Building a sustainable future

02-14-2009

There is no doubt the current fiscal challenges facing the state, the nation, and MSU are daunting and we fully recognize how much more difficult decisions become when resources are exceedingly scarce. Families throughout the state are feeling the pain of the global economic crisis, which has been exacerbated in Michigan by the decline of the automotive industry over the past decade. Given the depth of the hardship Michigan faces, we must think carefully about the effect the decisions we make today will have on the future of this state.

Budgets, whether for the state, the university, a business or a family, must reflect values; they cannot not simply balance a set of numbers but, instead must look to build a sustainable future as this current economic situation will not be over soon.

In difficult times, we have a collective responsibility to find ways to conserve resources while also leveraging the impact of the resources we have. Over the past number of years Michigan State has, for example, closed colleges, closed programs, and consolidated support units. We have adhered to the practice of only spending recurring funds on recurring projects, and appropriating non-recurring funds to bridge actions already taken. We’ve not done any of this by declaring a crisis; we’ve done it because we have to allocate resources for higher purposes and be sure that we use them in the best way possible for the people of Michigan and to meet our academic responsibilities.

The current operating appropriation proposed for 4-year universities in the Governor’s budget is more than $100 million below the level of funding in fiscal year 2000. This is not adjusted for inflation or for the increased number of students enrolled in Michigan’s public universities since that time. Throughout this period of nearly a decade, MSU has grown in quality, educated more students, continued our outreach efforts in communities throughout the state and the world, maintained access across socioeconomic classes, and increased the number of federal Pell Grant recipients, the neediest students in the nation, on campus, and we have done it all while continually tightening our belts because of decreased financial support from the state. Though the tuition increases are difficult for families, they have been necessary to offset the chilling effects of the continued lack of state funding.

In addition to the overall 3 percent cut to higher education proposed by the Governor, and her call for a tuition freeze, MSU is particularly concerned by the proposal to combine the Michigan Agricultural Experiment Station (MAES) with MSU Extension (MSUE) and cut the total funding for these programs by 50 percent. Research and Extension programs are critical to the state’s effort to expand the bioeconomy and create the jobs and technologies that will fuel Michigan’s economic transformation. Agriculture is one of the few sectors in the state that is growing and adding jobs. Disinvesting now jeopardizes the future of this $71 billion industry and the state’s ability to be a significant force in developing the “green” technologies and businesses of the future. The effects will be felt in every corner of the state.

In five of the last seven years there have been significant reductions proposed for MAES and MSUE. Because of our long-term relationships with stakeholders in communities throughout the state, we were able to help lawmakers better understand the value of the programs and services these organizations provide and the negative impact cutting them would have on individuals, communities, and businesses. Last year’s $64 million in state funding helped to leverage another $148 million in external funding, which generated a total economic impact of more than $1 billion for Michigan. If the proposed cuts are enacted, it would not only mean a loss of the economic impact from these leveraged funds but it would also mean the loss of approximately 1,000 jobs throughout the state. In the coming months, we will work aggressively with our stakeholders and lawmakers to restore the disproportionate funding loss for MAES and MSUE because it is critical for the future of Michigan’s families and businesses.

With respect to the MSU general fund budget, we will also continue the work across all units we began months ago in anticipation of possible appropriation cuts. We will look at cross-university functions in the context of the entire supply chain to determine how best to reduce total cost, not simply transaction costs. The loss of investment income from the administrative trusts will mean that the university just-in-time maintenance and repair initiatives will be significantly curtailed, except for those projects required to maintain health and/or safety standards or those with their own funding sources.

We have not yet made a decision about tuition or possible workforce reductions but we will be reviewing all of our options as we move through this thorough review process in the weeks and months ahead. I encourage you to visit the budget website for more information about the impact the Governor’s current proposal would have on MSU https://opb.msu.edu/functions/budget/documents/2009-10Budgets.pdf. I would also encourage you to review the 2009-10 budget presentation to get a better picture of the context and environment in which MSU operates.

MSU is a university that more and more is seen as a magnet for economic growth—as evidenced by the work of MAES and MSUE, as well as the recent announcements about FRIB and IBM. Like the Governor, we are committed to doing all that we can to bring jobs and investment to Michigan. We have proven again and again our ability to attract federal research dollars; bring in international businesses; commercialize the technologies developed in our laboratories; develop solutions to problems in our cities and rural communities; and, perhaps most importantly, educate the next generation of globally engaged students who will become the leaders of tomorrow.

These are, indeed, challenging times, and budget decisions across the board are painful. There is a lot that can be said about the dialogue that goes back and forth in difficult economic times, but MSU is still committed to our covenant with the state and people of Michigan. We will continue our discussions with our partners and stakeholders in communities throughout the state and in state government to assure the future of Michigan State University.

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