MSP Chronicle: update on the budget situation and associated actions

This will cover the following items: the budget numbers, Chancellor Lombardi's efforts to handle that cut, theories about why it happened, MSP's suggestions for alternative cuts, a note on program mergers and consolidations, thoughts on next year, and a final caveat.

BUDGET NUMBERS:

The Senate had proposed a $26 million cut to the Amherst campus budget; the House a $38.5 million cut. We ended up with a $41 million cut.

That was a major surprise to many people. For the last 25 years, it has almost always been the case that the Senate gave us a better budget than the House, and that the conference committee resolution was close to the Senate number.

The cut is $41 million instead of $38.5 million because the budget is so low that it is not enough to cover the salaries of all the employees who have in the past been state-funded. Next year, some of their salaries will need to be paid out of the curriculum fee. But the state only pays for the fringe benefit costs of state-funded employees, so the university will need to pick up a couple of million dollars in extra fringe benefit costs.

HANDLING THE CUT:

Chancellor Lombardi has announced further cuts to Categories I, II, and IIIA. (He deserves enormous credit for his openness throughout this process; you can see what he has done at www.umass.edu/budget.) The cuts so far announced total about $21.5 million dollars.

On Monday Chancellor Lombardi will be meeting with President Bulger and the other campus chancellors to propose a fee increase of $750 per semester to begin in January. If they approved that, and if the trustees subsequently agreed, that would generate about $9 million in revenues (after setting aside substantial amounts for additional financial aid, something the university does each time it raises fees).

That would not solve the situation for next year, but it would mean that the following year's budget would be roughly in balance. If the university is only facing a one-year problem, it hopes-expects to find ways to borrow (mostly from itself) to cover the problem. People should be warned, however, that this means every account on campus that had any money in it has been rounded up to cover immediate problems. Some deans, for example, have sacrificed their reserve accounts to avoid laying anybody off. At the moment that's fine, but if you go to the dean in November needing just a couple of thousand dollars to solve a pressing problem, the money just won't be there.

If the trustees approve a fee increase, Chancellor Lombardi still hopes to avoid any layoffs of faculty or librarians. Obviously, if the trustees refuse the fee increase, we will be dealing with a huge mess.

WHY IT HAPPENED:

Theories about why the cuts were so bad abound. Some possibilities include: (1) It's a Bulger tax, our penalty for his bad publicity; the state colleges were only cut by 13.5%, instead of our 18.5%. (2) Speaker Finneran is punishing the western part of the state for its opposition to him; this year Nancy Flavin, a member of Speaker Finneran's team and of the conference committee, wasn't there to moderate that. (3) Something went wrong in the Senate, or at least it couldn't exercise the counter-influence it often has. As this goes out Sen. Stan Rosenberg is working hard to round up support for a supplemental budget to try to get us back to something close to the Senate number. (4) The legislature, and maybe the voters, don't appreciate what we do and the need for a first-rate university; as a consequence, the very bad budget situation left us especially vulnerable. (5) For an adequate budget the state needs to raise revenues, but instead legislators decided the university when underfunded could raise tuition.

MSP'S SUGGESTIONS FOR ALTERNATIVES:

The MSP has suggested to the chancellor alternative actions that could be taken that would save $8 to $9 million and not involve laying off any unionized campus employees. We emphasize that many of these are actions that we would NOT want to take in ordinary times. They damage the university, but we believe they damage it less than closing programs or laying off faculty or librarians. (These numbers have not been adjusted for Chancellor Lombardi's most recent announced reductions.) The actions we proposed include:

President's office, $1-2 million: If the president's office took a hit proportional to the campus, we calculated it would need to be cut an additional $1 million; if it went back to its 2001 funding level it would be cut $2 million. (And of course the campus budget has not increased since 2001; much of this is People Soft.)

Administrative reductions, $1 million: We've given the administration the names and salaries of administrators who occupy positions that did not (so far as we can determine) exist in 1991. In 1991 we had more faculty than we do now, so presumably we could get by with the number of administrators we had then. The actual salaries on our list total over $2 million; we assume at least half that could be saved (some are faculty who would go back to their units).

Administrative salary reductions, $600,000: Since 1991, average salaries for full professors have increased 46.2% (while the number of full professors declined from 648 to 497). Many administrators' salaries have increased much faster. We propose they go back to a 46.2% increase.

Incentive retirement, $1.6 million: Faculty already eligible to retire at 80% of pay could be guaranteed post-retirement contracts for 20% of their pay, for one, two, or three years (at their choosing). For 20% of their pay they would do 50% of their work. With their pensions, they would receive the equivalent of full pay. Their departments could cover the most pressing needs, the money generated would stay on campus, and even after setting aside significant amounts to plug further holes, there would be a major savings.

Full year sabbaticals, $750,000: If faculty were offered the option of taking a full-year of sabbatical at 75% of pay the university would save 25% of their pay. The actual reduction would be over a million dollars, but some of the money would need to be set aside to cover the most pressing course needs. This program would reduce course offerings, but increase research and grant productivity and improve morale.

Associate deans, $150,000: Although many perform valuable work, we propose they go back to their units, increase teaching offerings, and lose their 15% increase for being on full-year contracts.

Fleet reduction, $800,000: The university owns about 500 vehicles. We propose selling 200 of them at an average of $4,000 each.

Capital budget, $2.4 million: Most universities have bonds to cover the cost of the capital budget. Because the legislature didn't adequately fund maintenance, the university started using operating funds for it. Although many of the projects can't possibly be delayed (leaking roofs), we think additional reductions can be made.

PROGRAM MERGERS AND CONSOLIDATIONS:

The administration has made a variety of proposals; each comes with an implicit threat that the alternative might be layoffs. If departments think these mergers strengthen the units, that's wonderful. If departments oppose the mergers and think they undermine the integrity of the programs, faculty should by all means make that case in all available forums, including the Faculty Senate process.

THOUGHTS ON NEXT YEAR:

Clearly, the university is not making an effective case for itself. Since other groups (the president, trustees, legislature, governor) aren't doing so, the faculty (and students) will have to examine taking a more active role. Beginning in the fall, the MSP intends to sponsor a number of forums on the future of the university, and to initiate a discussion about appropriate and effective ways to respond.

FINAL CAVEAT:

Things are changing fast. None of us has complete information. We've tried to check things but think that at this point timeliness is crucial, and better to have this information in your hands now even if minor errors have crept in. Obviously, if there are such errors please notify the MSP office (msp@external.umass.edu). Thanks.