University of Maryland News

From the President

Dear University of Maryland Family:

I am writing to update you on our budget and to describe our approaches to addressing current financial challenges. On Wednesday, August 26, the Board of Public Works approved Governor O'Malley's recommended cut of $454 million from the State's FY10 budget, the second FY10 budget cut since July 1. In addition, the State has stipulated furloughs that are to produce savings of $10.2 million from the campus.

The two budget cuts of July 22 and August 26, taken together, reduce our base, ongoing budget by $11.2 million and take away $16.4 million in reserves or "fund balance" funds. We also must hold back spending $2.4 million in allocated Higher Education Investment Funds in anticipation of insufficient revenues from corporate income taxes to provide them. With the additional cuts from furloughs of $10.2 million, the reduction since July 1 is about $40.2 million. That reduction is in addition to the previous $34 million in State cuts over the last two years plus a $12 million reduction taken at the beginning of FY10 to cover an insufficient initial State allocation. The grand total of base budget and reserve reductions during this recessionary period is approximately $86.2 million.

We are again faced with the unfortunate reality of furloughs. Within the restrictions stipulated by the State, we will prepare a new furlough plan for distribution to the campus before the end of September. We appreciate the counsel of the Senate Executive Committee, campus community, and appropriate union organizations on the principles used to underpin the plan. A summary of these principles will be distributed with the furlough plan.

The base budget reduction will be covered by distributing it to the President's Office and the vice presidential units in proportion to their appropriation. Within each unit the vice presidents will recommend their reductions. Decisions on reductions will be guided by our strategic plan and our goal to strengthen our core mission. Across-the-board reductions are not expected. The reserve reductions will be recovered from State fund balances across the university.

Even after these reductions, the State's fiscal circumstances may not be sound and further reduction of our FY10 appropriation is a possibility. Base budget reductions for next year, FY11, are also anticipated. The Director of Policy Analysis for the State Department of Legislative Services projects the State budget to be more than $1 billion out of balance. When reserve savings are used to cover ongoing base budget shortfalls, cuts in subsequent years may be required if State tax revenues do not recover and reserves are not sufficient to cover the gap.

I appreciate the thoughtful responses from our campus community in addressing the difficult budget situation. The web-based suggestion box has provided many useful ideas for budgetary savings and enhancements. We are following up on the most promising ones. A piece will be posted on the budget web site during the week of September 8th that will respond to many recommendations generated by the campus community.

On September 22, from 12:00 noon to 1:00 p.m., you are invited to a Town Hall meeting in the Hoff Theater, hosted jointly by the University Senate and the President's Office, to discuss our budget situation. A short briefing on the State budget for the campus will be posted on our budget web site prior to the meeting. The Town Hall meeting is an opportunity to ask questions and to offer and hear suggestions for navigating our budgetary circumstances. We are planning to web cast the meeting for those unable to attend.

These FY10 budget cuts, equivalent in total to about 10% of the State General Fund appropriation this year, are substantial and very stressful for all of us. After the cuts received over the past two years, each cut takes away a significant contribution to our campus mission. In making budgetary decisions, we will be guided by the University's strategic plan and do everything possible to minimize the impact of cuts to our excellent programs. Some reduction in workforce will be unavoidable through the hiring freeze, retirements and other separations. Programs are already being trimmed and more can be expected. We will do our best to treat our people with dignity and respect during these difficult times. As soon as possible and after appropriate deliberations, I will inform you of the actions taken on our furlough plan and budgetary reductions.

I extend my sincerest appreciation for your understanding during these difficult financial times. After six budget cuts since 2007, we have become all too familiar with this scene. Given that we have no alternative, we will adjust and we will continue to drive forward to build a great university to the best of our ability. Your suggestions, ideas and perspectives are of great value to me and to all of us throughout the campus administration as we work to craft a thoughtful, effective and compassionate approach to these challenges. I have the deepest respect for your faith and patience, and for your understanding of the actions we must take to find the pathway forward.

Yours sincerely,
C. D. Mote, Jr.
President

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This note was authorized for distribution to University of Maryland Community by: President C. D. Mote, Jr.