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KU Budget Update from President Hawkinson

February 16, 2017

Dear KU Campus Community,

In my January 'welcome back' letter, I provided some information regarding the fiscal challenges currently faced by the institution (see below).  I want to update you regarding this situation and provide some budget-related plans for the current and upcoming years.

The following is an excerpt from the January letter:
....While many good things are happening, we have many challenges to meet in the coming year, most notably the insufficient resources from the commonwealth and a smaller pool of students from which to recruit new students.  The recent settlement of our many labor contracts has resulted in much deserved pay increases for all our employees, but these pay increases, along with rising costs, and shortfalls from previous years, have left us with potentially huge deficits.  We simply do not have the resources coming in from the state or tuition to balance our budget.

Numerous cutbacks have been made at KU in recent years and further savings must be recovered so as not to put our mission at risk.  While some hiring has occurred in essential areas, we must limit future financial commitments by restricting our hiring of new personnel.  We will also need to pull resources from existing reserves in many areas of the university while at the same time continuing to make investments in those initiatives that advance the mission of the institution.....

2017-18 E&G Budget Update
On Tuesday, February 7th, Governor Wolf released his state budget for the 2017-18 year.  Most positively, the budget included an increase for the State System of nearly $9 million for the upcoming year.  While this increase is most welcome and comes at a time when the state budget is faced with its own challenges, it falls far short of the State System's appropriation request of $61 million in new funding. If the governor's budget proposal is accepted as presented, this would yield an increase in KU's state appropriation of less than $1 million.

The budget presentation at the February University Senate meeting showed that the university is faced with a budget deficit of nearly $8.8 million for 2017-18.  Even with the proposed increase in state funding, the university is still faced with a significant budgetary shortfall that will need to be addressed through a combination of spending cuts, one-time funds, and any increase in tuition rates that may be approved by the State System Board of Governors.

2016-17 Expenditure Review
The budget presentation at the February University Senate meeting provided information on the growing fiscal deficits that the university has incurred over the past two years.  In order to slow the additional growth of these deficits, the president's cabinet will be expanding its expenditure review process.  In addition to its ongoing review of requests to fill vacant positions, the cabinet will also begin reviewing all major purchases on a weekly basis to identify items that can be deferred or canceled. 

On a related note, the university is once again soliciting ideas for budget savings from the campus community.  A link is available on the budget website --- https://www.kutztown.edu/budget --- that will enable you to submit new ideas to reduce university expenditures or increase revenues.  Thank you in advance for your participation and creativity.

2017-18 Budget Planning
As many of you know, the university has made investments over the past several years to strengthen its recruitment and retention practices.  These investments, which include the establishment of new scholarship programs, new positions focused on student recruitment and retention, and new student retention programs --- among many other items --- are intended to align the university's student enrollment with its existing infrastructure, including the current complement of faculty and staff.  To provide these investments time to mature, it is imperative that the university pool its resources and ensure it takes advantage of all opportunities to reallocate resources to mission critical areas. To that end, each of the vice presidents have been asked to participate in the following initiatives:

  1. Funds rescission - University departments maintain millions of dollars in separate accounts to support operational and special programs, as well as fund large purchases over several years.  The vice presidents have been asked to return a portion of these funds to apply to next year's budget deficit.  Each vice president will identify specific accounts and amounts by working with appropriate college and unit heads.  A total amount of approximately $1 million will be pooled through this process to apply directly to this year's budgetary deficit.
  2. Budget reductions - Each of the vice presidents is in the process of identifying base budget reductions to reduce the 2017-18 budget deficit.  Most of these reductions will target the elimination of vacant positions and reducing certain central university budgets, such as deferred maintenance.  At this time, there are no plans to eliminate filled positions to reduce the university's 2017-18 budget deficit.
  3. Strategic Initiative Requests - This past year's gainsharing process yielded a total of $496,023 which has been set aside to fund new strategic initiative requests.  We want to thank all departments who participated in the gainsharing program to provide a source of funds to support important university priorities.  Request forms and instructions for the current year have been provided to the vice presidents for immediate distribution.

Please contact Matt Delaney, the acting assistant vice president for Administration & Finance if you have questions about any of the budget related information in this correspondence. 

Despite this challenging fiscal situation, I remain convinced that, working together, we will all ensure that Kutztown University remains vibrant and continues to provide the environment to make a difference in each of our student's lives.

Sincerely,

Dr. Kenneth S. Hawkinson
President