COLUMBIA — University budgeting in these uncertain times is like steering a ship without a compass.
The University of Missouri System's four campuses have been struggling for the past six months to gauge revenues and expenses in order to prevent a shortfall.
Positions that have come open since freeze began: 102 academic, 132 administrative
Positions filled since freeze began: 36 academic, 43 administrative
Future estimated savings from freeze over a 12-month period: $4.92 million in academics, $3.4 million in administration
Source: Christian Basi, MU News Bureau
First, the slumping economy nationwide led to caution in the legislature about state appropriations for the UM System. In early December, the Department of Higher Education asked state campuses to put together scenarios for 15-percent, 20-percent and 25-percent cuts.
The urgency prompted UM officials to declare a hiring freeze in November and implement expense reductions in January.
UM System President Gary Forsee additionally asked for the authority to impose furloughs, or unpaid leaves of absence.
To ensure enough money was available to meet potential state cutbacks for this fiscal year, the administration sought an immediate reduction in spending on travel, entertainment and other nonsalary expenses.
On top of that, MU is dealing with the impact of the largest freshman class ever, with a trickle-down effect over the next four years. The total student population is anticipated to grow by about 1,000 students next fall as well.
In the midst of the uncertainty, the federal government passed a stimulus package that creates, in theory, a pool of funds universities could tap, especially for grant opportunities.
Although federal stimulus money will help boost state appropriations, the General Assembly still must pass a budget for fiscal year 2010 — and that could happen as late as May.
“This is the most volatile period, really, I can remember in the last 30 years here at the university in terms of not knowing where things are going,” MU Deputy Provost Ken Dean said.
Dean and Tim Rooney, MU's budget director, are responsible for planning a budget for MU under conditions that change on a daily basis. So far, they have pinpointed $17.3 million in potential savings from the hiring freeze and targeted cuts.
MU has a complex $1.7-billion budget based on income from the state, tuition, grants and revenue streams from hospitals and clinics, residence and dining halls, athletics and the bookstore. Those revenue streams make up about 53 percent of budgeted income, though it stays with the various services.
The operations fund, which is financed by state appropriations and tuition, makes up about one-third of the total budget. Tuition money is a larger factor than state appropriations, Rooney said, which makes enrollment numbers an even greater concern than state funding.
Based on current enrollment projections, he said he is expecting a flat freshman enrollment next year, but a growth of about 1,000 students overall.
While smaller than the role of tuition, state appropriations are still a major part of the university's operations budget.
For planning purposes, Rooney said he assumes the funding levels will be equal to this fiscal year's budget as proposed by Gov. Jay Nixon.
“We assume that the pact with the governor of no reduction in state appropriations is going to occur, and yet, we have contingency planning in case it doesn’t,” Rooney said.
Flat state appropriations still create problems for the budget planning process.
"I think you need to realize that even if our budget next year from the state is flat, we have costs that are going to go up, such as increases in utilities," Dean said. "No matter how you look at it, those are expenses we have to be able to deal with next year."
There is also uncertainty over when MU will actually find out their level of state appropriations.
"In a good year, we don’t know that until May, and there are predictions that it could be longer than that," Rooney said.
The hiring freeze was the first cost-saving measure to be implemented, he said, because about 70 percent of the university's expenses are allocated to personnel.
MU has approximately 11,457 full-time employees, including the hospital and clinics and about 1,833 faculty, which includes assistant professors, associate professors, professors and faculty within the extension program and the hospital.
According to MU spokesman Christian Basi, $8.32 million is currently expected to be saved over a 12-month period as a result of the hiring freeze. These predictions are a combination of savings from both administrative and academic staff.
Basi said exact savings from the hiring freeze are hard to predict because of changing salaries and the possibility of positions being combined.
The university's budget office is also in the process of capturing $9 million in nonsalary funds from the various divisions across campus. This amount is equal to 5 percent of the state appropriations for the current fiscal year, Rooney said.
The $9 million is being put into a central account at the university and would be used in the event of a withholding from the state, he said. If no withholding occurs during the current fiscal year, it would be held during during the next fiscal year as a contingency.
One nonsalary expense that will not see reductions is an area called cost of goods sold, an accounting term for items bought for resale. An example of this would be materials purchased and sold through the bookstore.
“To tell them they have to cut back on those expenses doesn’t make any sense because then they wouldn't have anything to sell,” Rooney said.
Auxiliary services such as Campus Dining Services and athletics will continue to pay overhead to the university to cover their share of administrative expenses.
The nonsalary cuts allocated among the divisions were fairly proportional, except for Campus Facilities and MU Extension.
The extension program absorbed a smaller cut because of a potential reduction in state appropriations. Campus Facilities, though, is assuming a bigger hit than other divisions because it can defer projects across campus.
“Campus Facilities is taking a larger-than-normal share because they can defer large expenses such as renovations and repairs, so that helped reduce the cuts for the academic departments, which is what we always like to do,” Rooney said.
He said the division was also able to take a larger cut because of early planning on its part.
“To give them credit, before this whole thing started to unfold, even before the president’s nonsalary letter came out, they began thinking about delaying and pushing things to the back burner,” Rooney said. “They were wise enough to anticipate this.”
When asked about other options for savings, Rooney said all options are being considered but any further savings would begin to affect personnel more directly.
“There’s not much left,” he said.
Rooney and Dean stressed that savings reductions are being done in the best way possible to minimize the impact on students.
“We are not going to do this in a way that compromises the student experience,” Rooney said.
One area under consideration is the hiring of new faculty during the freeze to accommodate any spike or change in student interests.
“We’re looking to fill really pressing needs where we need to meet the student demand,” Dean said. “That’s No. 1, it seems to me. We have to meet the student demand for courses and instruction.”
The hiring freeze does allow exceptions, including the addition of faculty who would be funded by grants.
“We have to be mindful of those opportunities,” Dean said.
Overall, MU officials are still in the early stages of planning the budget for the next fiscal year.
“I think it’s a responsible budget," Rooney said. "We’re in uncharted waters. It’s best to be conservative, it seems to me."