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UW President's Statement on Budget

April 21, 2009

President Tom Buchanan today (Tuesday) issued the following statement to the UW faculty and staff regarding UW's budget:

Since January, we've been aware that the fiscal picture for Wyoming state government has changed, and, as the state's university, our fiscal situation has also changed. We anticipate more changes will come as the state's financial picture becomes clearer.

We've been fortunate to enjoy a strong state economy over the last six years. A little more than six months ago, the Consensus Revenue Estimating Group (CREG), which provides the legislative and executive branches with mutually agreed on state revenue projections, estimated a state revenue surplus of about $900 million. It was on that basis that Gov. Dave Freudenthal submitted his supplemental budget to the Wyoming State Legislature on December 1, 2008.

When CREG met again in January 2009 to give its updated revenue forecast, the projected surplus had shrunk to $260 million. Through the legislative session and since its conclusion, it has become clearer that even the reduced surplus projections no longer hold true, and Wyoming state government might experience a revenue shortfall. In February, Gov. Freudenthal requested all state agencies to consider budget reduction scenarios of 5 percent and 10 percent.

Earlier this month, in response to his concern about the U.S. recession and its impact on Wyoming, the governor issued an executive order restricting hiring in state government, deferring reclassifications and promotions, and limiting non-essential expenses such as travel, certain supplies and equipment, and contractual services.

As part of state government, the University of Wyoming will cooperate with the governor's directive.

The general fund portion of UW's Section 1 annual budget is about $183 million. If we identify a five percent reduction, that's $9 million. The more likely reduction is closer to 10 percent, or $18 million.

We're evaluating a number of strategies, just as any public organization or private corporation facing a revenue shortfall would.

As many of you know, UW embarked on a budget planning process in February under the direction of Provost Myron Allen, which involved a university-wide assessment of our core mission. With the information collected, the vice presidents and I are now conducting formal and informal budget reviews and considering a range of budget reductions.

As this situation has developed, I have updated the UW community regularly, and I understand that people are justifiably concerned about the changes we will have to make. As we learn more, I will continue to provide information. Unfortunately, we don't know the magnitude of the budget reduction for the 2010 fiscal year, which begins July 1. As a result, we will experience a period of uncertainty.

We've already begun to implement a number of budget reduction policies. These actions include identifying which position vacancies are critical to fill and at what salary they can be filled. No overtime will be paid; instead qualified staff will receive compensatory time. Finally, I have directed units on campus to be prudent with non-essential spending.

In addition, we're also considering:
-- job functions that can be consolidated for both effectiveness and efficiency;
-- reductions in support budgets; and
-- increasing tuition and other methods of generating revenue.

Unfortunately, in this environment, we also cannot guarantee that positions won't be cut. That isn't my first choice but depending on the magnitude of the reductions, we may not be able to avoid that strategy.

It's clear we are obligated to make changes in how we run this university.

We have a lot of hard work ahead of us, as we honor our obligations to the state and continue to fulfill our mission. I appreciate the thoughtful consideration members of the university community have given, and I commit to continue to be open about the budget planning process as it progresses.

The Consensus Revenue Estimating Group meets again in mid-May to re-estimate projected revenues. Based on the updated estimates, the governor will decide what the impact on state agency budgets will be. UW is just one part of a complex state government system, and each of the components has an important mission to fulfill.

Wyoming derives a sizeable portion of its revenue from mineral development, which includes natural gas. As a result, state revenue estimates fluctuate with the price of natural gas, which is currently about where it was eight years ago; it has dropped by approximately two-thirds since last spring. While UW has enjoyed the benefit of the state budget surpluses that natural gas made possible, those surpluses no longer exist.

Let me remind you that Wyoming has not seen the drastic impacts that other states have and even in the face of these changes, the University of Wyoming is far better situated than other state universities, some of which are announcing layoffs by the hundreds and are facing extraordinary losses of state funding.

In about four weeks, we'll have the results of CREG's updated revenue projections, and we will better understand whatever fiscal actions the governor may need to take. Until we know more, I encourage you to talk with your colleagues and with me. I will continue to update the campus community when there is important information to share.

Posted on Tuesday, April 21, 2009

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