GEORGE KENNEDY: MU's budget nothing but bleak

Thursday, January 26, 2012 | 6:25 p.m. CST; updated 3:50 p.m. CST, Monday, January 30, 2012

Coming soon to a service club near you: Tim Rooney and more than you ever wanted to know about our university’s budget.

Along with about 20 other faculty members, I got to see a kind of preview earlier this week. It was even more depressing than last year’s version.

Tim is MU’s budget director. Working for Provost Brian Foster, he has the unenviable job of trying to balance revenue and expenditures when the latter keep growing and the former is increasingly inadequate. I’ve attended several of his show-and-tell sessions now, and the news is never good.

Actually, he told me when I called him Thursday, off-campus groups won’t get everything we saw. They’ll get a shorter version that explains the components of the budget and emphasizes the university’s impact on Columbia. They won’t get to play with the budget scorecard, an interactive program that allowed us to follow along as he demonstrated a variety of ways to cope with the latest bloodletting proposed by the governor.

In case you’re not a Rotarian, here are some of the basics:

MU is a $2 billion business. Most of it is provided (and spent) by the auxiliary enterprises. The hospital and its physicians make up about three quarters of that. Other enterprises include the athletics department, the bookstore, KOMU and a few other self-sustaining operations.

The general operating budget, the part that pays faculty and staff, amounts to about $510 million. Tuition and fees now contribute 60 percent of that. Only a third comes from the legislature and governor. As we’ve heard, Gov. Nixon recommends for next year a 15 percent cut for higher education. The hit for UM's flagship campus would be $21 million.

And how important to Columbia is the flagship, you ask? Well, if we were all paid weekly, the payroll would be $16 million. Over the past 10 years, the campus has averaged spending $138 million on construction and renovation. Projects valued at $450 million are under way now. Without the university, Columbia would be Hallsville.

State support peaked in 2001. Since then, the state appropriation has decreased 15 percent. That has happened while MU’s enrollment has grown by 45 percent (from about 23,000 to about 33,000). The Consumer Price Index has inflated by 30 percent.

These days, Missouri ranks 44th among the states in state support per capita. All our neighboring states do better. Arkansas, for example, contributes twice as much per capita. When you divide our state appropriation by the number of Missourians, you get $161.82. That’s the lowest in the Big 12. It will be the lowest in the SEC.

The only states that do worse are Oregon, Arizona, Colorado, Vermont, New Hampshire and Pennsylvania. Wyoming is the most generous state. The top 10 include Alabama, Mississippi, Louisiana and Nebraska.

Looking ahead, the picture gets no brighter.

One thing we probably won’t see is the 3 percent salary increase that has been discussed. Tim’s scorecard shows why. When he plugs that raise into the program, it responds that a 13 percent increase in tuition would be needed to balance the budget.

Even without the raise, closing the gap would require tuition to go up 8.5 percent.

Neither of those hypotheticals is likely. The budget builders remember what happened last year, when the university raised tuition above the inflation rate and the governor responded by cutting the appropriation further.

So the scorecard shows that with no raises and a 3 percent tuition increase to match the inflation rate, there’s a $12.6 million chasm between income and outgo. Bridging that gap will be painful.

As Tim said at Tuesday’s session, "We've already plucked the low-hanging fruit."

He likes an analogy between the university and a tree. The roots are nourished by the state and tuition. The trunk is the core missions, with benefits to all the stakeholders as the branches and foliage.

We can only hope the noise coming from Jefferson City isn’t a chainsaw.

George Kennedy is a former managing editor at the Missourian and professor emeritus at the Missouri School of Journalism.

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Ellis Smith January 27, 2012 | 5:52 a.m.

George, do you remember the fast food commercial where somebody said, "Where's the beef?" Applied to the present subject, if there's going to be something done, both substantially and soon, there needs to be an outcry from the general public.

Why isn't there one? Nobody seems willing to answer that question. It wasn't answered in 2002 and it hasn't been answered since then.

Could it be that the plight of higher public education isn't near the top of the list of concerns the public presently has? Perhaps it SHOULD be, but is it?

(Report Comment)
Jimmy Bearfield January 27, 2012 | 7:31 a.m.

"When you divide our state appropriation by the number of Missourians, you get $161.82. That’s the lowest in the Big 12. It will be the lowest in the SEC."

If you're going to drag out those kinds of comparisons, then you should also mention that MU’s tuition is below the averages of the SEC, Big 12, Big Ten and the AAU. That means there's still plenty of room to increase tuition. Parents and students would continue to pay, if recent history is any guide. As MU Budget Director Tim Rooney said earlier this week: “Every time we’ve increased tuition, we’ve had record enrollment.”

(Report Comment)
Ellis Smith January 27, 2012 | 12:46 p.m.

It's true that for certain majors offered by UM System there ARE no alternatives elsewhere in Missouri. As extreme examples, if you want a degree in Ceramic Engineering you have two choices, MS&T or Alfred University in New York state. For Metallurgical Engineering, you have either MS&T or just six other schools nationally. I lack specifics for Mining Engineering and Petroleum Engineering but the situations are similar. Graduates of these disciplines command high starting salaries (as much as $100K for Petroleum Engineering, with only a BS degree).

Raising tuition is surely justifiable, but remember, for the programs cited we're talking about an enrollment capped campus.

(Report Comment)
Richard Saunders January 27, 2012 | 4:34 p.m.

Just as Fannie and Freddie fueled the housing bubble, Sallie fuels the education bubble. Otherwise, the counter-intuitive statement made by MU Budget Director Tim Rooney about "record enrollment despite tuition increases" could never exist in reality.

Worse yet, this student loan debt is inescapable. So right now, record numbers of kids are hoping to avoid the frying pan (of low-wage poverty), by jumping directly into the fire (of high-debt load poverty). Now, this by itself is bad enough, but since it is funded by the very process that destroys the economy (monetary inflation by debasing the currency), it is setting up the perfect storm, where there cannot EVER be enough jobs paying at levels to cover these expenses.

Without this trap, many young people would lead far more prosperous lives, instead falling further and further behind the debt-service "8-ball."

For those who would argue otherwise, that this is a social program to provide aid, I only have to ask one question to debunk it.

If the student loan system is supposedly benevolent and not predatory, then why are the loans made at usurious rates (mine are at 9% for example), rather than market rates (which are practically zero)?

(Report Comment)
Jimmy Bearfield January 27, 2012 | 4:54 p.m.

"this student loan debt is inescapable"

Not really. The feds clearly are moving toward making it easier for people to avoid paying a big chunk of their student loans. For example, in the fall, Obama authorized changes allowing all remaining debt on federal loans to be forgiven after 20 years. That's five years earlier than under the previous law. These kinds of moves pave the way for, say, even earlier forgiveness for those who major in math or the sciences, or those who have incomes below a certain level.

(Report Comment)
Ellis Smith January 27, 2012 | 5:45 p.m.

Assume, for the sake of discussion, that several students have loans on the same terms and for approximately the same amount of money.

They graduate, BA or BS. Some of them, because of their choice of major, will (1) have a job waiting for them on graduation, (2) immediately earn a good salary (about $60K), (3) and because of (1) and (2) they will be in far better position to pay off the loan.

And there's no monetary reason why they would be forced back home, living with mom and dad.

In spite of naysayers, there IS a future in this country for young people with the foresight to prepare for it.

(Report Comment)

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