Budget Retrenchment at University of Maryland 7/09

Now comes the excruciating process of budget retrenchment throughout state government.  Governor O'Malley's rosey budget projections from last session anticipated an economic rebound this fiscal year that has failed to occur. 

State agency fiscal planners are now grappling with the far-ranging impacts of the "O'Malley budget deficit."

Some insight on this process is provided by the following email sent by University of Maryland College Park President, C. D. Mote, to the faculty and staff at the university:

 

-----Original Message-----

From: President C. D. Mote, Jr.

Sent: Monday, July 27, 2009 7:03 PM

Subject: Update on the Budget Reductions

 

Dear University of Maryland Family:

On Wednesday, July 22, the Board of Public Works approved Governor

O'Malley's recommended cut of $281 million from the State's FY10 budget

that started on July 1, 2009. My goal here is to inform you about the

effect of that reduction on the University of Maryland.

 

Of the State's reduction, $37.8 million will be taken back from the

University System of Maryland, and our share of this reduction is $14.5

million, with $6.8 million to come from our base budget and $7.7 million

coming from fund balances. The Baltimore Sun reported that the Governor

will bring an additional $420 million or greater reduction to the Board

of Public Works before Labor Day, and that it will target State employee

compensation among other reductions.

 

Regrettably, the State's finances have worsened from those used

to prepare its FY10 budget. The Director

of Policy Analysis for the State Department of Legislative Services

projects the State budget shortfall will increase to $1.5 billion in

FY11 when federal stimulus funds will no longer be provided. Our campus

must respond right away to the July 22 recall and begin preparation for

the probable additional reductions for FY10.

 

Over the last two fiscal years, FY08 and FY09, we have been buffeted by

base funding cuts of $12.6 million plus one-time cuts, including

furloughs, of $21.4 million. Our FY10 State General Fund budget began

this fiscal year at about $420 million. However, that budget was not

sufficient to meet our mandatory obligations. Our necessary response

was a 2.5% ($12.1 million) base reduction in the campus working budget.

That initial base shortfall has now risen to $18.9 million for FY10

because of the July 22 base cut.

 

Given these budget reductions over the past two years, there are no

excess funds in our budget and cuts must be made. Cuts will not be

taken "across-the-board." We will be guided to the extent possible by

the priorities of our strategic plan and by our goal to strengthen our

core mission. It is prudent to re-institute an immediate hiring

freeze. Instructions on its implementation have been sent to the Vice

Presidents. Some reduction in our workforce is likely through hiring

restrictions, retirements and other separations. These can be

remarkably and personally painful for us all. When they occur, we will

seek to treat members of our community with dignity and respect through

any transition. Time is needed to redesign operations so that they can

continue to provide the services needed.

 

Clearly, we are beginning a process of doing our business in new ways.

An obvious response to these circumstances is to raise revenues and

reduce expenditures. We are doing both, scouring all possibilities and

following up on all leads. We ask for your suggestions in dealing with

these fiscal challenges. We are working closely with the Senate

Executive Committee as budgetary issues develop and would like input

from the campus as we analyze our options. The administration and the

University Senate have set up a web site to receive your suggestions for

new revenues, expenditure reductions, operating efficiencies and other

ideas (www.president.umd.edu/budget). Suggestions can also be sent

directly and confidentially to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 

Most base budget reductions take time to produce savings. There are

also limitations on the use of some funds that were raised for other

purposes. For instance, federal stimulus funds, research funds, State

bonds sold for capital construction, private gifts, and federal

pass-through funds must be used for their designated purposes.

Increasing the amount of these funds is good for the campus but provides

little relief for the shortfall in the State's support to the operating

budget. Similarly, the costs that we can reduce are also limited. For

instance, our debt service and utility charges must be paid.

 

We have already implemented new revenue-enhancement measures by:

closing the Office of Professional Studies; increasing the overhead rate

for self-support auxiliaries; negotiating a higher federal overhead

rate; offering new professional masters degree programs, new short

courses, and expanding summer and winter term course offerings that

generate new revenues; and, of course, by intensifying our private fund

raising that has raised $645 million towards its ambitious $1 billion goal.

 

Through our shared commitments to increase revenues, and to reduce the

costs of delivering instruction, research and administrative services,

we will emerge from this budgetary setback a more determined and

efficient university. Together, we will move the university closer to

the great university with affordable access we seek.

 

I am enormously grateful to you for your commitment to the University of

Maryland. It is your unwavering determination to build a great

University that carries us through challenging times like these. I

cannot thank you enough for all you give of yourself to the University.

Yours sincerely,

C. D. Mote, Jr.

President

********************

This note was authorized for distribution to

University of Maryland Community by:

President C. D. Mote, Jr.