Campus Convocation, 25 January 2010
Remarks by George M. Dennison, President
The University of Montana
Monday, 25 January 2010
Good afternoon and thank you for attending this special campus briefing on a daunting challenge we must and can manage while continuing to serve students. I know you have followed the news reports concerning the unfortunate State revenue situation, and you undoubtedly understand that the dismal projections will entail negative results for The University of Montana and the Montana University System. We had a very tight but balanced budget prior to these recent developments, and we have very few options to consider as we prepare for further budget reductions. Our colleagues in other states have found it necessary to deal with similar developments. It helps immensely that we did some planning earlier in anticipation of problems in the next biennium resulting from the withdrawal of the federal stimulus funds. I will take this occasion to thank everyone involved in that process because of the advanced preparation it provided. Nonetheless, we did not plan for budget reductions during the current biennium, a challenge that forces us to deal with the consequences immediately.
As we develop our plans for implementation during FY 2011, beginning on 1 July 2010, we will adhere to the priorities we established during the earlier process. I will restate them briefly:
- Maintain a balanced budget.
- Serve the students who have come to the University, assuring they can get the classes they need and remain on track to graduate.
- Protect the academic programs which have attracted the students.
- Provide as much security as possible to the work force, preventing layoffs and reductions in force.
- Maintain momentum in research and graduate education.
- Fulfill the mission of the University.
These priorities guided the earlier planning process, and we will sustain them as we move forward.
The challenge before us requires careful thought and attention to detail so as to make certain that we respect our priorities, as good faith requires. In addition, we must now keep in mind that resolving the current problems will not end the matter. The next biennium continues to require our attention because of the withdrawal of the federal stimulus funds combined with the current bleak revenue outlook in the State. Whatever we do now will in all likelihood remain permanent and we will need to consider carefully the possible impacts for the 2013 biennium. These facts make it clear that we must move forward with the reform and re-invention agenda I outlined in September to position the University for the 21st Century so it can continue to fulfill its mission. With these considerations in mind, we have developed a plan for implementation over the next three years, beginning in FY 2011, to achieve our objectives and adhere to our priorities, pending approval by the Board of Regents. The plan requires Board approval for implementation which we will seek.
For FY 2011, we will have to adjust the budget by an as yet undetermined amount. It appears that the amount ranges from $500,000 to $2,200,000 - between 1.2 and 5 percent of our State appropriated funds - depending upon actions taken by the Governor and perhaps the Legislature. A more precise estimate, taking into account a number of technical considerations, suggests a budget adjustment in FY 2011 for the Missoula campus of roughly $1,700,000. Moreover, we must plan to accommodate the withdrawal of the federal stimulus funds at the beginning of the next biennium and maintain a contingency account in the event of unanticipated challenges. In any case, to reduce an already tight budget, deal with budget changes of this magnitude, and adhere to our priorities will necessitate adjustments in revenues as well as expenses.
As much as we prefer otherwise, a tuition increase offers one of the few available alternative sources of revenue. A tuition increase of 1 percent per year in each of the next three years will generate roughly $900,000 in additional revenue per year, or, with compounding, about $3,000,000 in base funding over the three years. The yield will improve if we can increase enrollments as well. However, in the current environment, prudence dictates that we must not rely on enrollment increases to resolve the problem.
As we consider this alternative, we must bear in mind that we have kept increases in tuition low by comparison to other institutions during the last few years. Nevertheless, under the existing circumstances, I do not believe we can fulfill our commitment to students and the academic programs without modest increases in tuition. Students have consistently called for attention to student success and maintenance of the academic programs, possible only through protection of the faculty and staff. At the same time, we must and will continue our financial aid programs to assist those students otherwise at risk of losing access because of lack of resources. The private sector has provided invaluable support in this regard over the last few years, and we will need that support even more in the future.
In addition, I believe we must change the designation of the flat spot used to calculate full tuition on the Mountain Campus, but not for the College of Technology. We will not change the College of Technology because of differences in the student population enrollment patterns. As I mentioned in earlier communications dealing with the withdrawal of the federal stimulus funds, I think that setting the flat spot at 9 rather than 12 credits on the Mountain Campus more equitably allocates the costs associated with the delivery of instruction to full- and part-time students, while also encouraging students to carry full loads so as to graduate on time. It costs a student no additional tuition to take more credits after enrolling for 9 credits. Making this change impacts some students favorably and some negatively, while the current situation has a similar effect. On balance, I believe that the incentives to graduate on time outweigh the disincentives. Making the change will generate roughly $1,500,000.
