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Washington State University

Office of the President

Budget reduction plan

July 20, 2011

Elson S. Floyd, Ph.D, 7/20/2011

I am rapidly approaching my 15th year as a university President and I have never encountered the succession of budget reductions that we are experiencing as a higher education sector and as a state.

Over the past four years, WSU has realized a net state-appropriated budget reduction of 52 percent, or $231.0 million.  These are real dollar reductions and the impact has been devastating for our university.  We have more than 500 fewer employees than when I arrived in 2007.  At the same time, tuition has continued to rise annually by double digits.

The irony is that our institutional relationship and reputation is higher than ever with both the Governor and the Legislature; however, they do not have the revenues for additional allocations.

In response to the 2011-13 state budget, passed by the Legislature and signed into law by the Governor, Washington State University is again called upon to reduce its budget in alignment with the reduction to our state allocation.  After tuition increases for all students, WSU is left with a budget reduction target of about $40 million for the biennium.  A $20 million reduction in the 2011-12 fiscal year, when carried over into the 2012-13 fiscal year, will achieve our overall reduction goal of $40 million.

As I have stated publicly, this new budget reality requires us to continue the effort to restructure our University as we seek to respond to the “new fiscal normal.”  We must emerge from this fiscal crisis as a university focused on the pursuit of excellence in all that we do as a premier research land grant university. Within this context, we must be certain that we are operating in the most cost-effective manner possible without compromising the quality of instructional and research programs.  We will continue to realize these goals both in the current year and in the longer term; failure to do so is not an option.

I have actively listened to the sage advice and counsel received from many sources, and while the final actions reside with me as delegated by the Board of Regents, the following are the specific steps we will take in reaching a $40 million two-year reduction in expenditures:

In order to preserve the quality of our academic programs, the smallest budget reduction will occur in Academic Affairs.  The entire reduction for all of the colleges and schools will total $3.2 million.  We have worked hard to meet the required cuts through administrative reductions and reorganizations.  No academic programs are being recommended for elimination.

To achieve reductions of this magnitude, the following steps will be taken throughout the WSU System:

 Academic Affairs – $3.2 million.

Last fall, budget workshops were held with academic leaders to explore our need to develop new ways to organize and operate WSU. Those discussions, which were both productive and enlightening, were based on the expectation of further budget reductions. That expectation is now reality. Pursuing a number of these organizational initiatives is the only viable strategy by which to avoid more disruptive cuts and program eliminations. Furthermore, we must continue the process of re-envisioning the University, a process that will continue beyond the current fiscal year and biennium.

My plan for meeting the immediate shortfall includes the following steps, most of which have grown out of our ongoing budget discussions with academic leadership:

  • Consolidation of the College of Sciences and the College of Liberal Arts.
  • Consolidation of the Department of Natural Resource Sciences and the School of Earth and Environmental Sciences into the School for the Environment.
  • Elimination of the doctoral degree in design, and establishment of the School for Design in Pullman from the Departments of Landscape Architecture, Interior Design and Architecture and Construction Management.
  • Merging of the Department of Statistics into the Department of Mathematics.
  • Conversion of the PEACT (Physical Education Activity) programs to a self-supporting basis.
  • Elimination of the Agricultural, Education and Architecture branch libraries on the Pullman campus.
  • Discontinuance of state support for some journals and publications, with the intent that they become self-supporting.
  • Accelerate the consolidation of the health sciences.
  • Reorganization of University Extension, although it will be exempted from further budget reductions in FY 2012.

I must assure that our budget is balanced.  Therefore, I am establishing a 3 percent contingency fund pending the outcome of the above consolidation/restructuring actions.  The Budget Office will withhold 3 percent of the FY2012 budget allocations for each college and academic area.  All or part of the 3 percent holdback will be returned to each college or academic area if the above consolidation/restructuring actions are implemented in their entirety. In the event that the contingency is not returned, all areas are expected to deliver the same academic programs that they currently offer at existing capacity. 

Vice Presidential Areas and Branch Campus Reductions, including Athletics – $7.3 million.

Work groups on all campuses are formulating specific plans.  These plans will be available on the Budget Office website, subject to review and approval.  The vice presidential plans have already been approved and will be posted within the next several weeks.  As part of this plan, Intercollegiate Athletics will redirect part of its budget to assist in balancing the overall institutional budget.

WSU Capital Budget Reduction

In addition to the $7.3 million reduction in the above referenced area, there will be a reduction in capital staffing as a result of the sharp decline in state capital funding.  This staffing reduction is the result of the 69 percent decline in WSU’s capital funding from last biennium to this biennium. 

New Enrollment – $2.5 million.

A portion of the increased tuition revenue from added enrollment will offset a share of the budget reduction.  The remaining new tuition will be used to increase instructional capacity, advising, counseling, and other academic support services for the additional students.

Facilities and Administrative (F&A) restructuring – $5.0 million.

WSU will change its distribution model for facilities and administrative costs it receives as part of research grants.  While the distributions to faculty and departments will remain the same for FY 2011-12, the first $5.0 million after those distributions will be retained by the University to offset the budget reduction.  Vice President Howard Grimes will convene a representative committee to review the distribution of funds on an annual basis going forward.  Rather than having a permanent allocation process, we must begin to review the appropriate use of F&A funds on an annual basis in order to address institutional priorities and needs.

One-time savings, benefits, increased administrative service charge to Housing and Dining Services, and Parking Services – $2.0 million.

An analysis has been conducted to guarantee that bond covenants are not at risk with these additional charges. 

Future Budget Strategies 

As the job of restructuring our university continues, we will institute a process similar to the Academic Affairs Prioritization Process, which we began shortly after I assumed the presidency. The recommendations from A2P2 helped guide our budget decision-making in the 2009-11 biennium and, to a somewhat lesser degree, continue to inform our budget reduction efforts today.

A renewed process must build on the efficiencies that have already been instituted and must take a comprehensive look at the university as it stands today. In particular, these re-evaluations must include faculty duties and performance and should look for ways to better integrate curricula.

Clearly, today’s WSU is a leaner, more focused institution than it was four years ago; that trend must continue if we are to achieve our goals of enrollment growth and educational and research excellence. Initiatives to examine include, but are not limited to: tuition differentials for higher-cost programs; moving tuition for distance and on-line education programs to a per-credit-hour basis; admission of freshman students directly to their colleges of choice; a tuition-based funding model which ties funding for colleges, schools and departments more directly to the number of students they serve.

The strategies we adopt to meet the immediate budget situation and to restructure the university cannot be instituted in an across-the-board manner. Instead, we must examine our university’s policies and programs on a case-by-case basis and protect and enhance our university’s strengths. That process will place us in the best possible position to achieve our long-term goals when better economic times arrive.

Specific budgetary details of these steps will be posted on the Budget Office website prior to the first in a series of public forums, which is scheduled for August 19th.

Thank you for your support of WSU.