I am grateful for the opportunity to speak with you this afternoon about the fiscal situation at the university. First I wish to testify that it is a great privilege for me to be at UNH at this time. You may recall that I bring to New Hampshire a Mid-Westerner's perspective on the mission of higher education, a disposition to public service and the public value of educational institutions. After four busy but rewarding months here, I can say that there is no university in the country I would rather serve as president, for I see no university with greater potential to serve the public interest. UNH has many remarkably strong academic programs, an outstanding faculty, talented and ambitious students, and a dedicated staff. It is positioned at this moment to become a true partner with the state in economic development and in improving the quality of life for all New Hampshire citizens. Increased public investment in the university will provide significant return to New Hampshire's people.

UNH has shown itself capable of generating external support and capitalizing on public investments to support its mission. This year we completed Rudman Hall and the biological sciences complex, the addition and renovation of the Memorial Union Building, and the new Whittemore Center that houses our magnificent arena and recreation facilities. We will break ground soon on an addition and renovation to Dimond Library, which will provide 25 percent more space for collections and reading areas. Rudman Hall was a partnership between federal and state funding sources; the Memorial Union and Whittemore Center projects were funded privately from gifts, student fees, and gate revenues. But Dimond Library is a State of New Hampshire facility--the academic heart of the Durham campus and the state's only public research library. Our single "critical need" request for this biennium is $68,000 in FY '98 and $200,000 in FY '99 to address the operating cost of this expanded facility.

UNH serves New Hampshire best by striving for regional and national academic standing among universities, and in these ambitions we have learned to help ourselves. We have welcomed UNH's largest class of new students this year. We have never served a greater number of qualified New Hampshire students, but we could not serve them so well if we did not also attract capable out-of-state students, whose tuition dollars enable the university to offer a full array of academic programs at every level. Numbers suggest that UNH is now the public university of choice in New England. This fact documents the strong reputation we have achieved.

UNH faculty are competing very well for competitive grants and contracts, bringing to the university and to the state a total of $43,408,288 in FY'96. This represents an increase over last year of 5.5 percent and represents the largest total ever from grants and contracts. The university also is exploring expanded alliances with the private sector in those areas where emerging New Hampshire industry and university research programs have the potential to be mutually beneficial.

The university and the University Foundation are working aggressively to increase private giving. Last year private gifts totaled a record $13,114,000. On the strength of recent fund-raising achievements, we intend to undertake a major capital campaign for academic excellence. The University Foundation has recently authorized a feasibility study for such a campaign. If we proceed, as I expect, I will challenge the state to participate by matching our private fund-raising efforts in certain specific areas.

In spite of our efforts to help ourselves by increasing revenues, the university's current and projected operating budgets present difficult problems. The balance of in-state and out-of-state tuition dollars is precarious, and inflation and budget reductions have taken a heavy toll. This year my administration inherited a budget that includes a shortfall of more than $1 million. In addition, after comprehensive budget planning for future years, we will implement severe permanent reductions in expenditures of 24 percent in the business operations and 15 percent in the secretarial and clerical budgets. Through this process we expect to eliminate 50-55 positions. The Board of Trustees gave all USNH institutions the opportunity to add 1 percent to this year's 2 percent salary increase for support employees, but the university cannot eliminate any more positions than those already targeted and thus will not fund this increase at this time.

The last faculty contract at UNH expired July 1, 1995. Negotiations between the faculty and the Board of Trustees have not yet produced a new contract. We had hoped that the factfinder's recommendations would be the basis for an agreement, but the faculty has rejected those recommendations, and the contract negotiations will enter a phase of mediation beginning November 26. If the factfinder's recommendations had been accepted, they would have raised faculty salaries 4.1 percent in the first year and 4.75 percent in the second on an annual basis. These raises would have required the reallocation of the faculty salary base equivalent to twenty faculty positions.

Even at this level, faculty salaries would be slightly below the average of the six New England public land-grant universities. In the other five New England states over the last two years, state appropriations have increased from 3 percent in Vermont to 13 percent in Connecticut. Thus, we must expect that competing with the other New England land-grant universities in the area of faculty salaries will be a major challenge for UNH, and increases at our peer institutions will likely be above the 3 percent and 3.5 percent salary increases proposed by the University System.

Finally, I would like to comment briefly on three other areas of critical university need.

• Financial Aid. In order to attract highly-qualified students, both in-state and out-of-state, we must offer competitive financial aid packages. We believe it is important to admit students on the basis of academic readiness and not use financial need as a factor in deciding admissibility. We observe that the percent of our students qualifying for aid has increased over the last two years from 27.7 percent to 32.2 percent. As a consequence, in the current fiscal year, we are using approximately 23 percent of our tuition dollars for financial aid.
  
• Library Acquisitions. The library acquisition budget at UNH has not kept up with library budgets at other research universities. A critical problem has been the inflation rate of research journals in excess of 10 percent each year over the last decade, as well as the exchange rate of the U. S. dollar against European currencies. Because of the importance of current research journals to the work of our faculty and students, we now spend 82 percent of our library acquisition budget on research journals, leaving only 18 percent of a much-too-small budget for the purchase of books, monographs, and electronic data bases. UNH's library is a major state resource. It is the only public research library in New Hampshire. More than 17 percent of the materials circulated last year by UNH's library were borrowed by citizens not affiliated with the university. Almost every public library in the state borrowed from the university's library. In addition, the state's public schools, colleges, businesses, state agencies, and hospitals are dependent on this library. We must find ways to increase this investment.
  
• Technology to Support Learning. Although this year's budget request does not directly ask for funds for information technology, this is an area of great need at the university and will be a high priority for the campus for several years. Our past budgets have adequately addressed computing needs for administrative use, but support for teaching and learning information technology has been underfunded for many years. As a result UNH is eight to ten years behind comparable institutions and faces one-time expenditures at the level of $5.3 million and annual support expenditures of $1.7 million beyond our currently budgeted amounts.

The recent Business and Industry Association report on expanding economic opportunities emphasizes the importance of strengthening education in New Hampshire, building a telecommunications infrastructure across the state, and investing in UNH as a "premier research university." UNH is positioned to play a major role in the future of this state. Our research and outreach programs are in areas of critical importance to the state, such as environmental technology, marine science, advanced materials, communication technology, health care delivery, children and families, disabilities, teacher education, land use, sustainable living, public policy research, small business management, entrepreneurship, theater and the arts. In addition, a statewide telecommunications infrastructure and an electronic library to serve the state's industry and the state's citizens will be anchored at the university.

UNH has the capacity to drive a knowledge-based economy in New Hampshire. Further, the university can take a leading role in connecting higher education across the state and in providing articulation with K-12, so that students can move efficiently through all levels of education. I see bright prospects for renewed collaboration between the State of New Hampshire and its public university. It gives me great personal pleasure to represent those prospects to you.