Mr. Chairman and Members of the Joint Sub-Committee, I very much appreciate the opportunity to address you this morning.

We have agreed to be brief this morning, because the committee has a heavy burden of work.

I want to begin this morning by re-stating some of the themes with which I began my tenure as President of the four campuses of Montana State University, two years ago. I'll then make some remarks about Montana State University-Bozeman and allow the CEOs of the Billings, Great Falls and Northern campuses present information on their campuses.

Here are the themes:

• Higher Education is an investment for students and for the state. We need to leverage the state's investment to gain other monies and create a greater return on the state's dollars.
• No state or institution has enough money to do all the things it would like to and we can't spend money we don't have. We need to always question whether the resources we do have are allocated to our priorities.
• One way we can stretch available resources, and be more effective in our success is to form partnerships both between our campuses and between the public and private sectors.

My vision for Montana State University is: one university in four different geographic and economic regions of the state, each with special and different programmatic strengths and serving different customers with different interests, challenges, and needs.

Despite its sparse population, Montana is not a "one size fits all" kind of a place. And the variety of the different MUS campuses gives each Montanan a place to meet his or her educational goals.

Because our MSU campuses do have different challenges, in the next biennium, I will ask our budget committee to find a way to create a pool of Campus Sustainability Grants to help each campus better take advantage of or enhance the conditions that will make it more successful in its educational mission for Montana.

The budget challenges for all state agencies are daunting. For the MSU campuses, the gap between the FY2000 Base and an FY2004 Executive Budget that would include a Pay Plan annualization and Present Law Adjustments is just over $15 million. This morning each of our campuses will discuss their portion of that amount and what it might mean on their campus. I know working through the state's revenue shortfall is tough duty for members of this committee. Our pledge to you is to present you with our capabilities, hold open our books, answer your questions to the best of our ability and, at the end of the day, do the best we can for the people of Montana with the resources that the state can afford.

Let me now turn to Montana State University-Bozeman.

We very much appreciated the recent visits of both the Subcommittee and the full House Appropriations Committee to our Bozeman campus. We hope that the opportunity to observe students and faculty in their classrooms and laboratories has provided you with a better feel for what we are all about.

On the Bozeman campus, our priorities over the last two years have been:

• Supporting student success (and improving retention)
• Being fiscally responsible and accountable to our public
• Making decisions in a data-rich environment and engaging the campus community in the process of identifying priorities and allocating resources accordingly.

I believe that you have the document, Points of Excellence, in your folder. It summarizes many of our recent outcomes and accomplishments and does a good job of telling our story. I'll use my remaining time this morning to focus on budget issues.

I'd like to summarize what the FY2000 base means for MSU Bozeman.

In 2000, our state funding was $36.5million, and our resident enrollment was just over 7,600.

This coming year, FY04, we project our resident enrollment will be 8,150, an increase of 523 over 2000. Yet our costs will have increased over those four years, in large part due to:

• Salary increases, approved by each legislature
• Utility increases
• Library resources cost increases

The on-going increased costs of keeping pace with technology advances

Keeping Funding at the 2000 level, with 523 more students and our recent cost increases, will strain our ability to continue providing the quality of programs we have promised our students -- a level of quality they have come to expect from us.

Illustrated in another way, the $10 million that is Bozeman's share of the MSU gap mentioned earlier is the equivalent of:

• A tuition increase of 11.75% in each year of the biennium;
• 92% of the budget for the operation and maintenance of our Physical Plant;
• 20% of the General Fund portion of our Instruction budget, or
• 17.5% of our total salary budget

The Board of Regents will provide direction to the campuses on the level of tuition increase appropriate for the next biennium. In large part based on the final funding the legislature is able to provide. As a campus, we will then initiate our process of internal review; this review will be led by our University Planning Budgeting and Analysis Committee. (explain success of committee in developing consensus-based budget recommendations.) This process will focus on current programs and possible adjustments in spending, as well as opportunities for increased efficiencies. Because I believe strongly in this process as the right way to develop our budget plans, I do not want to get in front of the campus committee's efforts by identifying specific reductions that would be made. What I can emphasize is that this level of reduction from the executive budget, with more resident students to educate, will be extremely difficult to absorb without a direct impact on cost, access and/or quality.

Most students select Bozeman because of our level of quality. If we were to depreciate this level of quality, through the reduction of program funding, or the elimination of the most advanced elements of instruction, we would we doing our students a disservice. We would be destroying the reason that our students select us -- and the reason so many employers, from across the nation, aggressively pursue our graduates.

We appreciate the support you have given us in the past -- and feel confident we have provided the state a significant return on the investment. We applaud the efforts you will be making to determine fair and appropriate allocation of the available state's resources, and thank you for dedication to that most difficult task.