my remarks to you today, and how I might best make the case for your investment in 52,000 University students who represent the future of our state.

As I’ve thought about how to share the University of Nebraska’s story with you, and how to describe the work that has been done across our campuses in the past few years, Paul Harvey keeps coming to mind.

For every point of pride and hope the Chancellors and I feel when we come to work – and there are many – there is also the realism of “the rest of the story.”

We are a University on the move, fresh off our 150th anniversary, reflective of our past and unified in our goal to make an even greater impact on Nebraskans’ lives. The rest of the story is that we are mindful that three rounds of state funding cuts in the last biennium have limited our ability to grow and meet the workforce needs of the business leaders sitting behind me.

We are at the table as never before in conversations about how to solve the world’s most urgent challenges. The Department of Defense has us on speed dial in the fight against terrorism. When the government needs a place to monitor a potential Ebola patient, they call on the University of Nebraska. Innovations coming out of the Institute of Agriculture and Natural Resources will help feed 9.6 billion people by 2050.

Here’s the rest of the story: Limited resources mean we are not as competitive as we could or should be. Cuts that prevent us from investing in talent are akin to putting a “for sale” sign in the yards of the very faculty who have built the University of Nebraska’s national and international reputation.

We are proud of the tireless work our employees have done to find $22 million in administrative cuts through our Budget Response Team process. If not for these reductions, tuition increases would have been higher and academic programs would have suffered more. The changes have yielded new efficiencies and collaborations between campuses that did not exist before.

But not a day goes by when I don’t think of the more than 100 jobs that have been lost because of this effort. These are real people, real public servants, with real families and livelihoods.

Moreover, we have looked under every rock for administrative cuts, some twice. I worry about the impact that further reductions in state funding would have on the quality and breadth of the institution. Academic programs can only be protected for so long.

And we are grateful to Nebraska policymakers for their long tradition of support of higher education. Chairman Stinner, Vice Chairwoman Bolz and this Committee in particular have shown great leadership and vision in advocating for affordable, accessible, quality higher education for current and future generations of Nebraskans.

Your decision last year to spare us and all of public higher education from what would have been devastating budget cuts is, I think, a key reason why I can sit here today and truthfully tell you that the University of Nebraska’s next 150 years can be even better than our last.

For the biennium ahead, I am grateful that the Committee and the Governor have recommended funding the University’s salaries and health insurance. This is the best starting position the University has been in for some time and I thank you for your leadership particularly during times of fiscal stress.

The rest of the story is that this is not a growth budget. It does not cover all our needs, including utilities, which have not been funded for several years, or our rising inflationary costs. It will not meaningfully move the needle on the urgent workforce and talent crisis facing the state of Nebraska.

Senators, we have been through a period of extraordinary challenge. One year ago, I sat in this chair and told you I had put my fireman’s hat on almost immediately upon arriving in Nebraska and not taken it off since. I told you that it was difficult to see over the horizon when we were managing one cut after another. Mr. Chairman, in this way we have a lot in common. You certainly know what it’s like to wear the fireman’s gear.

I can’t tell you I’ve put my fireman’s hat away. But I can tell you that in spite of our challenges, in the face of cuts that could have crippled our momentum, the faculty, staff and students, and especially our leadership teams, have resisted the urge to hunker down. We have kept our focus on the future.

Today, I am asking you to do the same.

The opportunities for your University to help you build the economy of the future are as great as they have ever been. The needs of our workforce are urgent and growing, starting with the 35,000 annual openings in high-skill, high-demand, high-wage jobs that Nebraska will have in the years ahead. Every day that we don’t invest in the recruitment and retention of talent is another opportunity for promising young people, skilled workers and successful companies to go elsewhere. The testifiers who will follow me will tell you more about that.

Your University is ready to run faster, to be more nimble, to be bigger and bolder and more creative about producing the workforce, the research and the economic activity you need to grow this state.

We need your partnership to do it.

It is difficult to grow when, for several years running, we’ve had to eat the costs every time even a roll of toilet paper gets more expensive. Before you say, “Bounds, you’re being dramatic,” let me tell you what some of our neighborsare doing. The University of Minnesota, our Big Ten peer, has asked legislators for $87 million more for operations in the next two years and $230 million for capital funding. Lawmakers on both sides of the aisle applauded the Minnesota President for, and I quote, his “prudent” request. Wisconsin legislators will consider a proposal to invest $150 million more in the University of Wisconsin System. The University of Illinois is asking for $722 million for deferred maintenance.

I am asking you to find a way to make the University of Nebraska a priority for the state.

I’m asking you to invest in one of the greatest change agents our state has to offer – the University – so that Nebraska can be the kind of place where Ava Vargas and every child like her will someday want to live, work and raise a family. By the way, congratulations, Senator Vargas.

I ask that you find a way to fully fund our budget request so that your University can be kept whole in the next two years. Short of that, treat our salary appropriation fairly compared to other state agencies.

Help us turn the corner so we can help you build a future that our children and grandchildren will be proud of.

I know you have no easy choices. I’m grateful for the work you do and I don’t envy your task. But I am convinced that the long-term prosperity and well-being of our state depends on a growing, accessible and competitive University of Nebraska.

Let me say a few words about the request we’ve brought to you.

First, it may be helpful to provide a refresher on how the University’s budget works.

You’ll often hear about the University’s $2.6 billion budget and you might conclude that we have flexibility when it comes to managing cuts. That’s not accurate. In fact, two-thirds of our budget can’t be touched.

