Testimony of University of Nebraska President Hank Bounds
Appropriations Committee – February 27, 2017

Chairman Stinner and members of the Appropriations Committee, I am 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 be with you. I join Regent Whitehouse in asking you to support your university at a level at which we could continue to provide affordable, high-quality education that serves students and grows Nebraska’s economy.

You’ve heard from me a number of times over the past few months regarding the university’s budget, so I will keep my remarks brief. Other Nebraskans who have contacted you to voice their support add a fresh perspective to our discussions. These Nebraskans represent a diverse range of stakeholders: Students, staff, leaders in the private sector, agriculture and in the community.

They will all echo a similar theme. And that is that the State of Nebraska, its economy and its people depend on an accessible, excellent public university as much today as they did when this institution was founded almost 150 years ago.

“The University of Nebraska represents the single most important economic development engine in the state. We provide a remarkable 6-to-1 return on every dollar you invest in us. ”

In the century and a half since, the state and its university have built a strong record of successful partnership. This committee deserves a good deal of credit. Because of our partnership, today the University of Nebraska represents the single most important economic development engine in the state. Our enrollment is at an all-time high and we are working to supply even more skilled graduates for Nebraska’s workforce. We provide a remarkable 6-to-1 return on every dollar you invest in us. Our research is improving quality of life and expanding entrepreneurial activity across the state. Nebraska is now associated with global leadership in treating cancer and infectious disease, feeding a growing population, and keeping our men and women in uniform safe.

We are not satisfied. The chancellors who are here with me today would tell you that we think we can do much more to grow our state and transform lives here and around the world. We have ambitious goals for the future. We will need your continued partnership to achieve them.

I know the state is facing fiscal challenges. And I believe each state agency must do its fair share in helping you navigate this downturn. The university takes seriously our responsibility to work with you to make necessary cuts. That’s why last fall I directed the campuses to begin exercising great fiscal restraint. And it is why we have put together a thoughtful plan for finding permanent cuts in university operations.

That process is now underway, with 10 budget-reduction task forces developing recommendations for final consideration by me and the chancellors later this spring. It’s too early to speculate on specific cuts and I expect many of them will have a long runway for implementation. I do know that these cuts are going to be painful and that they are going to impact real people and real services across our campuses and the state. And, depending on the final budget that you and the full Legislature approve, these cuts will not shield us from having to consider deeper reductions to our academic enterprise and significant tuition increases for students and families.

I have been candid with the university community and all Nebraskans that at the funding levels proposed by the Governor for the next two years, both of those options would be on the table. Under this committee’s preliminary budget plan, that would not change. In either scenario, when our rising costs are factored in, the university would have to close a budget gap of more than $50 million by summer 2019.

A cut at that level would put at risk our affordability for Nebraska’s young people. It would limit our efforts to grow Nebraska’s economy and meet the needs of a rapidly changing workforce that increasingly requires more college graduates, not less. It would harm our ability to successfully recruit and retain talent in what I believe is the most competitive marketplace of our lifetimes. The chancellors can share real stories about how difficult it is to attract talent even in good economic times. A lack of state support for the university makes us an unattractive destination for the brightest talent who we want to educate our young people, create new jobs, and treat patients at the medical center.

And it would send the wrong message to private sector donors who have seen the state’s willingness to invest in its university and have partnered accordingly.

Quite simply, the steps we would have to take to close a $50 million gap could do enough damage to our momentum that it would take us a decade or longer to recover.

I am asking you to fund the University of Nebraska at a level that would do the least amount of damage possible. As Regent Whitehouse explained, maintaining the university’s 2016-17 appropriation through the next biennium would still require us to find tens of millions of dollars in cuts, given our rising costs. But flat funding, plus the support for UNMC’s transformational iExcel project that was part of the intent language of the 2015-17 biennial budget bill, would allow us to keep tuition increases to the single digits, versus the double-digit increases that we would be forced to consider under the current recommendations. That’s $10 million more per year than your initial recommendation – support that would spare students and families from having to shoulder double-digit tuition increases that we know from past experience can drive our enrollment down. There are university students sitting behind me who can tell you firsthand what those kinds of increases would mean for a typical 20-year-old.

I know your goal is to be fair and equitable to state agencies in making these difficult decisions. Using the start of the current biennium as a baseline, flat funding for the university would still put us behind a number of other agencies and overall state spending in terms of growth. Given our commitment to accessibility for Nebraskans, so far we have elected not to make up that gap with tuition. We have increased tuition by 1.75 percent and 2.5 percent the past two years, the lowest amounts in decades. We can only go so long without considering much larger increases, however, considering that tuition revenue and state appropriations are the only funding sources for our day-to-day budget.

Furthermore, any gap is exacerbated by the funding trends of the past several decades. The university receives 13 percent of the state budget today, compared to 21 percent 30 years ago. State support to the university has not kept pace with inflation or our enrollment growth. If there were any easy cuts, we made them a long time ago.

I’m even more concerned about our limited resources when I look at trends with regard to our bank balances. The university does have cash on hand. But the measurement that matters is days of cash. And Nebraska is trending in the wrong direction. We have 160 days of cash on hand, down from 180 just a few years ago. And our bank balances are far lower than, for example, Penn State, with 364 days of cash, Michigan with 305 days of cash, and Ohio State with 267 days of cash.

In fact, when we look at Big Ten peers and surrounding states, the only other state trending downward like we are is Kansas.

Senators, let me reiterate our pledge to be a partner to you in managing the current fiscal challenges.

But I hope you will consider the fact that the University of Nebraska can also be your closest partner in growing Nebraska out of this downturn.

When you invest in the university, you get a long-term return unlike that yielded by any other entity. You get solutions for the most pressing needs facing our state.

Look around this room. We know that half of us will be diagnosed with cancer at some point in our lifetime. When you invest in the university, you’re investing in an institution that’s building a world-class cancer center that will attract the best and brightest talent to our state and create thousands of new jobs.

We know that the world’s population will soon reach 9.6 billion and that we will need to produce twice as much food to feed those people. When you invest in the university, you’re supporting research that is driving agricultural innovation here and around the world.

We know that in the decade ahead, a significant number of Nebraska’s Baby Boomers are going to age out of the workforce. In the same time period, the number of 18-year-olds in our state will grow. When you invest in the university, you’re helping us remain affordable so those young people can enroll and earn a degree, joining the 10,000 graduates we already produce each year to keep our workforce strong.

We know that the success of Nebraska depends on the success of our rural communities. When you invest in the university, you’re creating a ripple effect in all 93 counties. The university has a presence in each – whether a research center, an extension program, a nursing division, or a student or alum contributing to a vibrant quality of life.

I could go on. When you invest in the University of Nebraska, you invest the future of our state. The Legislature and this committee in particular have a long history of doing that, and I am grateful and proud of the results. I hope our partnership can continue, because I think Nebraska’s best days are ahead.

Before I turn it back to you, I want to thank the Committee for your recommendation to spend revenue bond surplus funds for two important projects on our campuses: The demolition of Cather Hall, Pound Hall and the Cather-Pound Dining Center at UNL, and University Village roof repairs at UNO.

Thank you for your time, and now I would be pleased to answer your questions.