Agreeing to avoid long-term damage to the university's momentum in considering options to address a short-term problem, Montana State University's planning and budget committee yesterday voted to borrow from two university funds and institute university-wide cuts of about 1 percent to remedy a $1.055 million shortfall for the current fiscal year.

The 23-member University Planning, Budget and Analysis Committee voted unanimously to implement a one-time plan to remedy a shortfall this fiscal year caused in large part by an increase in fixed costs, such as rising utility costs and health insurance premiums, that ate up increases in university revenues.

The committee considered two plans that will balance the budget for the current fiscal year. The first called for across the board cuts of 1.52 percent and no borrowing from university surplus accounts. However, the committee agreed with a second plan to borrow $250,000 from overages in two MSU funds, which would result in more shallow university-wide cuts of .8 percent. One source will come from a contingency fund that pays off sick and vacation leave balances when employees' retire, and the other source will come from University Auxiliaries. Funds to the employee leave contingency fund will be paid back next fiscal year.

"I don't want to do long-term damage to the progress and momentum the university has made in attempting to solve a short-term problem," Dooley said of the $1.055 million shortfall. He said the university is on an upward trajectory in freshmen recruitment, retention and academics, and the plan for deeper cuts might stall its progress.

Prior to the vote, the committee learned that even though enrollment is down slightly, tuition revenues had grown by more than $6 million in the last year. However, fixed costs and other costs have risen over $6.4 million. Those cost increases included a $1 million increase in MSU's utility bill and $750,000 in employee health insurance.

Combined, the budget was $1.055 million short, or about 1 percent of the university's $103 million budget. The shortfall was increased by three budget amendments that UPBAC agreed would be a priority this year. Those three amendments included $250,000 for the Core 2.0, MSU's new curriculum widely implemented this year; $90,000 for Bozeman upper division nursing courses to help alleviate the state's shortage of nurses; and $32,000 to pay stipends for Montana teachers who supervise MSU student teachers. The total of the shortfall and the three amendments was $1.055 million.

As a result of the vote, all university executive officers must strip .8 percent from their budget for this year. Academic Affairs will absorb the largest dollar amount, or $375,693, followed by Administration and Finance ($113,458). The President's Office must cut $14,360 and the Vice President for Research $11,401. Student and Auxiliary Services will absorb $39,644. UPBAC also passed a "friendly" amendment, which would take a "see as we go" approach, borrowing first from the Auxiliary fund, and lastly from the employee leave contingency fund, if necessary.

"This is going to make some level of sacrifice for everyone," Dooley said. "It will be a sacrifice that will not come without pain. But it is belt-tightening that we can accomplish."

Written by Carol Schmidt and posted 9/29/04.