Think of the budget as falling into three buckets. One bucket is self-supporting operations, like parking and housing. Another includes restricted funds like private gifts and research grants that can’t be directed elsewhere. There’s no doubt that private philanthropy has transformed the University, but donors don’t give to fix a leaky roof. In fact, more than 99 percent of gifts to the Foundation are designated toward a specific purpose.

And the third bucket is what you’d typically think of as the educational enterprise of the University – the teaching, research and outreach efforts that drive our daily activities. This is the portion of the budget that’s impacted by state funding cuts. And this portion is funded by two primary sources: State appropriations and tuition revenue. The history is quite clear on the relationship between these two. When state funding goes down, tuition goes up.

With that in mind, the Board of Regents, Chancellors and I had a lengthy discussion about what level of funding we felt was necessary to pay our employees and keep our buildings open while not raising tuition to a level that would price students and families out of a University education.

What you have before you is a minimal request, reflecting the fiscal challenges that you continue to face. It covers some – not all – of the basic needs of the University of Nebraska.

It does nothing to meaningfully close the salary gap between us and our peers even as we recruit faculty in the most competitive marketplace of our lifetimes.

It does nothing to address the $750 million in deferred maintenance needs that exist across our campuses.

It does not include investments for major strategic initiatives, like our No. 1 University-wide priority, engineering. This is a critical workforce and economic development issue for Nebraska. Yet we are not competitive in the Big Ten. We’ve outlined an ambitious and exciting plan for growth that will engage all campuses and private sector partners across the state – but it will require support from all fronts to provide the facilities, faculty and programs we need to be successful.

Our request does not improve our competitive position when it comes to facilities and financial aid. Other states provide significantly more in these areas. Iowa, for example, gets $90 million annually for facilities. On state-funded financial aid, Nebraska ranks in the bottom 10 nationally on a per-population basis. That doesn’t help when we’re trying to attract young people who will become the next generation of nurses, software developers, teachers, engineers and entrepreneurs.

Our request, even if fully funded, will require us to have a conversation with the Board about tuition. I don’t take that lightly. The combination of value and quality that the University of Nebraska offers is unrivaled almost anywhere else in the country. We have the lowest tuition in the Big Ten, and the lowest levels of student debt. Every time we are forced to consider a tuition increase, we test the principle that the University of Nebraska is an institution of access, founded to serve not just a privileged few, but the sons and daughters of farmers and ranchers who also deserve to share in the promise of higher education.

And since it does not cover all our needs, our request could require further reductions at the very time we should be growing in order to meet the needs of our state.

That these reductions will come on the heels of our efforts to climb out of a $55 million budget hole makes our work even more difficult. Many of the proposed cuts that I shared with you a year ago have come to fruition. Every one of them has hurt our goal to grow the workforce. When we cut a program, it hurts the workforce. When we delay hires, let jobs go unfilled and hold off on salary investments, it hurts the workforce.

One of the gems of the University of Nebraska that’s earned well-deserved media attention recently is our research on the western bean cutworm at the West Central Research and Extension Center in North Platte. Senator Erdman, I know you got an opportunity to see this work in person a few months ago, and I have seen it as well. The work that one faculty member in Extension is doing to combat this pest is helping farmers increase their yields and save untold dollars. But cuts force us to scale back our work in rural Nebraska, and not only does that hurt agriculture, it hurts the workforce.

Senators, when your University isn’t growing, the state isn’t growing. That’s not good for our young people, it’s not good for business leaders who depend on us to provide a skilled workforce, and it’s not good for taxpayers who get a 7-to-1 return on every dollar they invest in the University of Nebraska. That figure is hot off the press, by the way.

But when we find ways to grow, great things happen.

I could ask every chancellor to come up and talk to you about the momentum and opportunity on their campus, and this red light would come on before they could scratch the surface.

I think they would tell you about the progress at Innovation Campus and the new collaborative facility that houses the UNL health center and UNMC Lincoln nursing college. I think they’d mention the planned expansion of UNO’s biomechanics program which is unlike any other in the nation. I think they would speak to the growth of UNK’s footprint, including a game-changing new STEM building and new early childhood center that will make Kearney a hub of economic and educational activity.

And I am quite sure they would invite you for a tour of UNMC so that you could experience the wonder of the Buffett Cancer Center – a place you helped build – and see and touch the technology that makes it possible for you to connect instantly with someone a world away.

We would all tell you about our new records in research, and our ranking among the world’s leading institutions in bringing faculty innovations to market. We’d talk about how proud we are that our student body is more diverse than it has ever been, because we know that we are better when we stand next to people who don’t look or think like us.

And we would agree that our work is just getting started.

The needs of the state are too great, to pressing, not to invest in the University of Nebraska, one of the primary drivers of individual and economic growth for the past century and a half. We have the opportunity now, together, to build the future we want for our state. I’d ask for your partnership in that work.

Before I conclude and invite your questions, I’d like to make a few technical points.

First, we are asking the Legislature to re-appropriate unspent cash funds from LB390, which provided for a pilot study of medical cannabidiol.

Second, because of a clerical error, the fiscal year 2020-21 capital reaffirmation for the Veterinary Diagnostic Center needs to be revised to $2,733,600.

Finally, we have discussed with the Governor’s office some proposed changes to the intent language for the Nebraska Talent Scholarships program to be more specific about what areas of study would be eligible for the scholarships and what data we would report to the State every year.

Thank you for your time and consideration. I’d be pleased to answer your questions.