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Email from President Davidson

Budget update

 

April 20, 2020

  

Dear Roadrunners,

I am writing this rather long message to provide you all with a detailed update on our budget situation and the inclusive, analytical and values-based process we are using to make decisions in the midst of this unprecedented global pandemic. I want everyone to have a sense of the gravity of the situation, and to understand the facts as we know them, the ideas being examined, and most importantly, how to engage and offer your input to help us chart this uncertain course.

First, I want to thank everyone for their flexibility in adapting to this crisis, for your support to each other and for your patience as we work through it all. Thank you also to everyone who contributed to my “call for ideas” on how we might rethink our budget and our strategic trajectory. Ultimately, it will be the trustees who will need to approve any major adjustments to our budget; but they will look to us for clear-eyed analysis and innovative ideas.

What are the facts?
At the April 7 Special Edition President’s Cabinet meeting, I outlined some fairly dire budget scenarios being contemplated by the state, along with some preliminary analysis on how those scenarios, combined with potential enrollment declines, might affect Metropolitan State University of Denver’s bottom line.

Prior to the pandemic, MSU Denver had been robustly negotiating with the Colorado Department of Higher Education, the state legislature, and our fellow presidents and chancellors across the state to ensure a more equitable share of a larger pie; and we had made some progress. Not only had our fellow schools across the state and the Joint Budget Committee agreed that it was time to start to correct some of the historical underfunding of MSU Denver, but on March 10 the JBC recommended a 7% increase in the higher education budget for fiscal year 2020-21. While this proposal still had to go through the rest of the legislature and the governor for vote and signature, we were fairly confident that the outcome of this year’s legislative session would allow us to meet most of our needs while also providing pay raises to faculty and staff for the second year in a row. All of those hopes for next fiscal year have been shattered in the wake of the immense pressure the response to the COVID-19 virus is set to have on our state budget.

The latest information we have is that Colorado legislators will need to find $3 billion in cuts to balance the books for FY 20-21, which begins July 1. That means that it is highly likely that we will need to absorb at least a 10% decrease, instead of a 7% increase in our FY 20-21 budget. And this is on top of covering the $5-7 million in emergency expenses and lost auxiliary revenue we will have had in response to the crisis by June 30, and additional losses in enrollment revenue we are expecting for summer and fall.

I know that these facts will no doubt generate anxiety and stress across our community. It is absolutely true that we will need to make fairly serious and, in some cases, quite disruptive adjustments to our budget and the way we operate in order to ensure the long-term survival and health of our amazing University. The president’s Idea Catcher has seen more than 75 submissions, all of which are being analyzed for impact and feasibility along with input from academic deans and vice presidents. The next step is to prioritize budget adjustments and pitch our recommendations to the Board of Trustees.

Our challenge is that in contrast to the popular image portrayed about higher education, MSU Denver is extraordinarily lean. With a 27:1 student to non-teaching administrator ratio, we are massively below the norm in personnel required to support our faculty and students. The average is closer to 10:1 (and as low as 4:1 at some research institutions). While I am immensely proud of our “do more with less” tradition and structure, what this means is that there are fewer quarters under the couch for us to give up and, therefore, the cuts we will be forced to take may be a bit more painful than I wish.

Preliminary ideas we are examining for this fiscal year and next are as follows.

Short Term (FY 19-20)  
The Idea Catcher for this fiscal year closed on April 15. The finance team is currently assessing options to find $5-7 million in offsets to get us through this fiscal year. The range reflects uncertainty in enrollment revenues for summer session as well as any potential federal funding we may or may not be able to leverage. I will be meeting with academic deans and other leaders this week to review proposed cuts to their budgets and to make some decisions. I will keep faculty and staff senate leaders updated as more information emerges and before any decisions are set.

Ideas being considered for FY 19-20 are:

  • Canceled travel across all areas
  • Canceled events across the University
  • Pause and cuts in professional development for faculty and staff
  • Hiring “chill” in which academic deans and vice presidents will review current vacancies to determine if these positions must be filled now or if they could be put on hold without having serious negative impact on serving our students
  • Reduce marketing and advertising spends
  • Accept risk in legal reserves and compliance

Medium and Long Term (FY 20-21 and beyond)
The Idea Catcher is still open for these phases, and I encourage you to submit any of your thoughts or innovative ideas. The cutoff for FY 20-21 ideas is April 30. The Catcher will remain open through May for the work the Futures Team is starting, which will look at longer-term innovations and strategic positioning for our University vis-à-vis our strategic-planning efforts from last year. Going forward we will be looking not only for efficiencies and cuts, but for areas where we should invest that would better position us to attract and retain students or to generate revenue that would help us better serve our students. The following are ideas that have been submitted by you as well as academic deans and vice presidents.

  • Freeze or reduce salaries
  • Layoffs or furloughs
  • Benefits adjustments
  • Early retirements
  • Re-assessment of CAT I, II and III balance
  • Continued hiring chill
  • Program cuts
  • Merging of departments
  • Streamlining or centralizing some administrative functions
  • Class size optimization
  • Reductions in travel
  • Reductions in professional development
  • Sabbatical freeze
  • Online learning enhancement/rebalance face-to- face vs. online
  • Add revenue-generating nondegree-oriented programs
My guiding principles and priorities as we are forced to make these disruptive trade-offs are the following:
  • Put students first: Providing students with a high-quality education is the reason our University exists and the reason we all get up in the morning. This crisis will no doubt place additional personal and financial stress on our students. We must not only protect our ability to provide them with first-class wraparound services and instruction, but also innovate to meet emerging needs that this crisis will generate for them.
  • Support and be fair to employees: We must respect the roles faculty, staff and administrators each play in delivering on our promise to students, from teaching and advising, to balancing budgets, recruiting new students, fundraising and more. Indeed, 70% of our budget is payroll, reflecting the degree to which ours is a human-centric enterprise. Just as students will be affected emotionally by this crisis, so will we all. I ask that you continue to support each other and know that we will do everything we can to avoid furloughs and layoffs.
  • Be strategic: Being strategic means balancing the short-term imperatives with a long-term lens. In the short term, we must not panic and rush to make premature, quick-fix decisions that we may later find difficult to undo or otherwise shattering to our mission. Second, we must think innovatively about the longer-term post-pandemic ecosystem and how our roles and responsibilities as Colorado’s only four-year access institution will shift. This is why I have asked the Strategic Planning Team to pivot for the summer to examine alternative futures. As the University’s “Futures Team,” they will use a Red Team methodology that will allow them to present strategic options and innovations to me and the Board of Trustees.
I know you likely have questions about what may lie ahead, and I hope you’ll join Faculty Senate President Katia Campbell, Staff Senate President Rebecca Reid and myself at tomorrow’s virtual Spring Update at 10 a.m., where I will answer their questions and more. You can watch that livestream on our website.

Acknowledging that there will indeed be some rocky roads ahead, I am heartened by the talent and teamwork our agile and innovative Roadrunners are bringing to these challenges. Our finance team is first class, our trustees are mission-oriented and massively supportive, and our staff, faculty and leadership team members are some of the finest people with whom I have served. I remain immensely proud to be your president.

Respectfully,
Janine Davidson, Ph.D.

 


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