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UM curators talk budget cuts, retirement, presidential candidates

Thursday, June 16, 2011 | 8:22 p.m. CDT; updated 8:35 p.m. CDT, Thursday, June 16, 2011

COLUMBIA — The UM System Board of Curators on Thursday listened to a bleak account of potential funding cuts necessitated by a recent drop in state support.

At their June meeting in Columbia, board members also heard encouraging news about a pool of more than 140 candidates to replace former UM President Gary Forsee and moved along potential changes in the employee retirement plan.

Nikki Krawitz, vice president for finance and administration, addressed the unforeseen budget shortfall imposed by Gov. Jay Nixon last week with a list of possible areas to tap.

Nixon announced that UM state funding for the 2012 fiscal year would be cut by 8.1 percent rather than the anticipated 7 percent. Krawitz said this additional deficiency amounted to $4.4 million for the system.

She identified a number of areas that could be targeted to meet the loss in funding:

  • Capping enrollment: This would reduce stress on an already-swollen campus but would curb enrollment for some eligible students, she said. It would also limit additional revenues unless the cap were restricted to in-state students.
  • Reducing institutional financial aid: This would be an especially painful cut for students, Krawitz said, given reductions in other financial aid options such as Bright Flight, Access and Pell grants.
  • Reduce the salary and wage merit pool from 2 percent to 1.5 percent: The two largest expenditures in the budget are for people and facilities, Krawitz said. Already, deferred maintenance on facilities totals $1 billion, “negatively impacting academic and research programs.”  But UM salaries are already low in comparison to peer institutions, and this action would only exacerbate the difficulty of attracting top faculty and staff, she said.
  • Increase employee contributions to the retirement fund by half a percent; this action would protect student access and affordability, but also could reduce the ability to recruit top faculty and staff.
  • Eliminate funding for Extension youth programs (4-H Club and others): Although this would help maintain funding for on-campus programs, it would eliminate programs in other counties in the state.
  • Surcharge on students: As in 2003, UM is discussing a surcharge that would allow campuses to retain 20 percent for financial aid. Like other options, this could hurt student access and college affordability.
  • Eliminate the Enterprise Investment Program: Although this would save funding for UM’s core teaching mission, Krawitz said this action could have a negative long-term effect. The program supports new Missouri businesses that would help the future state economy and, in effect, the university system.

“None of these are good options,” Krawitz said.

Earlier Thursday, the Presidential Search Committee announced that the board is examining more than 140 potential successors to Gary Forsee. 

Curator Warren Erdman, who heads the committee, said most candidates preferred to keep their identities confidential but added that he was “enthused by their diversity.”

Erdman would not elaborate on backgrounds of the candidates, yet he called the list “extremely broad” and indicated the inclusion of women and minorities.

Additionally, Erdman said he was pleased by the quality of candidates both beyond and inside the borders of Missouri.

Erdman said the pool has not been whittled down, but the committee is “focusing in” on certain candidates who have either applied or been nominated.

“I’m encouraged by the thoroughness of the process,” he said. “The board members are probing for detailed information in each of the candidates.”

Erdman said the committee would begin the next round of dialogue as early as next week and likely conduct interviews this summer. Throughout the search, the committee remains open to new applicants and nominees, he said.

“This is not a closed search,” Erdman said. "We don’t want to feel the pressure to rush and have to compromise. This search is much more broad and detailed than previous ones.”

Also Thursday afternoon, the Compensation and Human Resources Committee forwarded potential changes to the employee retirement plan to the full board for consideration Friday.

The committee discussed a plan in which a certain amount of income would be guaranteed upon retirement and the rest subject to an employee's investment decisions. It would only affect hires made after Sept. 30, 2012.

This proposal includes elements of the current defined benefit plan, which guarantees income, and a defined contribution plan, in which income is contingent upon performance of investments.

The changes, which have been debated for two years, were met with opposition from some board members who didn’t find a compelling need to shift plans. 

“The question is who is better able to manage the risks of a downturn market?" board member Don Downing said. "The university has the ability to better mitigate market risks.”

Betsy Rodriguez, UM vice president for human resources, said there was no perfect answer.

“One cannot say that the DC plan is best, and one cannot say that the DB plan is best," she said. "In the end, we feel that this is the best course for the university.”

If the board directs the university to proceed to the next step, a final plan design will be ready for a vote in October, Rodriguez said.

The full board meeting Friday will be live audio-streamed at umsystem.edu/stream.


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Comments

Ellis Smith June 16, 2011 | 8:54 p.m.

There already is one UM System campus with capped enrollment, which began with the 2010-2011 academic year. The reason for the cap is inability to accommodate any more students: it's more a structural problem than one of funding.

The situation has an interesting, if unintended, consequence. Missouri University of Science & Technology can and now does impose higher admission standards when accepting students.

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