Campus Budget
Budget Update
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June 28, 2010
To the Campus Community,
The state legislature has now completed its conference committee budget, and I wanted to report to you the results of their deliberations. A negotiated settlement of differences in the house and senate will now go to the governor for signing.
I wish I had better news to share.
The budget that the conference committee submitted is actually two budgets. One budget assumes that federal Medicaid stimulus funds (FMAP), amounting to more than $600M for Massachusetts, will be appropriated through legislation and forwarded to the state. The other budget assumes that the Medicaid funds will not be appropriated, and that the state must do without the money it was expecting from the federal government. The previous house, senate, and governor’s budget all included the FMAP funding. At present, however, it appears increasingly unlikely that this funding will be forthcoming.
We are likely to receive an allocation of $193.5M from the state. The conference committee also recommended that the governor grant us stimulus funding at the house level ($5.3M), which means that the total allocation for FY11 is almost $46M less than what we received last year.
In addition, the Board of Trustees decided in early June not to proceed with any fee increases this year. They did not extend the rebate from last year, but they also did not proceed with an additional 3% increase for FY11. This 3% increase was included in our budget projections from December until the beginning of June. Furthermore, we had reason to believe that we would be granted a small flagship fee this year. The loss of this fee revenue, coupled with the reduction of almost $10M owing to the missing FMAP funds, means that in the last month alone our budget revenue has been reduced by over $15M.
There may still be some changes in the budget that could mitigate the precipitous losses we have suffered since the beginning of June. It is possible that the governor could grant us additional, one-time stimulus funding. It is also possible that the Board of Trustees will call a special meeting to pass an emergency fee increase. And it is possible, although increasingly unlikely, that the federal government will pass legislation enabling the Medicaid funding to come to the state. But for now the most prudent course of action is to plan with the conference committee budget and the fee structure that is in place.
Complicating our planning are the dim revenue prospects for FY12. We can be almost certain that stimulus funding of any sort will end this year. State revenues are starting to rebound, but structural deficits in the state budget, caused in part by dependence on one-time stimulus funding, will mean that we are unlikely to see any increase in state appropriations next year. Indeed, Michael Widmer of the Massachusetts Taxpayers Foundation predicts a decline of over 10% in funding for higher education in fiscal year 2012. If the ballot initiative that proposes lowering the sales tax passes this fall, the reduction to the campus budget would be even more severe.
In addition, union contracts will likely raise our base commitments by approximately $10M for FY12. With the prospects of a flat or decreasing state allocation next year and the virtual certainty of a significant increase in expenses of $10M or more, we must budget carefully and conservatively this year. Otherwise, we risk having to make reductions next year that would cripple the campus.
In this stark budget climate we must stick together if we are going to weather this crisis and keep our sights set on achieving our goal of moving into the top tier of public research institutions.
I regret that the state did not fund the union contracts as they were negotiated. But it is unproductive to characterize the actions and attitudes of campus administration as opposed to improving the lot of the outstanding faculty and professional staff on this campus, as some have done. This misrepresentation ignores the consistently supportive statements we have made and steps we have taken over the past two years. Indeed, the provost and I recognize that salaries on campus are not commensurate with our campus's ambitions and that an increase in salaries is an important element in our plans to move the campus to the next level.
We must avoid the divisiveness that can too easily prevent us from reaching our common goals and that most often results in futile finger-pointing and useless recrimination. I renew here my call for civility and understanding among all campus constituencies, so that we can continue to work together, even in these difficult times.
For when we work together, we have seen that we can accomplish amazing things. No one thought we could increase our non-resident enrollment in the incoming class by over 40% in one year. But thanks to cooperation among faculty, staff, and administration, we will have over 350 more non-state students in the class of 2014 than we had last year. Thanks to cooperation among faculty, staff, and administration, we have raised more private money this year than last, even in a difficult philanthropic climate, and we will soon be able to announce the first eight-figure gift ever received on the campus. Thanks to cooperation among faculty, staff, and administration, we are proceeding with the construction of two new life science facilities, and we have a good chance of obtaining funding for the construction of a new academic facility. Thanks to cooperation among faculty, staff, and administration, we are planning for new student housing that will enable us to accommodate the additional undergraduates coming to our campus. And thanks to cooperation among faculty, staff, and administration, we have obtained over $40M in research grants from stimulus funding this past year.
When we work together in a spirit of cooperation and with a common purpose in mind, we can and do achieve great things on this campus. In the face of several recent and unfortunate turns in our budget, it is especially important that we resolve not to inaugurate a cycle of adversariness, but instead continue to build on our considerable successes and strive even more resolutely toward the goals that we all want to achieve for ourselves and for our great institution.
Robert C. Holub
Chancellor
