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Budget uncertainty continues for USU as 2011 legislative session opens

January 16th, 2011 Posted in Opinion

By Alex Thatcher

LOGAN—As the economic recession lingers, many universities still face tough budget cuts. Although Utah is more economically stable than many states, universities, including Utah State, are still tightening their belts.

According to Commonfund, an organization that manages many colleges’ financial endowments, the average college portfolio lost 2.7 percent in the fiscal year that ended in June 2008. A follow-up survey found that endowments lost another 22.5 percent in the next five months, between July 1 and December 2008. Since then, 43 states, including Utah, have enacted higher education budget cuts because revenues from income taxes, sales taxes and other sources have plummeted.

Utah State already has cut an estimated 17 percent of its 2008 budget, laying off both staff and faculty, cutting course offerings and consolidating classes, and putting a range of projects and intiiatives on hold. As the Utah Legislature begins its 2011 legislative session this week, there may be additional cuts to come.

Two indicators used to measure the condition of the state’s economy are still negative in Utah. First is a continuing increase in the unemployment rate, and second is a sluggish recovery—or even new downturns—in the housing market.

“Both of these two indicators are critical to the economic recovery,” said USU President Stan Albrecht in a message to the university faculty, staff and students last semester. “And until these two indicators change, the revenue picture for our state will remain cloudy.”

The president said that although there is some hope that the recession has reached its “bottom,” recovery will take a long time.

“Like you,” he said, “I am worried about the slow pace of the economic recovery and what that means for Utah State University, our students, faculty, and staff. While there are a few encouraging signs on the economic horizon, it would be a mistake for us to declare that the impacts of the recession are behind us.”

In his letter to all USU employees, Albrecht expressed his desire to address salary issues, but explained the difficulties. “Let me assure you that my top priority is faculty and staff compensation,” he said. “Indeed, after two years of no raises, this is the top priority of the entire Utah System of Higher Education. Yet, I must report that the discussions I have been having with legislators around the state, and with the governor’s budget advisors, suggest that we face significant challenges on that front.”

State revenue would have to grow by a few percentage points just to meet normal requirements such as funding for the state’s retirement system and Medicaid and Medicare, he said. Even if state revenues did grow, new funds would go to these systems before university employees were compensated.

“Given these circumstances,” said Albrecht. “We will explore all available options to finance some sort of compensation increase. We will continue to work with deans, department heads, and others as this conversation goes forward and will keep you informed of progress.”

On the positive side, thanks to gifts and grants, USU has been able to fund new building projects despite the recession, the president pointed out. Some of these buildings include the Emma Eccles Jones Early Childhood Education and Research Building, the Equine Education Center in Wellsville, and the Bingham Entrepreneurship and Energy Research Center. The reason that these projects have gone forward even as the budget has been cut in other areas, he said, is that they were paid for almost entirely with private donations.

“As you will understand,” said Albrecht, “these resources could not have been used for purposes other than those for which the donors made their contributions.”

Another encouraging sign for 2011 is that Fall 2010 USU enrollment was up sharply, with a fall semester headcount of 25,767 students—an increase of 702 from last year.

“It is encouraging to see that students continue to vote with their feet and realize that higher education is an important investment in their future,” said William Sederburg, Utah commissioner of higher education. “And that despite recent budget cuts, our institutions have found ways to accommodate this many new students this fall.”

Campuswide, the university is dealing with program and budget retrenchments of 2009-2010, and programs are refocusing on a leaner reality for 2011.

“We see our current economic challenge as an opportunity to refine our focus and to be sure we are investing in the things that will benefit our students most,” said Douglas Anderson, dean of the Huntsman College of Business. “We are confident the choices we make now will enable us to emerge from this downturn as a business school that is more innovative and effective than it ever was before.”


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