The only other alternative revenue source involves an equitable reallocation of the State appropriation to assure that the pro-rated State subsidy per resident student follows the student to the campus selected for enrollment. The reallocation does not contemplate providing the same level of subsidy to every resident student regardless of the campus of enrollment. Rather, it requires computing the subsidy amounts by campus and then reallocating funds so that each campus receives the appropriate pro-rated share of subsidy funds based on 1) the defined subsidy by campus and 2) the amount of funds available for allocation. Such an approach generates equitable - not equal - allocations among the campuses. Reaching the final objective of equitable allocations will in all likelihood necessitate reallocation over at least two years because of the potential impacts on campuses that have benefitted for the last few years from the absence of any such equitable adjustments based on actual resident student enrollments. Nonetheless, given the current level of the imbalances - some 1,000 resident students above the subsidized level on the Missoula campus alone and 1,500 for all four University of Montana campuses - a reallocation going half of the distance will provide at least $1,000,000 per year to the Missoula campus, or $2,000,000 over two years.
To prepare for the future, we must also plan for expense reductions wherever we can without violating our priorities or damaging the institution. You will recall that we had several action items on the agenda for implementation to deal with the withdrawal of the federal stimulus funds at the beginning of the next biennium. Having found these ideas worthy of consideration, we need now to implement them, with each sector of the University having the flexibility to take action - after advance approval - in ways that will achieve the savings goal, respect our priorities, and protect the institution from damage. I will list the strategies along with an estimate of their potential savings.
- Manage vacancies that occur during the coming two and one-half years, filling them when necessary and leaving them vacant when possible without violating our priorities or damaging the institution: $500,000.
- Reducing over-time and extra-compensation pay coming from University General Funds when possible without violating our priorities or damaging the institution: $150,000.
- Implementing a four-day work week, except in those instances when closing facilities violates our priorities or potentially increases costs: $450,000.
- Reduce non-essential travel drawing on General Funds, implement energy saving steps, cut operating costs, and reduce copying facilities and the like: $250,000.
To summarize, these revenue and expense changes will generate $7,850,000 in base adjustments over the three years:
- $3,000,000 in increased tuition revenue;
- $1,500,000 from adjusting the flat spot;
- $2,000,000 in State appropriation reallocations; and
- $1,350,000 in expense reductions.
With these adjustments, and continuation of our reform and re-invention effort, we can manage the challenge of the next few years, focus on student success, protect the academic programs, and sustain the University in its mission. However, we will succeed only if everyone contributes to the effort. We must meet student needs or see our situation worsen, just as failure to pay attention to research and graduate education will produce a similar result. Working together, we can and will prevail. Let me thank you for all you have done to date and all that you will do in the future. You make the difference.
Finally, this occasion affords me the opportunity to inform the campus and larger communities that I have notified the Commissioner of Higher Education and the Regents that I will retire from the Presidency of The University of Montana on 15 August 2010 - or as soon thereafter as the Board of Regents arranges for a successor to assume the position - twenty years to the day since my arrival on campus in 1990. I originally intended to announce this decision last September but delayed it on request until after the successful conclusion of the search for a new President of Montana State University. I consider it a high honor and rare privilege to have served as President of a wonderful institution, made so by the people who constitute it. I cannot speak about stepping out of the role as President of The University of Montana without expressing my deep gratitude and profound respect for the faculty, staff, students, and alumni who have worked with me over the years to advance the University. I truly believe we have together positioned the University to respond to the challenges and opportunities of the 21st Century. Make no mistake, Presidents come and go, but students, faculty, staff, and alumni remain. You deserve the credit for making The University of Montana a remarkable success. I can take my leave knowing that my alma mater remains in good hands and will continue to develop, whatever the challenges before it.
In the next couple of weeks the Commissioner and Regents will organize a search process to identify the next President of The University of Montana. I will do all I can to assist, but intend to stay out of the way. Over the coming three years, I plan to write a history of The University of Montana - a labor of love as well as hard work - so I will spend a good deal of time doing the necessary research and talking to people. I will also consider some teaching as the opportunities present themselves. I have enjoyed these past twenty years more than words can convey, in large measure because of the quality of the people who constitute The University of Montana. I must also express my appreciation to the Commissioner and the Regents - as well as their predecessors since 1990 - for the friendship and support they have bestowed upon me. Their support and your collaborative efforts made my work as President a rewarding and fulfilling experience. Based on all I have learned, I can confidently paraphrase the oft-invoked toast coined by founding President Oscar John Craig:
TO THE UNIVERSITY, BECAUSE OF YOU, IT SHALL PROSPER!
Thank you for your attention today. As you can see, we have no reason for panic and every reason to move forward. But in doing so, we must pay attention to our priorities. I will answer any questions you may have.
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