Dec. 8, 2008

Colleagues,

Much has been reported recently about planned budget reductions for higher education and other state departments. I want to keep you informed of our plans for an approach in dealing with this, the most challenging budget environment we have witnessed.

At this point, I can’t provide you with concrete information about what we’ll face or how it will affect us because the economic environment is continually changing. But we cannot wait to begin planning for difficult times. Governor Bredesen has asked for a broad summary report in January to address how much and where we will make our reductions. While we will meet that initial deadline, we will also work aggressively over the next weeks and months to develop the details of our plans and how they will affect each of us.

What I can tell you now is your campus leaders are committed to protecting our core mission, our teaching and learning processes, and to continue leading the way as the highest quality university in the TBR system and beyond

The Budget Today

As reported in the June 16 Tech Times, Tennessee’s higher education institutions faced a $56 million reduction in funding at the beginning of the fiscal year, resulting in a $2.7 million budget cut for TTU. We allocated those cuts to represent a 2% reduction in academic budgets and 3.75% reduction to administrative units. As tuition increased this fall, most resulting new funds were set aside to plan for additional reductions already projected. In October those additional reductions were realized, and we were forced to return $1.6 million more (Oct. 17 issue of Tech Times). Depending on the outcome of this year’s holiday spending season, we may see even more budget reversions this spring.

What We Know About Future Reductions

The reductions we are expecting to face in the coming fiscal year – beginning July 1, 2009 - are the worst we have experienced in recent decades.

• Revenue collections for the state could fall as much as $1 billion below what was expected. To balance the budget for the next fiscal year, Governor Bredesen told higher education officials last week to expect reductions up to 15%.
• While all of higher education will take a 15% cut, the TBR has expressed its intention to limit cuts to community colleges and technology centers, forcing the six TBR universities to carry a larger share, which could equal some 20% at TTU.
• We have been told the $2.7 million cuts made last July were permanent, so any new reductions beginning July 1 would be made on the adjusted appropriation. At this point we believe the October reductions were one-time cuts.
• TBR has approved a plan to charge students for every credit hour enrolled. (Currently all full time students pay for a maximum of 12 credit hours, regardless of how many they take.) We expect TTU to see a conservative estimate of $1.5 million increase in revenue as a result of this change.

What We Don't Know

• Without considering any off-setting tuition changes or increases, that 20% cut could mean as much as $9.3 million in reductions for TTU effective July 1, 2009. When the tuition cap is removed ($1.5 million) and we maintain the reductions we made in October ($1.6 million), our reductions may equal a $6.2 million (13%) cut.
• The big unknown is the tuition rate for next fall. Tuition isn’t set until June, so the dollar impact may be less depending on any possible tuition increases. A 6% tuition increase could reduce our cuts to $3.8 million (8%), for example. But in the current economic environment, our legislators may not be supportive of a significant tuition increase.

Our Plan

I have assembled a strong task force that began meeting last month. That task force includes individuals who were already working on a strategic budget model for the university, the current faculty senate president, three past faculty senate presidents, and representatives from most major divisions of the university. We will continue to keep you informed of the discussions and ideas that come from that task force.

One of the first recommendations of that task force is the development of a web-based suggestion box to give everyone an opportunity to provide anonymous input and offer suggestions for cutting costs. It is now available online at http://website.tntech.edu/budgetsurvey/. We will carefully review all suggestions.

The plans we will develop over the next several weeks and months will bring significant changes that will affect our university for a number of years. While our goal is to minimize the impact of these reductions on personnel, we must consider all options. It is possible a furlough and/or a reduction in force may be options for discussion on campuses throughout the TBR. It will be difficult. But we are committed to making decisions that position our university to excel in the future.

This is a defining moment for TTU. It has been a long time since our university has been faced with the severity of reductions currently being estimated. Difficult choices will be made. The decisions we make and how we make them will shape the future of our university.

I hope you will work with me to find ways of making these budget reductions while strengthening our tradition of excellence and maintaining our steadfast focus on serving our students.

Sincerely,

Bob Bell