February 19, 2016
A letter from President Kirk Schulz: University budget
Dear Faculty and Staff,
Greetings from Anderson Hall! While this is a bit early in the month for my "Dear Colleague" letter, I want to keep the university community informed as we work to finalize our budget for this year and prepare our budget for the upcoming fiscal year. Quite frankly, this news is not the best.
Taking into account multiple demands on our budget, we will be taking the following immediate actions:
• A one-time, 2 percent general use callback will be instituted for each administrative and academic unit at K-State for the remainder of fiscal year 2016.
• Unit heads will be asked to prepare several options for general use base reductions between 2 and 4 percent for fiscal year 2017.
What brought us to this point where we have to look at budget cuts? There are five major factors that have all contributed to our need for internal reallocations:
• Stagnant State General Fund Budget: In my seven years as K-State president, the State General Fund, or SGF, allocations to K-State have either remained flat or decreased each year. In prior years, we were able to use tuition rate increases to offset a stagnant SGF allocation. But, with the tuition cap in place, this is simply not possible.
• Legislative Tuition Cap: The Kansas Legislature capped tuition rate increases at the Consumer Price Index plus 2 percent, which severely limits our flexibility to generate new revenue.
• Decrease in Institutional Fund Balances: Over the past several years, we have depended on institutional reserve funds generated from enrollment increases to insulate the university community from budget cuts. As these funds have been "spent down," we no longer have sufficient central reserves to backfill where needed.
• Increased Utility Costs: We continue to invest in our academic infrastructure with new construction and much-needed renovation of existing buildings. The energy efficiencies implemented over the past several years have resulted in a cost reduction per square foot on electricity. That said, we are still experiencing rate increases and adding a substantial amount of additional space with new construction. Along with the chill plant debt service payment beginning this fiscal year, the overall result is a significant shortfall in the utilities budget.
• University Enrollment and Credit Hour Decline: Enrollment is the lifeblood of our university, and we have worked hard to produce eight consecutive years of record enrollment. Increased tuition funds were used for salary increases, scholarship enhancements, increased utility and health care costs, hiring additional faculty and staff and offsetting state general fund reductions. We are proud that the fall 2015 entering class is the most diverse and academically gifted in our history. However, like many post-secondary institutions in the nation, our enrollment decreased this year in all major categories: domestic undergraduate and graduate students, distance education students and international students. We had a not-so-perfect storm of all being down at the same time.
So, what actions are we taking to ensure we don't find ourselves in a similar position a year from now?
• We are working diligently to get the tuition cap removed for fiscal year 2018. The Kansas Board of Regents has responsibility for setting tuition and fees, and we need that authority restored. The need for differential tuition also is being considered.
• We are exploring a number of strategic initiatives throughout the university community that will be closely examined and vetted by the University Budget Advisory Committee.
• We have an Enrollment Management Task Force working hard to help develop a plan as we move forward.
• We need to find ways to match revenues to needs and spending. We will keep everyone informed about developments and continue to be transparent as it relates to budget initiatives.
Unfortunately for higher education, the budgetary challenges we are facing are not unique to K-State and also are affecting some of our nation's most prestigious public universities. The chancellor of the nation's top-ranked public research university, the University of California at Berkeley, recently announced they are running a $150 million per year deficit and will have to substantially change the way they do business.
When budget cuts occur, there is always significant consternation about the effects these cuts will have on faculty and staff, as well as our core university missions of teaching, research and service. K-State is finishing nearly a decade of being asked "to do more with less." While it is easy to be discouraged, I remind myself each day that we will all continue to work hard to ensure our students have the same great experience at K-State that they have had for more than 150 years.
Again, I thank all of you for what you do each day and greatly appreciate your dedication to excellence. I look forward to sharing more information in the coming weeks.