Budget Updates from the Senate and the Governor

Today, the Senate Budget and Taxation Committee voted in its amendments to the Governor's originally proposed budget.  Members approved a base budget cut of $5.4 million and a fund balance cut of $4 million.  This $9.4 million cut is less than half of the proposed $20.8 million cut from the House ($10.8 budget, $10 fund balance).

Both committee reports have maintained the expectation that the Board of Regents will still support a tuition freeze, despite cuts that will likely erode quality.

In the Governor's amended budget today, he cut the original $16.9 million from the base budget that would support the tuition freeze.  In its place, he has filled the $16.9 million hole with two years of funding from the federal stimulus package.  The upside of this proposal is that there will be full-funding of the budget and tuition freeze for two years.  The downside is that after two years, a larger-than-normal hole will open up that will need to be filled by state dollars in FY2012.

**TAKE ACTION** Support Full Funding for Higher Education

Funding for USM institutions is at risk!  The House Appropriations Committee voted to decrease funding by $20.3 million last week.  Take 2 minutes to let your elected representatives know how important it is to support higher education (if you are an out-of-state student, feel free to use your campus address).

Click this link to TAKE ACTION to send an email message to your legislators letting them know that you support full-funding of the Governor's budget.  The sooner you send, the better.  Forward this link to your friends, parents, neighbors, and professors so that legislators hear how important funding higher education is (they can use this specific link).  It only takes a few minutes by simply entering your address and editing a pre-drafted message.  Be sure to let your legislators know your role in the USM (student, faculty, etc.).

A cut of $20.3 million will ensure tuition is not frozen for in-state undergaduates, lower the quality of programs for all students, and could threaten pay/job security for faculty and staff.

If you have further questions, please email me ASAP at joshmichael@umbc.edu or call me at (410) 294-8581.

Read this message from the USM website:

Support Higher Education Funding  Oppose Legislative Cuts to Higher Education

Governor O’Malley’s FY 2010 budget proposal for the University System of Maryland supports the overarching goals shared by the state and the University System of Maryland:

• provide access to high-quality and affordable programs and services;
• ensure that the state’s public higher education system sustains its critical role in advancing Marylanders’ quality of life—intellectually, economically, socially, culturally, and in areas related to health.

The Department of Legislative Services is reccomending the General Assembly cut the USM funding by $5.7 million dollars and possibly more. Ask your legislators to reject this cut and fully fund higher education to maintain the quality, affordability and accessability of our public universities.

Tuition Freeze becoming a reality

The announcement of Governor O'Malley's intention to fully fund the Thornton calculations for K-12 education during the next two years.  Why does this matter to higher education, you ask?

What's not said is what is important in this article.  In funding K-12 education above the originally proposed levels, the Governor will surely have the funds to fully support his proposed dollars in the operating budget for the USM.  The Governor has relied upon funding from the federal government to support his operating budget.

So, the tuition freeze is becoming more and more likely each day.  The announcement of full-funding of K-12 this year is a sign that funding should arrive for higher education to support a funded tuition freeze.

O'Malley's FY 2010 Budget Proposed, Tuition Freeze Included

The Governor presented his proposed FY2010 budget today.  Specific to higher education, the Governor has included a tuition freeze for in-state, undergraduate students for the fourth straight year.  As highlighted on The Sun's Maryland Politics Blog, this is the first time in 25 years that expenditures will shrink for the Maryland state budget (by 1.3%).  The Governor is making his pitch loud and clear that affordable higher education is a priority of his administration, increasing funding for colleges amidst major state cutbacks.  This trend in investment is unique, whereas most Governors view higher education as true discretionary cost that should be cut during hard fiscal times.  Such is the case across the United States today, and was the case in 2003 under the Ehrlich Administration.

Higher Education Finances and What to Expect

Inside Higher Education highlights broad-based budget cuts across the nation. Salisbury President Janet Dudley-Eshbach warns of furloughs and mid-year tuition increases. The Chronicle of Higher Education highlights expert analysis of the tough consequences for higher education in the expected recession over the next two to three years.

The economy is in poor shape, and higher education will suffer. Fiscal pressures will come from a variety of areas:
- decreased state funding support for the operating and capital, due to declining state revenues
- decreased enrollments because of a lack of income and access to loans (both potential and current students); resulting in decreased tuition receipts

Undoubtedly, the more states cut their budgets, the more higher education will be cut. And so, to offset these lost revenues, higher education institutions will be pressured to either cut expenditures and services or significantly raise tuition. Each institution will likely work to balance the two budget-balancing strategies in the way to maintain prestige/quality and accessbility/affordability.

Next month, the Maryland Board of Revenue Estimates will examine the expected revenues for the next fiscal quarter for FY09. Possibly, the Board will identify the need to cut more from the budget. Do recall, the state experienced budget cuts amounting to around $350 million after the last revenue estimates were evaluated (higher education saw a $35 million cut, or 10%). Surely, with the further downturn in the economy over the past few months, we could expect more cuts.

A few things to consider:
- higher education occupies about 21% of the discretionary portion of the state budget (the portion of the budget that is not prescribed through legislative mandate)
- higher education saw 10% of the last round of budget cuts
- higher education is often seen as a non-essential expenditure

So, I presume that while Governor O'Malley has consistently provided significant financial support for higher education, he will be pressured more and more through fiscal realities to significantly cut higher education. In other words, the more money that is cut from the budget in Maryland, higher education will likely recieve an increasing percentage of the budget cut.

So then what happens? Tuition increases or service cuts. Take your pick. This can play out in a few ways:
- mid-year tuition increases
- larger class sizes
- decreased course offerings
- furloughs for staff
- hidden student fees and surcharges
- closed and limited student services (i.e. early closing hours for library)
- decreased and enveloped financial aid
- increased prices on campus sales (i.e. food, textbooks, t-shirts, etc.)
- fewer student job opportunities
- fewer research opportunities
- less research time for faculty


So, what are you willing to sacrifice? How do you suppose me and other policy makers balance affordability and quality?

Looking Forward in higher education...budget cuts

I spent two days last week participating in a retreat of the Board of Regents. We reviewed strategic objectives for each campus and heard from Presidents on how they would handle budget cuts in Fiscal Year 09 (this current year) and FY10. We asked Presidents to prepare statements on a 2% FY09 base cute and a 3% FY10 cut. The most popular cuts that we heard were:
- maintaining the hiring freeze
- further backlogging deferred maintenance
- financial aid for students.

We asked the Presidents to prepare these numbers in expectation of budget cuts in the current year because of the mid-year estimated budget shortfalls (see previous entry). It is estimated that the Governor will cut just over $220 million this year, and because higher education is such a large share of the discretionary budget, we expected to see cuts.

Since the retreat, we have heard from the Governor's office that we should expect to see a base budget cut of $10 million and a cut from our fund balance reserve of $20 million. While we will see a total of $30 million in cuts this year, the lasting effect on the budget will only be a cut of $10 million from each year out.

Of course, this budget situation is a tale of two cities. The Governor has worked very hard to support higher education, and planned to fund a tuition freeze for undergraduate in-state students at the cost of $16 million and fully funded the rest of the operating budget and capital projects. On the other hand, the system did not raise tuition because the Governor planned to fund the difference; but now with budget cuts, those dollars will now not come to our institutions.

Of course, things will be difficult over the coming months and couple years. A partnership with the Governor's Office is critical to maintaining as much funding as possible for education. Governor O'Malley been very supportive in the past and I do not doubt that he will be in the future.