Meeting describes fiscal CEU future

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Posted Wednesday, April 15, 2009 - 5:05pm

Apprehension over what the conclusion of the legislature's general session would mean for the College of Eastern Utah prompted a campus-wide meeting on April 2 to discuss budget cuts and the subsequent consequences for the college. Mike King, interim president, presented material regarding CEU's budget situation.

In September of 2008, the legislature implemented a four percent cut, about $763,200, to CEU's budget. The majority of that cut was absorbed by the college's reserve, which left the base budget at approximately $18.48 million.

Uncertainty over the possibility of more cuts caused the college to reduce operating expenses, which are a department's funds for transportation, supplies or equipment, by 15 percent. In preparation for the likelihood of a further budget decrease, department spending was only allowed on an emergency basis, requiring approval from a vice president beforehand.

For fiscal year 2010, beginning July 1, 2009, the cuts will have a more severe effect. According to King, the legislature is requiring a cut of 17 percent to all institutions of higher education, which is an ongoing cut, meaning that if the economy does not improve, the 17 percent cut will be permanent from the base budget for the future. The cut leaves CEU's base budget for FY 2010 at $15,280,00, severing $3.2 million in funds.

There is some good news for next year, explains King, "The legislature was able to take advantage of the federal stimulus money that came to the state ... There will also be some of this one-time money made up of bonds for construction projects and road projects, and that frees up some cash as the state borrows money to do those construction projects. So the net cut for FY 2010 ... is about 9 budget. However, when we get to 2011, there is no more one-time money to add back."

The college has opted to phase into the cuts over the course of two years, bearing a cut of 13.5 percent, about 2.5 million, for FY 2010. Absorbing a 17 percent cut in one year would force the college into a financial emergency. Such cuts affect CEU more detrimentally than other Utah colleges, who gather an average of 63 percent of their budget from state funds versus CEU's average 88 percent, according to the Utah System of Higher Education.

Cuts of this magnitude will require major consolidation throughout the entire institution, and King outlined two major changes that will generate funds for the college. First, the cost of health care will be shared by college employees, King states, "If you look at the system of higher education, we're the only school that doesn't charge their employees a percentage of the health care cost. We don't share it except just very minimally. We believe that by sharing the health care cost that we can generate about $300,000 ... we don't have all the details on this yet, but essentially what it means is that we'll be paying about 15% of the total cost of the premium."

The second strategy is a tuition increase of 9 percent, which will raise about $200,000 for the college. Other measures include cost-saving techniques, with the largest reduction in the area of operating costs, which will undergo a 25 percent cut for FY 2010, explains King, "I think that our cuts this year have approached probably at least 30% in operating expenses and maybe more than that, when it comes right down to it. This 25 percent cut it's not necessarily an across-the-board cut, there will be some flexibility within units and divisions to spread that cut as they need to, but it's an average of 25 percent and that will yield us about $810,000. These numbers are estimates."

Twenty faculty and staff positions will be saved for fiscal year 2010, and many faculty "received letters in December that they would not have a job after the first of July or the end of June this year, just because of the uncertainties we had to make some notifications ... We were able to let the faculty know ... that they would have those positions, so we've been able to step ahead with that and commit to making that happen."

Fiscal year 2011 is an uncertainty, however, as more drastic measures must be taken and positions maybe be lost. As a result of the need to make additional cuts in 2011, other options must be explored to achieve a base budget of $15,281,800 in 2011. Studies are to begin immediately on low-enrolled programs, which could result in restructuring of some discontinuances in those areas.

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