Kentucky's Budget Crunch
MSU Collage Image

Morehead State and the 2010-12 Budget
Briefing No. 5 by President Wayne D. Andrews

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

DATE: April 28, 2010

Today my objective is to update you on the latest developments relating to our next MSU budget – the current status of the state budget for 2010-12 and the setting of tuition rates for the 2010-11 school year.

This is the fifth of a series of budget briefings I am providing via e-mail and postings on the University’s Web site at the following link:

No one knows exactly when Gov. Steve Beshear will call the General Assembly back to Frankfort to enact a biennial budget. Both sides appear to be far apart with the Senate Republicans saying no new debt or business taxes and the House Democrats insisting on millions of dollars worth of construction projects to generate new jobs to speed the state’s economic recovery. Further, Senate President David Williams says his chamber won’t return unless the budget details are settled in advance of the session.

The governor met with both legislative leaders last Friday and encouraged them to reach an agreement before he issues the call. He has tried consistently to protect public education but only the General Assembly can authorize new revenue.

We had expected a special session in June after the May primary election but Gov. Beshear has indicated it could happen in May because he needs time to negotiate the refinancing of state bonds to take advantage of better interest rates. Under Kentucky’s constitution, only the governor can call a special session and set the agenda.

MSU and the other institutions of public higher education are assuming at this point that the new state budget, whenever it materializes, 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 new facilities. Also, each institution and its employees will pay higher contribution rates to the KERS and KTRS retirement systems, starting July 1.

State government faces a tough budget year in 2010-11 but the outlook for the second year, 2011-12, is even darker. The potential loss of federal stimulus funds from the state budget in that fiscal year could have a particularly harmful impact on higher education. Like other institutions, we are trying to look ahead in terms of developing a strategy to cope with even greater reductions.

I appreciate those who participated in our public budget forums earlier this month. It should be clear to everyone that we face a major challenge in balancing our budget while trying to keep moving ahead toward our shared goal of greatness.

Students will have an opportunity to learn the details of our budget dilemma and how tuition rates fit into the budgetmaking process when we conduct our annual tuition forum today (April 28) at 5:30 p.m. on the first floor of ADUC. Please encourage your students to attend so they will be fully informed on tuition issues.

The Council on Postsecondary Education (CPE) voted last Friday to set maximum tuition increases at four percent for KCTCS, five percent for regionals and six percent for UK and UofL.

As the only public university using per-credit-hour tuition rates, our tuition calculation is a bit more complicated than the others. It is even more so this year as we try to prepare for debt service for the new student wellness and recreation center which will open next year. You may recall that our students voted several years ago to impose a special fee to fund the construction and operation of this facility. Only about a third of that fee has been assessed to date. Under the CPE tuition parameters, we must have special authorization to increase that facilities fee as part of our tuition.

We are well aware of the serious economic challenges facing our students and their families. The challenge of determining reasonable yet affordable tuition is a delicate balancing act. On one hand, we must adequately fund the institution but, on the other, we must not intentionally price ourselves out of the higher education marketplace.

Even with the proposed tuition increase of about five percent, MSU will be left with a potential gap of about $2.5 million between revenue and expenditures. Reducing costs and increasing revenue through enrollment growth must be among our budget strategies. And we will have no choice but to further reallocate our existing financial resources. That will be done in collaboration with campus leaders.

In a related matter, we have found it prudent to make changes in our tuition waiver program for students who enroll in our courses while still in high school. The following is a letter I sent last week to local school superintendents, principals and guidance counselors to explain what we are doing and why it has become necessary.  > Letter to Superintendents 

I have been asked on several occasions to comment on the impact on MSU of a state government shutdown on July 1 if there is no state budget. From what we have learned from state officials, public higher education institutions would be directed to suspend all operations because we are not considered essential to public safety. Hopefully, we will not have to deal with such an extraordinary situation. I went through it in Tennessee and it was not pleasant for anyone.

In closing, I pledge to you that we will continue to be guided by our strategic plan and by our shared commitments to this institution and to each other as we carefully chart our course through these perilous times.