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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

Budget Crunch: Local Colleges Brace for State Financing Cuts

January 02, 2009

By Steve Vockrodt - Kansas City Business Journal Staff Writer

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Few options for cuts in higher education budgets will be off the table as local universities and colleges prepare for what probably will prove to be a grim legislative session.

News coming from Topeka of late hasn’t been good for higher education. Gov. Kathleen Sebelius has called for a $114.4 million reduction in higher education financing during the next two years. That news followed state projects that a budget shortfall could exceed $1 billion during that time.

“No matter what areas you cut, it’s going to be bad for the citizens,” said Rep. Terrie Huntington, R-Fairway, chairwoman of the House Higher Education Committee. “With students, obviously, you make too many cuts and access to education is limited because tuition prices will have to increase, and that’s not a good thing.”

The scene isn’t any prettier in Missouri, where in December legislators learned the state faced a $340 million budget shortfall through the current fiscal year, which ends in June.

A subsequent memorandum from University of Missouri System President Gary Forsee indicated he had received word from the state that public universities may have to operate with between $60 million and $100 million less in state appropriations for the coming year.

Gary Forsee
Gary Forsee

Although few university officials know exactly how legislative budgets will force institutions to pare their finances, most say schools will try to protect classroom instruction to the extent it is possible.

“Programming ought to be OK on this campus,” said Robert Clark, vice chancellor in charge of the Edwards Campus of the University of Kansas. “I don’t think that we’ll be affected too greatly by the programming element of it.”

The specter of hiring freezes, should they occur for the University of Kansas, would have a negligible effect on the Edwards Campus, Clark said. “Obviously, certain things are going to be affected, and services may be one of them, and hiring freezes may be another,” Clark said. “That won’t really affect us because we have a skeleton crew, and a lot of people who are here have been here for a long time.”

In anticipation of shortfalls in higher education budgets, the University of Kansas in August outlined to the Board of Regents steps it was taking to adopt a 3 percent cut in the current fiscal year.

Robert Clark
Robert Clark

They included reducing expenditures by $4.64 million for the Lawrence campus and $3.7 million for the University of Kansas Medical Center in Kansas City, Kan.

The medical center also imposed a 90-day delay in filling certain state-supported positions, a move which officials said they expect will save $1 million.

A memo to faculty from Richard Lariviere, provost and executive vice chancellor of KU, said that rather than across-the-board cuts within the university, vice provosts and school deans would be given the authority to determine ways to reduce spending.

The same memo said that the university administration would look for efficiencies, such as energy efficiencies, to save money and that faculty would continue to be promoted and tenured by the same criteria, regardless of the economy.

Donald Perkins, budget director for Johnson County Community College, said the school is waiting until the spring to see to what extent its expenses need to be cut.

JCCC drew 16.5 percent of its revenue from the state in 2008.

“What expenses may need to be cut, we need to know how much,” Perkins said. “We have some idea based on the Sebelius memo, but certainly it seems that we should expect that there’s a possibility that it could be different in the spring, that it could be more.”

The last time the Overland Park college faced budget difficulties was in 2002 amid the national economic turmoil at the time.

Perkins, echoing sentiments from KU’s Clark, said the college sought to cut expenses outside of the classroom.

For example, it cut back in travel expenses and scrutinized requests for administrators to make trips for conferences and seminars and the like. The college draws the largest portion of its budget — 47.2 percent — from Johnson County property taxes.

Perkins said there was some potential that the county’s valuations may go down in the coming year, further complicating matters.

But Perkins said that the college’s overall budget remains strong, with the option of administration spending down some reserves to cushion the blow from the reduction in state and county revenue sources.

It’s been as difficult to conceptualize what challenges Missouri’s budget will present to public universities.

Various scenarios for state aid cuts could cost the University of Missouri-Kansas City alone between $11.7 million and $15.6 million.

UMKC Chancellor Leo Morton said that wouldn’t put a halt to ongoing capital projects on the campus.

Leo Morton
Leo Morton

The University of Missouri System has been under a hiring freeze since November.

The system typically receives $400 million in state financing, so the projected $60 million to $100 million in potential budget cuts to the system were what Forsee described as “unprecedented and will require an extraordinary response on our part.”

Forsee said in a memo to the system community that typical cost-cutting maneuvers, such as the current hiring freeze, across-the-board cuts and scaling back travel and training costs, won’t be enough with the present economic situation.

The University of Missouri System has declared that the potential state aid cuts could result in work force reductions and increased tuition and fees.

“There will be impacts across all the dimensions of the university,” Forsee said. “I don’t think we can hope and wish this will all go away. There will likely be broad impacts, and our role as leaders is to minimize that impact.”

svockrodt@bizjournals.com | 816-421-5900