Morehead State and the 2010-12 Budget
Briefing No. 4 by President Wayne D. Andrews
TO: Regents, Faculty, Staff, Students, Parents, Alumni, and Other Citizens
DATE: April 2, 2010
Today I am updating you on two matters relating to our next MSU budget – the current status of the state budget for 2010-12 and the unavoidable expenditures that must be addressed in our internal budget process.
This is the fourth 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.
The General Assembly went home last night for the 10-day veto recess without passing a budget bill acceptable to both chambers. The members will return to Frankfort on April 14 and 15 to finish this year’s session and hopefully to complete a compromise budget. Senate and House leaders are expected to have informal budget discussions during that period.
It now appears certain that the state budget for the 2010-11 fiscal year will include a cut of at least 1.5 percent in our state appropriation and that we will receive no new monies for maintenance and operating costs of two new facilities opened last year and two others scheduled to open within the next year or so. Further, none of our capital construction requests will be funded and the University and each of our employees will pay higher contribution rates to the KERS and KTRS retirement systems, starting July 1.
I look forward to discussing the budget with members of the MSU community next week at the two public forums in the Crager Room – Tuesday, April 6, at 3 p.m. and Wednesday, April 7, at 8 a.m. I am committed to openness in this process.
Budgetmaking at a public university is a complicated task with many components. The revenue side of the budget is dependent primarily on state funds and tuition and fees. Both of those remain unknown today because of no budget and that fact that the CPE won’t approve new tuition rates until next month.
The expenditure side of our budget is driven first by the mandatory expenses commonly called “fixed and unavoidable costs”. As this point, we have identified a dozen such pressures facing us in the 2010-11 budget starting July 1. Those costs are estimated at $5.3 million and, when added to the $636,000 we likely will lose in state funds, the gap between income and expenses is $5.9 million.
Those projected new costs include:
• $2,004,120 to maintain and operate our new facilities, based on the square footage formula used by the Council on Postsecondary Education. Space Science and the Equine Health Center opened in 2009-10 and the Center for Health, Education and Research will be finished later this year. The student wellness and recreation center will open the following year.
• $676,500 in additional health insurance costs for our employees and their families, all of which will be paid by MSU through the current calendar year.
• $618,901 in new contributions to KERS and KTRS, including the new retiree health insurance fund. Employees also will experience increases in their retirement fund contributions.
• $550,000 in uncollectable debts, primarily from former students whose families are struggling in these difficult economic times.
• $375,000 in ongoing contractual obligations for current and future improvements in information technology support.
• $361,600 in mandated tuition waivers.
• $335,400 in increased costs of utilities.
• $118,395 in debt service for the student wellness and recreation center.
• $87,500 in increased fees for general insurance, financial audits and legal services.
• $70,000 in additional premium costs for worker’s compensation and unemployment insurance.
• $60,000 for faculty promotions and tenure.
• $12,400 in increases in rental and lease payments for various properties, mainly at regional campuses.
Granted, these new cost figures are discouraging. So the next briefing will look at our options for revenue growth through tuition and fees and more students and at cost reduction strategies.
As we have done in years past, development of the new budget will be done in collaboration with campus leaders. Opportunities will be provided for input by employees. We will continue to be guided by our strategic plan and by our shared vision of greatness for this institution.
I hope to see you at one of the forums. Meanwhile, please continue to share your ideas through the online Budget Suggestion Form.