February 20, 2009
My Dialogue letter last week spelled out the big picture for the University’s finances. It also provided an overview of the financial challenges we and every other university face today and that will likely continue for at least the next couple of years. Our top priority is to strengthen our balance sheet – to hold onto our cash and minimize additional debt. As we work out the details, we will be guided by two principles – adherence to our educational, research, and clinical missions, and the preservation of jobs to the greatest degree possible.
The difficult steps we need to take cannot be carried out without the support of the entire University community. I have heard from many of you in the past few days and am confident that we will take the appropriate steps as a team. They include:
- Identifying cost-savings opportunities in compensation and benefits that have the least significant impact on our people.
- We will forego traditional June 1 increases and freeze salaries for faculty and staff.
- We are considering reducing our current level of employer-paid life insurance benefits to be more in line with peer institutions.
- At this time, no changes are contemplated in health care benefits or tuition remission.
- While we have looked at temporarily suspending the University’s contribution to our retirement plans, we have decided not to further consider this option for the upcoming fiscal year.
- Reducing spending plans for construction projects over the next year. We will re-evaluate our previous plans when the economy is stronger.
- Implementing a 7 percent reduction in spending across the University beginning in fiscal year 2010. The Miller School of Medicine, which operates under a different financial model, will see similar reductions in its operating costs.
- Exactly where cuts are made can and should vary from department to department to ensure that operations vital to each of them continue to function efficiently and meet the highest standards. In all likelihood, as certain departments are restructured, some positions will be eliminated or left vacant.
- Aggressively pursuing a variety of opportunities to increase revenue.
- Includes growing clinical and research revenues and taking advantage of special opportunities to increase tuition revenue, for example, from executive education.
We are getting organized to take advantage of funds earmarked for higher education and infrastructure in the federal stimulus bill. Of particular interest is additional funding that the National Institutes of Health and National Science Foundation will be receiving.
We are also identifying opportunities to provide immediate relief to faculty and staff, including freezing parking fees. There will not be an increase in employee parking rates in UM facilities in fiscal 2010.
As always, University administration will work with the Faculty Senate and its committees and consult with the Employee Benefits Advisory Council to ensure we transition successfully through this difficult period. We also will institute a formal representative group specifically to offer more cost-saving ideas. In today’s turbulent times, universities must balance long-held ways of doing business with the flexibility to remain viable and effective to the communities they serve.
I encourage you to read the higher education provisions in the "Recovery and Reinvestment Act" provided by the National Association of Colleges and Universities. It gives good and consolidated information about the areas in our industry that have been targeted for some relief.
This will not be easy, and perhaps the most difficult part is the uncertainty of not knowing how this will all play out. No one has all the answers, and there are no textbook solutions to the current crisis.
In the absence of hard facts, if you hear something that concerns you, I urge you to share your concerns with your supervisor or me.
I want to thank you for the many good suggestions you have sent to me – keep the ideas coming!