Budget Reduction Planning

July 22, 2003

Dear Colleagues:

Earlier this month, I shared with you a summary of the final FY2003–04 state budget for Rutgers. At that time, I thanked you for your help in successfully encouraging the Legislature and Governor to reduce the proposed funding cuts for our university, but I also cautioned that sacrifices would still be required in order for Rutgers to continue fulfilling its mission in the face of a $20 million loss in state funding. Today, I am writing to update you on the decisions that have been made regarding budget reduction plans for FY2003–-04.

With the restoration of almost half of the proposed state budget reductions, the university’s base state operating appropriation for FY2003–04 will go from $332.6m to $311.4m, a cut of $20.2m, or 6.1%. While this is still a significant loss in state funding, the restoration enables Rutgers to avoid the devastating budget decisions that would have been necessary under the original $39.4m cut.

Nevertheless, the loss of $20 million of state support means that the university still faces difficult budget choices. Moreover, other factors also add to the budget gap. Unavoidable cost increases, such as fuel and utilities and student financial aid commitments, will result in rising costs with a declining base of state dollars. And the state budget contains no funding for salary increases for employees at Rutgers and the other senior public colleges. Last, the university’s ability to accommodate the latest $20m cut in state funding is limited because Rutgers already absorbed a 6.7% midyear cut in FY2001–-02 and because the final payment of funding to Rutgers in FY2002-03 was reduced by $13.8m.

The university has crafted a three-part plan to address the budget gap, to maintain the affordability of a Rutgers education, and to advance the academic quality of our institution:

  • On July 11 the Board of Governors approved a tuition increase of 9% for most students that bridges but does not close the budget gap. To ensure that Rutgers remains accessible to a diverse group of students, the Board also approved allocating $4 million in need-based financial aid.
  • Despite the difficult budget times, it is important for the university to continue to make progress toward its highest academic priorities. Therefore, the university’s budget planning includes a $3m allocation of funds to advance academic excellence. I have asked our chief academic officers to prepare a plan ensuring that these scarce resources are used strategically to move the university forward toward its academic goals. Their proposed plan will be shared with the academic deans and directors at the start of the new academic year.
  • Even with the restoration of state funds and the tuition increases, a reduction is required to balance the university budget.

Therefore, in order to close the gap, to meet mandatory costs increases, and to create the reallocation fund, permanent budget reductions of $7.5 million will be allocated across the university. In recognition of the university’s core instructional mission, the reduction targets were calculated by assigning the smallest proportional cuts to instruction, higher proportional reductions to other core mission functions, and the largest percentage cuts to our administrative units, as follows:

  • Instruction, a 0.85% reduction
  • Research, extension, the library and core student services, a 1.98% reduction
  • Administrative functions, a 2.40% reduction

These percentages are the basis for the reduction targets for each major area of responsibility; however, vice presidents and provosts may distribute their reduction targets differentially to recognize varying needs and priorities.

While these reductions will require careful planning and difficult decisions to avoid serious disruptions in basic services, I am confident that the array of actions that we are taking will protect our core functions, permit the university to continue to serve our students well, and maintain progress toward greater academic distinction.

Thank you for your collaboration and support during these challenging times.

Richard L. McCormick
President
Rutgers, The State University of New Jersey