An anticipated cut to the University of Nebraska’s state appropriation would mean the elimination of academic programs, President Hank Bounds told the Board of Regents on Thursday.
A year after university leaders addressed a $49 million budget gap created through a loss of state aid and increases to operational costs, Bounds said NU’s total cut this biennium will top $69 million if a plan by Gov. Pete Ricketts passes the Legislature unchanged.
Earlier this month, Ricketts proposed cutting $11.4 million from NU’s state funding for the remainder of this fiscal year, and imposing another $23.2 million cut in the university’s state aid for the 2018-19 budget year.
In a lengthy discussion of NU’s budget challenges Thursday, Bounds said the university has exhausted the cuts it can make in areas that don’t directly affect academic programs on campus.
“We can’t efficiency our way into another $23 million,” he told the board.
Further cuts in areas such as information technology, energy savings and service areas could potentially damage the university’s daily operations, he said.
NU will absorb cuts imposed for the remainder of the fiscal year ending June 30 by dipping into its cash reserve, but a move like that will also place added strain on the university’s fiscal situation.
But next year’s cuts will require campus leaders to identify which academic programs, extension offerings, or research enterprises the university can do without, Bounds said.
He explained several rules he set for chancellors, and business and academic leaders as they return to their campuses to begin identifying cuts:
* No across-the-board cuts — a 5 percent pay cut for all employees, for example — will be considered. “Across-the-board cuts end up weakening the entire university,” he said.
* Budget cuts must be addressed through cuts, tuition hikes or using some cash reserve, but NU will reject proposals to use cash only to keep it floating through the budget biennium.
* Although regents already approved a 3.2 percent tuition increase for 2018-19, NU could enact further tuition increases to bring in new revenue to assist in closing the budget gap.
* The process for all recommended cuts must be clearly articulated, and the impact on current students must be described.
Bounds said he believes campus leaders will provide several options to the board, but that he believes each of those options will affect academic programs.
“I just need to be candid with everybody on that,” he said.
Regents indicated they were hesitant to consider steep hikes to tuition, voicing concern about pricing out current and future students from being able to attend the university’s four campuses.
For every 1 percent tuition is raised, about $2.5 million in added revenue is generated.
“Tuition increases won’t get us there at a price Nebraska families can afford,” Regent Howard Hawks of Omaha said.
Regent Jim Pillen of Columbus said with large populations of first-generation students, particularly at UNO and UNK, tuition increases could have damaging effects on both the university and the state.
“I’m not sitting here saying I can’t vote for any tuition increase, but we somehow have to become innovative so we leave our institution accessible for all,” Pillen said. “We just cannot have our institutions be for the lucky draw.”
Regents also pointed out that eliminating academic programs would not produce immediate savings. NU would be required to continue serving students in those programs — potentially for several years.
In that time, the costs of running those programs would be ongoing, while student enrollment would likely drop, Hawks said, producing a "double whammy" for NU's budget.
NU will go before the Legislature's Appropriations Committee on Feb. 14 to make its case. Regents and top administrators said they’ll likely convene a special meeting before that date to discuss strategy, Bounds said.