Large Pieces of the Fiscal Year 2008 Budget Puzzle
Editor’s note: Department heads recently turned in their budget requests for the fiscal year that begins July 1, 2007, and senior administrators will deliberate over the next two months on a budget that will be submitted to the Board of Trustees for its approval in February. Bulletin Today asked Mark Dienhart for his perspective on the budget process.
It’s budget request time … clearly not the most wonderful time of the year, despite the coincidental occurrence with the holiday season. What makes it not so wonderful, in my view, has to do with the fairly recent past when plans and ambitions, not to mention hopes, dreams and even basic expectations, sometimes went unfunded because of the university’s financial pressures. Repeat requests involving all sorts of research, data and number-crunching went unfulfilled and naturally produced frustration and disappointment … and sometimes positively grinch-like behavior.
Well, times, as they sometimes do, have improved and not all requests now go unfunded. That will be the happy circumstance again this year, but there will be factors that restrict the kinds and amount of funds available to help us all enhance the university and the educational experiences we offer. These factors will be discussed with the Budget Advisory Committee (made up of some 30 members of the campus community), the Academic and Administrative Leadership Group, the University Council, in individual meetings with budget managers, and even with our Board of Trustees. But just to make sure those major factors are obvious to everyone, let me list a few of them:
- Controlling costs – everyone knows that the cost of a higher educational experience has been going up at a rate higher than that of the CPI. Some of that has been justifiable, I think, because of the differing goods and services that higher ed institutions are required to “buy” on an annual basis. Not the least of those items is health care and technology. St. Thomas’ tuition increases have been at around 6 percent. Those increases are not among the largest in the state or region but have been enough, despite big increases in financial aid, to place burdens on our students and their families. We all know that and feel it, and so do our trustees. We need to do our best to moderate those increases and hope other higher ed institutions can and will do the same for their students.
- Improving financial aid, salaries and maintaining facilities and technology – people make St. Thomas special and the very best students, faculty and staff are attracted and retained, despite the alternatives they have, in some significant measure by how well the university performs on these factors. St. Thomas students received $30 million from all sources last year and nearly all freshmen received financial aid. And more is needed. More than 70 percent of our annual expenses are directed toward personnel budget and not all of our employees have market-competitive wages. Current technology, lab equipment, well-maintained buildings, classrooms and offices are also requirements and are also expensive.
- The quasi-endowment – our institutional savings account allows us to responsibly navigate some of the challenges, unforeseen or not, that we can and do face on a nearly annual basis. It was used, for example, to help fund the start-up of what has become a very, very successful law school (which will soon become an additional source of revenue to the university), and was drawn upon post-Sept. 11, 2001, to help us survive downturns in the stock market, restrictions on international student enrollment, etc. The quasi-endowment needs to be replenished over time from its current $20 million level to something closer to $70 million. We have a $180 million annual budget and, like every household budget, we need to be prepared for surprises, opportunities and disasters. They’ve all occurred recently in our university’s history, and history does, unfortunately, repeat itself on this front.
Now, that still leaves room for hopes and dreams and ambitions, in my view. Big hopes and dreams will need to compete against others, and large infusions of new funding will be uncommon. More modest initiatives, while more practical and possible, still need to be carefully justified and connected to the university’s mission and priorities. That’s why all the budget work we do is important and necessary and usually successful.
Formulating an institutional budget that supports the important activities of all members of the university community is a complex process and needs and requires the input of many, many people. It is not and could not be developed and maintained only by Mark Vangsgard, Gary Thyen and our division of Business Affairs. It requires good thinking and careful attention to detail from us all in addition to our hopes and dreams. It also helps to have an understanding of some of the bigger pieces of the puzzle like those presented here. I hope this is helpful.