As you may have seen in the press, Governor Lynch recently announced that he was recommending an appropriation for the University System of $97 million for FY10—a 3 percent decrease—and $100 million for FY11, which is equivalent to the state’s contribution to USNH in FY09. While this isn’t good news, it could have been worse. In many other states, cuts to higher education have been much deeper. Governor Lynch’s budget proposal must now go through a series of legislative reviews. We are unlikely to know before the end of June, at the earliest, what our total state appropriation will be for the next biennium. Even then, caution will be required, as in this economic environment there is heightened risk that the state ultimately may not have the funds to meet targeted appropriations.
Projections of other UNH revenue streams are more difficult to model than usual. For example, while Admissions has received nearly 16,000 applications for next fall’s first-year student class, no one is confident that the usual yield curves will apply. We need to wait to see how many of those students admitted send in deposits by the May 1 deadline and, just as important, how many of those who make deposits actually enroll in the fall. The mounting economic pressures on families make financing a college education more challenging than ever. The Financial Aid Office has already written to students inviting them to tell us of changes in circumstances that might affect aid eligibility and we will continue to seek ways better to support our students.
On the research funding front, we are currently projecting a year-end total of $92.4 million. This would be the lowest we have experienced in several years, and is $36 million below our peak in FY06. Although there is reason to be hopeful about the environment for federally funded research, especially in areas that UNH has demonstrated strength, including climate change, "green energy," and marine science, continued uncertainties with the federal budget for R & D activities are a concern with respect to achieving higher levels of funding in the near future.
Reflecting the general decline in the value of our endowment, the “payout for purpose” on the USNH-managed portion of our endowed funds will be only 85% of last year’s amount. On the UNH Foundation side, which holds the other half (roughly) of our endowment, the directors have decided to adhere to the prevailing payout policy, which is based on the endowment's average performance over the past three years. Taken together, this means we will probably see a very small decline in revenue from endowed funds for FY10. Given the economic circumstances, this is good news, although this nearly sustained payout to purpose will be available only by dipping into the corpus of the endowment, which will mean fewer dollars in the base in years to come. Striking a prudent balance between current and future needs is never easy.
Overall, by pinching all our revenue streams, the economic downturn has exacerbated UNH’s existing structural deficit, which we must continue to address as we prepare the FY10 budget. We also need to build a contingency fund to ensure we achieve fiscal balance should our projected revenues fail to meet our forecasts.
While we have no unique immunity against the sort of layoffs, furloughs and other personnel-related actions that others across the state and nation have taken, the University of New Hampshire values enormously the dedication and contributions of the people who make UNH great. Any such steps would be at the far end of actions that we would contemplate. As a first step toward minimizing the likelihood that staff in general will be substantially affected by the University’s budget situation, I have determined that senior administrators—vice presidents, deans, vice provosts and I—will receive no salary increase in the coming year.
You can be assured that as we address our budget challenges, we will take great care to maintain our institutional strengths, emerging on the other side of this crisis with our commitments to our core missions of teaching, research, and public service intact. We want your ideas as well. In the coming days, we will send you a link to an e-mail address where you can submit both cost-cutting and revenue-generating ideas for the consideration of the Central Budget Committee, which is responsible for making recommendations on major budget questions.
In the meantime, I wish you all the best as we look forward to brighter, warmer, and greener days ahead.
Mark W. Huddleston
University of New Hampshire