Governor Corzine's Budget Proposal

March 11, 2009

Members of the Rutgers Community:

This week, Governor Corzine presented a $29.8 billion state budget proposal for fiscal year 2009–10, cutting nearly three billion dollars from the budget that the Legislature approved last June, and seven billion dollars from the projected baseline growth of the budget. His budget proposal comes in the midst of a global economic crisis that has had severe consequences for employment, investments, spending patterns, and thus tax revenues in New Jersey and across the nation. The recession only deepens the problem that New Jersey already faced in balancing its budget. Rutgers and the other colleges in our state are among the many institutions that will once again see funding decreases.

The governor’s budget includes a 5 percent cut in operating aid for virtually every college and university in New Jersey. For Rutgers this means a $15.5 million decrease in Rutgers’ operating aid. With this reduction Rutgers’ state operating support (excluding fringe benefits paid by the state) will total $294 million, approximately the same dollar amount that the university received in fiscal year 1997–98, twelve years ago.

In addition, the state budget does not provide any funding for employee salary increases at Rutgers or the other senior public colleges and universities. Since our salary increases for the coming fiscal year total almost $30 million, the overall Rutgers shortfall is $45.5 million. Mandatory cost increases in other areas add to the problem.

These proposed reductions are far more difficult because they come on top of the very significant shortfalls in state funding that Rutgers and New Jersey’s other colleges and universities absorbed both this year and in fiscal year 2006–07. Indeed, the university is still dealing with last week’s announcement that the state salary funding Rutgers was expecting to partially cover this year’s salary increases will be reduced by at least one-fourth and possibly one-half. Coming so late in the fiscal year when funds in an already stressed budget are largely spent, it is a particular challenge to achieve these additional savings of $4 million to $8 million by June 30.

Student financial assistance does increase in the governor’s budget thanks to the federal stimulus funding that New Jersey received. Governor Corzine has proposed a 10 percent increase in student aid, including a 13 percent increase in the Tuition Aid Grant program. A majority of Rutgers students receive some form of financial aid, so this increase is welcome. Coupled with the proposed increase in federal Pell grants, state and federal student aid will provide a needed safety net for many of our students and their families.

Given the continuing trend of decreasing state support and the difficulties that our students and their families are confronting in this period of unprecedented fiscal stress, the university faces enormous challenges. Universities across the country, including our Association of American Universities public and private peers, are taking unprecedented actions to maintain their primary academic purposes in these troubled times. For his part, the governor has proposed a state budget with spending reductions, tax increases, and a wage freeze and furloughs for state workers. He has stated that it is far better for employees to share in these reductions and to continue working than it is to achieve savings by laying off large numbers of employees. We agree.

In order to help me evaluate the range of solutions to these unprecedented economic circumstances, I am appointing a committee, led by Executive Vice President Philip Furmanski, to consider options for dealing with the university’s budget problems. Its members will include representatives from both academic and administrative areas and from our unionized and nonunionized employees. I am asking this committee to go beyond the very difficult steps the university has already taken and to recommend a course of action that will spread the burden fairly and wisely across our community while protecting our core missions.

Rutgers has faced funding cuts before, and we have found answers that have kept the university moving forward, albeit at a slower pace than we had hoped. I have no doubt that we will again find a way to advance our most important priorities, but these are extraordinary circumstances and they call for extraordinary solutions. We must do everything we can to protect the excellence of our programs, to keep tuition affordable and student aid available, and to preserve jobs.

Efforts are continuing to save money and increase efficiencies at Rutgers—such as creative energy solutions; sharing services such as business functions among units; refinancing debt at lower rates; increasing the use of technology; and curtailing expenses, including travel, that are not absolutely critical. I applaud and thank all of you who have contributed to these savings and encourage you to provide additional suggestions to the members of the committee described above, whose names will be announced shortly. Of particular note is the work of the New Brunswick Deans Council, which has prepared a report on planned actions to reduce spending across a range of academic and administrative programs. You can view the report on the Academic Affairs website at http://academicaffairs.rutgers.edu/.

Rutgers has a hard road ahead in dealing with the global economic crisis. There will be pain and the need for shared sacrifice. But Rutgers is a remarkable institution that is achieving great things, even in difficult times: our rating as a “best value” by SmartMoney magazine, the many awards that our faculty and students continue to garner, and our continuing success in obtaining grant support, to cite a few examples of our continued advancement. This record of accomplishment should make us proud and help us through hard times and difficult choices.

I will keep in touch with you in the coming weeks about the budget, about our efforts to save money and find efficiencies, and about the work of the committee I am appointing. Thank you for all you do for Rutgers.

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