Kentucky's Budget Crunch
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Morehead State and the 2010-12

Budget Briefing No. 2 by President Wayne D. Andrews

TO: Regents, Faculty, Staff, Students, Parents, Alumni, and Other Citizens

DATE: March 2, 2010


As the result of significant developments last Friday on two fronts, I am updating you today on the current status of the new state budget for the 2010-12 biennium.

This is the second of a series of budget briefings I am providing via e-mail and postings on the University’s Web site at the following link: www2.moreheadstate.edu/budgetcrunch.

In case you did not see or hear the weekend news coverage, Speaker Greg Stumbo and the leadership of the Kentucky House of Representatives met Friday afternoon with nine institutional presidents, the president of the CPE and with former Gov. Paul Patton, chair of the CPE and president of Pikeville College.

Our meeting followed a morning press conference in which Speaker Stumbo was critical of public higher education generally and the community college system specifically. He raised questions about our accountability for the $1 billion we receive each year in state support and suggested that tuition rates might be frozen for two years in exchange for our state appropriations not being reduced in the effort to balance the new state budget.

When I reported to you last week, it had been proposed that our state funding be reduced by two percent each year of the biennium. Within 72 hours, that plan was amended to a two percent cut the first year with no change in the second year. Also, we were informed that there will not be any new appropriations in 2010-12 for the maintenance and operating funds we sorely need for newly-opened or soon-to-be opened facilities.

I am relieved to report to you that our session with Speaker Stumbo and other House Democratic leaders ended on a hopeful note as they pledged to do their best to maintain current state funding of public higher education but, at the same time, we were informed that the eight universities and KCTCS will be held more accountable for statewide goals such as improved graduation rates.

Speaker Stumbo described the 90-minute meeting to the news media as "a very lively and open exchange." I agree wholeheartedly with his assessment. The meeting was very positive and most informative.

I feel that each president left the meeting with a better understanding of the incredible challenge the House is facing in balancing the budget and with an agreement to provide the General Assembly with more information on the achievements of all of our institutions. We regularly report key performance indicators to the CPE but must make sure going forward that our lawmakers also are fully informed.

Our legislative leaders made it clear that they understand the complexities of financing our institutions in these difficult times and that they recognize and value our role in the state’s future. I am confident they will do all they can to maintain our base funding.

On a personal note, I am indebted to our two alumni in the House leadership – Majority Floor Leader Rocky Adkins and Majority Whip John Will Stacy – for their support in that meeting and for what they do constantly to help this institution.

As the budget-making process continues over the next several weeks, please e-mail your questions and/or comments to me using our online Budget Suggestion Form.

I said in the opening of this briefing that there had been developments on two fronts last Friday. In addition to the meeting with House leadership, many of us also are impacted by the filing that day of House Bill 540. A news article is posted on the Legislative Update about this bill concerning the medical insurance fund of the Kentucky Teachers’ Retirement System (KTRS).

The passage of House Bill 540 will increase the contribution rates paid by each of our KTRS members and by the University into the retirement system’s medical insurance trust fund that is used for retiree health benefits. The legislation also will require our retirees under the age of 65 to make payments into that fund until they quality for Medicare.

No one is happy about the prospect of having more money taken from our paychecks but the five regional universities and KCTCS cannot prevent this from happening. In fact, our negotiators were able to extend the increases over six years, rather than the three years originally proposed by KTRS. At present, each of us who belongs to KTRS pays three-fourths of one percent of our gross salary into the insurance fund. That amount is matched by MSU. Starting July 1, the payments will increase each year until 2015 at which time the rate for each employee and the institution will be 3.75 percent. The amount paid by our retirees under 65 will increase each year until it matches what other Social Security retirees pay for Medicare Part B coverage.

As for a budget timetable, we believe the two-year spending plan will clear the House next week. The bill then moves to the Senate for consideration. The Senate must finish its work on the two-year budget bill and get it back to the House for concurrence with changes, if any, preferably no later than March 30. The governor’s 10-day veto period ends April 11 and the General Assembly returns to Frankfort on April 12 for the last two days of its 60-day session.

In closing this report, I want to make you aware that there are other factors which influence our institutional budget, in addition to state appropriations and tuition rates. I have asked Beth Patrick and the budget staff to prepare background material on those elements that I also can share with you in a timely fashion. Our shared goal is a budget that allows us to continue our march to excellence.

Meanwhile, let’s stay focused on our daily work of improving the lives of those we educate and serve. Thanks again for your personal efforts.