Letter to Campus Detailing Budget Strategy from Chancellor and Provost

Dear Colleagues,

With the Board of Trustees' approval of the tuition increase last week, the long process of determining our budget for next year is coming to a close. 

As you probably read in the newspapers, the $14.8 million budget cut for our campus forecast in our January letter to you has turned out to be $40.49 million (out of a cut to the UI system of $89 million).  As a result, we must make reductions that are large, will affect most every unit on campus, and will have real consequences.  We want to share with you the strategy we are following in making these cuts, how the strategy was developed, and what it will mean for all of us.

We began planning for these cuts last fall.  We consulted with students in town meetings about tuition policy and in discussions with the student Tuition Policy Advisory Committee.  We sought the advice of the faculty Campus Budget Oversight Committee and the Deans' Budget Committee, and we consulted with the deans throughout the planning process.  There emerged from these discussions a set of priorities that would guide our planning.

High priority was given to protecting the institution's excellence and stature by preserving its ability to attract and retain superb faculty members, its capacity for renewal and innovation by supporting new initiatives that can make signal contributions, and maintaining a research environment that nurtures scholarly achievement at the highest levels.  High priority also was given to coping with budget cuts in ways that would maintain the quality of our educational programs and preserve students' timely access to courses needed to meet degree requirements and to graduate on time.  The campus' engagement with the state's citizens, communities, public agencies, and businesses was given priority as well, along with the need to maintain essential services for students, public safety, and equal opportunity programs.  We have also given priority to financial aid for students for whom the higher tuition would be a hardship, as we pledged to the students in our discussions with them about a possible tuition increase.

To protect these priorities as much as possible, we devised a budgetary strategy.  The first element of the strategy was the decision to make differential budget cuts, allocating lower cuts to units whose work most directly affects these campus priorities.  As such, academic units received lower cuts (average of 6%) than administrative and service units (average of 7.5%).  Among academic units, lower cuts were made to budgets of units where priorities of research excellence and major instructional responsibilities intersect, where engagement with pressing societal needs is fostered, and where the institution is investing in initiatives and opportunities.  The University Library's centrality to the campus' missions and standing, and its value as a public resource were recognized with a cut of only 1.5%, and no cuts were made to essential programs including graduate fellowships, the Division of Rehabilitation Education Services, and the Council on Teacher Education. 

Similarly, within the administrative and service units, cuts were made differentially based on the units' centrality to these campus priorities.  No cuts were made to the McKinley Health Center, the Principal's Scholars Program, University High School, the Campus Honors Program, the Office of Equal Opportunity and Access, or the Division of Public Safety because of the importance of their special roles.  The essential contribution of Student Affairs units to serving students' needs and interests was recognized with a cut of only 3.14%. 

The second element of the budgetary strategy was a decision to use all available resources to mitigate the immediate damaging effects of the budget cuts and provide a "soft landing" that would allow the cuts to be absorbed over a period of time.  This approach mirrored the campus' use of more than $8M in reserves to help cover the FY02 rescission, and it became the institution-wide financial strategy.  At all levels of the institution-the campus, the colleges, individual departments and units-every effort would be made to ameliorate the most harmful immediate effects of the cuts on the campus' core missions by reallocating all available resources to cover a portion of the necessary reductions where possible in the short term.

The third element of the budgetary strategy was a decision to use new resources strategically to support our highest priorities.  The new funds provided by the additional 5% tuition increase approved last week were allocated in a way that allowed the budget cuts to units to be made differentially, directing support to campus priorities.  Additionally, most of the funds generated by the FY03 tuition surcharge ($5.7 million) have been allocated to provide educational enhancements recommended by the student Tuition Policy Advisory Committee and identified as targets for investment in our covenant with the students concerning how surcharge funds would be used:  access to General Education courses, access to high-demand majors and essential courses, library operations and services, vital student services, graduate fellowships, critical campus network maintenance, and essential classroom upgrades.  Using new funds in these ways will allow us to continue to move ahead despite the budget cut in areas that are most critical to our educational and research missions. 

We believe that this strategy for absorbing our budget cut will protect our core missions and activities to the extent possible.  Difficult decisions had to be made at all levels of the institution, decisions that no one wanted to make but could not be avoided.  They were made in a principled way, based on our priorities for the present and future of this campus.  Above all, we have sought to protect this institution's exceptional quality and make sure that it continues to be the kind of university that drew us all here.  But there is no denying that however much we wish otherwise, the budget cut will have costs to our people and our programs. 

Our students will pay higher tuition next year.  They will have fewer courses to choose from, and seats may be harder to find in their desired courses at their desired times.  In many areas, class sizes will be larger, and fewer elective courses will be taught.  Our resources to support research will be constrained, and our public engagement will be reduced.  The salary freeze will prevent our recognizing in a tangible way the exceptional accomplishments of our faculty and staff during the past year.  The most bitter consequence of all will be the loss of valued employees.  The size of our faculty will be reduced by approximately 75 colleagues through normal attrition over the next couple of years.  Most reductions to other employee groups also will occur through attrition, but a number of terminations and layoffs will be necessary.  Indeed, this process has already begun.

The next several years will be challenging ones for all of us.  For our part, we will work energetically to bring new resources to the campus and manage our way through this financial crisis so that we emerge on the other side positioned to move ahead rapidly as new funds become available.  The excellence and dedication of all who work here are precious assets that have made this institution what it is.  This is perhaps our most valuable resource for coping with the stresses that this period brings.  The campus has for a long time been a wonderful place to make a career.  This downturn will not change that.

The coming period will be a time of tight fiscal constraint and retrenchment in many areas, but it also must be a time of progress on some key fronts.  The ability to launch bold new ideas with early investments has led to some of our university's most important achievements, and we will continue to find ways to take advantage of exceptional opportunities and leverage quality across the campus.  We will find ways to fund strategic faculty recruitment and the retention of essential colleagues.  And we will continue to encourage faculty members to come together to create new opportunities for achievement.  Our commitment to excellence through support of diversity, and opportunities to make signal contributions will continue to move the institution ahead along the paths we have laid out together.

Our university has long conducted its affairs by relying on the thoughtful judgments of decision-makers within the units - the heads of departments, schools, colleges, and administrative and service units.  Their tireless efforts in working with us over the last six months to craft our budgetary strategy have once again earned the trust we place in them.  And, the confidence we place in our outstanding faculty and staff has been earned many times over by your accomplishments and devotion.  We know that the last few months have been a time of uncertainty and anxiety, and we thank you for your continued dedication to one of America's great public universities. 

Cordially,

Nancy Cantor         Richard H. Herman