March 10, 2010
Dear Kutztown University Community,
The state of the economy has affected many businesses and industries in recent years. Although Kutztown University has faced some economic challenges during this time, we have been able to maintain a vast majority of our programs. However, we are now faced with a serious budget challenge that will have a significant impact on our personnel and programming.
Kutztown University will protect its commitment to excellence despite the challenges. Still, we are required by state law to have a balanced budget, and must do what is necessary to comply. Consistently declining state funds and increasing costs have resulted in a need to consider substantial cutbacks for the 2010-11 academic year and beyond.
Consider the following factors that have led to this budget crisis:
- Tuition rates for PASSHE schools compared to large public entities and private schools remain modest. We are anticipating a minor increase this summer given the current economic conditions.
- State funding is down several million dollars compared to last year. In fact, the current year combination of state and federal stimulus money is about equal to the state support we received in 2007-08.
- We are anticipating funding from the state to remain the same for the coming academic year, and will receive the $3.4 million federal stimulus for a second and final year.
- Our expenses have continued to increase. For instance, the salaries of 85 percent or four-fifths of our employees (those employees who are represented by a union) are contractually obligated to increase an average of about 6 ¼ percent through 2011.
- The costs of benefits for all employees is projected to increase by 7.3 percent for the next year, and 10.2 percent for 2011-12.
- We face a 10 percent increase in utility rates. Although we have implemented many energy savings projects, our cost savings are going to be realized in the long term.
- The budget deficit will become even more severe in the years ahead as we face a ten-fold increase in SERS retirement costs.
The bottom line is that our revenues are projected to increase an average of two percent through 2013-14, while our expenditures are projected to increase an average of six percent. Increasing revenue to meet these costs is very difficult. Our university experienced steady growth over the past decade in enrollment and resources. There is very little room for growth at this time.
Our options to balance our budget are very few --- we must reduce our personnel (both faculty and staff) and our programs. It is clear we have never faced anything of this magnitude or longevity in recent history.
Making the decisions on reductions is very complex. We have been reviewing our possibilities since last fall with a goal of cutting ten percent of our budget over the next two years. In doing this, we are looking at every aspect of the university. It is evident that our reductions will impact all five divisions of the university. We expect to begin announcing reductions for the coming year this spring, and will begin announcing reductions for 2011-12 in the fall.
I want to reiterate that despite these challenges, we are committed to protecting our core academic programs and providing the excellent education for which we have become so well known over the years. We must also maintain our ability to be innovative with respect to what we are offering from an academic perspective. This will allow us to meet the needs of our students as they prepare for the marketplace.
It is clear our university will look different in the next three to five years. The decisions we have to make will be difficult. We will do everything we can to help our affected employees with transition assistance. Students whose majors are affected can be assured they will be able to achieve their KU degree.
We will work together to get through this. As always, I am encouraged by our talented faculty and staff who are committed to producing the best and brightest graduates in our region. I know that we will use this experience to strengthen our university and continue to represent the same academic excellence we have had for nearly a century and a half.
Thank you for your dedication and commitment to Kutztown University. I will keep you informed about the budget process as more information becomes available.
F. Javier Cevallos