Weathering the economic storm

The economic crisis could threaten the security of the tenure system, according to an article on Inside Higher Education today, “Layoffs Without ‘Financial Exigency.’” The article names two universities – Florida State and Clark Atlanta– that have already made or plan to make substantial cuts among tenured faculty, and policy changes in other university systems that may make it easier to lay off tenured professors.

Other colleges have made headlines over the past two years for planned faculty layoffs, including Arizona State, the University of California system, Florida State and Virginia Commonwealth. Others established mandatory furloughs.

UNM has been hit hard by the recession as well. While the hiring pause and other belt-tightening measures have helped stave off deeper cuts, many staff and faculty struggle to keep units running smoothly with less support.

Still, protecting the university’s academic mission has remained a top priority. Not only is UNM not laying off faculty, we’re growing it. As of this writing, 29 tenure or tenure-track faculty positions were posted on UNMJobs. In a faculty retirement incentive program under development, reserving those lines for tenure-track hiring has been a key point.

Of course, that things could be worse doesn’t mean they couldn’t be better.

While budget decisions may need to be made quickly, they should also be made strategically, avoiding quick fixes in favor those that will strengthen – or at least not damage – the long-term success of the university and its ability to serve students, patients and the community.

Submit your budget suggestions to the president’s cost containment Web site.

Advertisements

Declining State Revenues Paint a Grim Budget Picture

On August 14, the Legislative Finance Committee heard the latest revenue forecast for the state, and the news was not good.

A Woeful Revenue Picture

The state anticipates a revenue shortfall of about $433 million for the current budget year – the one that just began in July.  In addition, the revenues for the previous budget year did not come in as expected, so FY 2009 is suffering an approximate $309 million deficit.

So all told, the state will have to plug an anticipated budget hole of more than $700 million, which would easily wipe out the New Mexico’s cash reserves.  In fact, the hole has made it imperative for Governor Richardson to call state lawmakers into special session in October to fix the problem.

The budget problem, however, is a moving target.

New Mexico has been slammed with falling oil and gas revenues, but those are not totally to blame for the revenue deficit.  Most of the recent decline can be blamed on weaker income and sales tax collections, and a drop in corporate taxes – all symptoms of the economic recession that continues to plague the nation.

There are some small signs that the recession may in fact be receding, but its continued impact in expected to be felt for the next few years.  And as has historically been the case, it has taken longer for New Mexico to feel the impact of the downturn.  It will also take the state longer than most to fully recover.

What Does This Mean for UNM?

At the present time, it is likely the university will face a mid-year budget rescission of 3 – 5% or possibly more.  If there is a sliver of positive news in all of this, it is that the fiscal year is still young, so there is time to take action.  As always, the university’s primary goal will be to protect its core mission and the well being of our students.

UNM’s projected enrollment increases will translate into new tuition dollars, and most of that new money will go toward lessening the impact of the budget cuts.  The administration is also committed to researching all centrally held funds to determine unrestricted balances that may be available.

Decisions on how to deal with the budget cuts on the academic side will be left to the schools and colleges and administrative units.  The Provost and the Deans have already engaged in strategy sessions, and the Deans will in turn engage their department chairs.

Faculty governance groups, the Staff Council and student government are being called upon to participate in strategizing and planning for how the university will deal with the cuts.  Input will be sought from all campus sectors with the goal of finding the most sensible ways possible to cope with the reductions.  All of these discussions and input will need to come to fruition by mid-September so we don’t have a lot of time.

A Realistic View to the Future

There is a real concern among economists that revenues will continue to decline.  That means this is not a short-term deal and there will be no quick fixes.

This fiscal year’s mid-year rescission will more than likely be followed by lawmakers being forced to make further cuts in the state budget for 2010-2011.  If the sluggish revenue picture continues, more cuts could follow.

Barring an economic miracle, UNM must prepare for the inevitable.  It cannot and will not be business as usual.  Though final decisions will rest with the Board of Regents, President Schmidly, his senior leadership team and a committed campus community will be asked to provide the scenarios for their consideration.  All actions will be carefully considered and there will be close communication with the entire UNM community throughout the process.