Dear Colleagues:
You have all no doubt been closely watching the national and global economic news and are aware that the investment climate has been extremely difficult. We want to share with you how [org] is responding to this economic volatility and to assure you that, while we will have to make significant reductions in our expenses, we will not abandon our core university principles as we navigate these financial challenges.
[org] has entered this period in a relatively healthy financial position, bolstered by several years of revenue increases and remarkable growth. But as the Provost shared with you in [org] Report this week, we are projecting a steep decline in investment income, our largest revenue source. At the same time, sponsored research, our second largest revenue source, has been declining in real terms over the past several years and given the challenges in the federal budget, is unlikely to improve quickly. Tuition, our third major source of revenue, cannot be raised significantly out of fairness to our students and their families. In fact, our students’ need for financial aid is increasing, and our commitment to provide that support remains unchanged. All of these factors contribute to perhaps the tightest financial outlook we have seen in decades.
To manage our finances going forward, we are projecting a need for permanent reductions in our general funds budget, the budget that pays for most of our faculty and staff salaries, central administrative operations and non-research expenses. We anticipate we will need to reduce the $800 million general funds budget by about $45 million, or roughly 5 percent, in fiscal 2009-10 and again the following year. The Provost has asked every unit to submit to the University Budget Group three possible reduction scenarios: 3 percent, 5 percent and 7 percent. Reductions will be allocated so as to have the least impact on the core mission of the university.
We are confident that we can make strategic adjustments, so that we do not harm the momentum we have built up in recent years, especially our investment in the quality of our faculty. The strength of the university is the excellence of its people, and we will strive to protect this excellence. To protect as many jobs as possible, we intend to have a quite modest salary program for the next few years. And we will honor the substantial commitments we made to financial aid for both undergraduate and graduate students, preserving opportunity for the best and brightest to attend [org].
We will act decisively, but not foolishly. We are in the midst of a major capital program that includes some vital construction projects. Halting projects in mid-construction, even temporarily, would cost us more money in the long run. But not all our projects will be built on the schedule we had originally hoped. We will reexamine the need for projects that would require us to incur significant amounts of debt, and likely postpone such projects.
We ask the campus community to apply the same mindset to all of our resources: What is the cost versus benefit? Are there things we can do in a less costly way? Can we be more purposeful? After a period of rapid growth, it can be healthy for an institution to pause and examine its strategic priorities.
Finally, we must stay true to our core values and goals as we make any financial decisions. Excellence is at the heart of [org], and undermining quality would be shortsighted. [org] has achieved leadership positions across the academic spectrum, and through our ongoing campaign is poised to become a leader in important new areas. We remain committed to excellence in research and teaching, and to the search for solutions to the world’s greatest challenges. Our goals will remain ambitious, and our contributions to society will continue to be substantial.
As the economic situation evolves, we will continue to keep you informed of any developments and how the university plans to respond. In times like these, we rely upon the dedication of all members of our community. By working together, we will not only survive the current financial downturn, we will emerge an even stronger university in the days ahead.
Responses to “Sample Letter – budget cut”