November 19, 2008 Budget Update
Colleagues – Faculty, Staff, Students:
The latest revenue forecast for the State of Washington became available today. Washington, like most of the rest of the states – indeed, like much of the rest of the world – is facing very serious revenue shortfalls.
For our state, revenues are currently projected to fall around 10% short of projected state expenditures. The magnitude of the shortfall is estimated to be about $4.6 billion. Since about half the state"s budget is protected from reductions through constitutional or other means, to make up the 10% shortfall would require an average of a 20% reduction in the rest of the state agency budgets. We are in that latter category of state agencies whose budgets, on average, would have to be reduced by 20%.
Just what does that mean for Western? The 20% reduction is in the 60% of our budget that comes from state support. So, it"s 12% of our operating budget.
How about tuition as a backstop? If tuition were raised to the maximum currently allowed by law (7% per year) for resident undergraduates, the additional funds would reduce the magnitude of the cut to something in the neighborhood of 8.7% of our operating budget. Such a reduction is still larger than any anybody I have talked with recalls having happened at Western, perhaps by a factor of 2.
We, of course, are vigorously arguing that we are not “an average” state agency: we are part of the solution to Washington"s fiscal challenges and not part of the problem. (See, as an example, the Associated Press story that recently ran in media across the state.)
And please understand that we are a long way from actually having a budget. The Governor is required to present a balanced budget and her supplemental budget for the current fiscal year and her 2009-11 budget recommendations will become public no later than December 20th. The legislature is likely to take up the supplemental budget for the current year early in the session. Their responsibility to develop a budget for the next biennium could extend to the end or even beyond the end of session if ballot initiatives are involved.
So, patience continues to be necessary. That having been said, we cannot wait until the legislature acts in order to then decide how we will adjust to the consequences for Western. Our focus needs to be on adjustments to our budget for the 2009-11 biennium. That budget has already been developed using normal campus processes and, after approval by our Trustees this summer, was sent down to Olympia. We need to put in place a special supplemental budgeting/planning process to adjust that budget once we know what the allocations actually will be.
With that need in mind, the University Planning and Budget Office has drafted for your consideration, critique, and improvement, the following:
1. Principles and Guidelines for the Campus Supplemental Budget Reallocations
2. A Campus-Level Supplemental Process for Changing the 2009-11 Budget
3. A university-level review of “strengths, challenges, opportunities, threats” (a “SCOT analysis”).
These are initial drafts and really do need your critical review. Please do get involved and help make them better. They are being put on the web in a form that will allow you to make direct comments, criticisms, and suggestions. The Planning and Budgeting Office will send an announcement to campus as soon as these web pages are available.
The focus here is on the process for reaching revised budget decisions, not the actual decisions. An important principle you will find articulated in the draft is that all decisions are compliant with state requirements, university policies, and contractual commitments including collective bargaining agreements.
The budget situation is extraordinarily serious. There is no doubt about that. We must not let that fact paralyze us, though. Just the opposite. When it comes to the value of higher education as part of the solution rather than being part of the problem, Washington really does get it. This is the time to be ever more clear about our core priorities and where, as a university, we intend to be in the future. The budget picture will eventually turn around and, when it does, we must have in place the plans and the capacities to aggressively move forward.
Thank you for your patience and thoughtful engagement as we move forward.
Bruce