By Roy York
On Friday, UK President Lee Todd foretold a grim financial future for the university in the next two years warning faculty, staff and students that the coming months could bring wage and hiring freezes, tuition hikes and possible layoffs.
Todd sent a campus-wide email saying UK had fared better than many other agencies in Kentucky in the face of budget cuts. Yet in handling the $25 million reduction in appropriations since December 2007, Todd said, “The easy decisions have already been made.â€
Todd said the current allocation from state funds to UK’s budget is $310 million, down 7.5 percent from December 2007. Todd expects state appropriations for the 2010-11 fiscal year to be at least $306 million, of which $21 million comes from federal stimulus money. But Todd warned that $21 million would not be available for the 2011-12 year.
In addition to losing the stimulus money for 2011-12, Todd estimated the cost of running the university would increase $17.4 million next year, including an additional $8 million to fund to health care and other benefits for employees and retirees.
Todd said it would take about a 9 percent tuition increase to cover the $17.4 million, but he is reluctant to recommend such a raise in the face of economic hardships already faced by Kentucky families.
“Increasing tuition (a significant amount) is among the least likely possibilities,†said UK spokesman Jimmy Stanton.
Todd said lay-offs are a last resort to balance the budget because a significant faculty reduction would have severe consequences for UK in both the short and long term. He did not completely rule out faculty and staff reductions, however.
“Everything will have to be on the table for discussion as we build the university’s budget for next year,†Todd said.
Ernie Yanarella, a UK Board of Trustees faculty representative, said he appreciated the president’s frank and candid budget message, but said he would like to see more options explored as UK tries to replace disappearing funds.
“If the options for dealing with the looming budget problems are as narrow as President Todd has framed them, furloughs are not just an option. They’re inevitable.†Yanarella said.
Todd’s message also squelched hopes that the wage freezes in place for UK employees for the past two years would be lifted even though Todd said raising salaries remains one of the top priorities concerning the budget.
“A 1 percent salary increase would cost the university’s general fund $3.6 million,†Todd said. “But it is very difficult to add a recurring expense of that magnitude given substantial increases in fixed costs and the prospect of no additional support from Frankfort.â€
Yanarella said he understands the burden will have to be shared throughout the university but he expressed frustration over how much the faculty has been asked to absorb including the prospect of two more years without salary increases.
Yanarella offered a solution for the president and said the UK Athletics Department should be asked to give additional money to the UK general fund to help shore up the deficits since the athletics program is consistently in the black.
“It seems to me when you have a successful sports program that continues to increase its budget — by virtue of its successes to be sure — it should be tapped to help shoulder the burden,†Yanarella said.
Gov. Steve Beshear will make his budget recommendations to the Kentucky General Assembly on Jan. 19, and Todd said he and his staff would be working to convince lawmakers to continue funding UK without major cuts.
“We will do our very best to convince Kentucky’s policy makers that their investment in us — even in these most difficult of times — is essential to Kentucky’s long-term success,†Todd said.
Re: The comments of Ernie Yarnell: I agree but I also find it disturbing that Dr. Todd did not mention that if the decision is not to proivde any raise (yet again) a sizable bonus for employees this year from the stimulus could be accomplished. That would be a very simple stopgap and help a little. Everyone here at UK has dug in; we have increased in national rankings, generated more revenue, taught larger clasees, worked longer hours. Money has been found for everything else- why can’t some be found for compensation? Many employees are taking second jobs to meet living expenses. Work here will suffer- there will be more illness and time away from work, less energy for daily tasks and creativity. The end result is rising expenese in terms of lost workdays and decreasing productivity (there is a copious body of research that supports this statement). Make an investment in a proven item- invest in the faculty and staff. And that 8 million increase in expenses for benefits next year- how much of that is actual payout? Most employees never use the tuition benefit, the gymns, and most of the other benefits that UK lists in our compensation package each year. Look how much we are saving UK by not using those benefits. Perhaps some of that can be converted to salary increases. Since UK gets that fringe amount when we are awarded external projects that money is coming in, so why not use it for the employees for which it is intended? State government, which apparently is in much worse financial shape than UK, has managed to provide a salary increase every year, maybe we can learn something from them.
Time to be rid of Lee Todd and this pathetic rubber stamp Board of Trustees. UK is in a nose dive that is fast approaching the ground. We need a 2-3 year moratorium on all new construction here at UK. Todd needs to get into our endowment funds and step up for the employees who have not had a raise in 2 years and will not be getting one again this year. I believe everything that I buy has gone up over the past 2 years except my paltry wage here at UK. We have so much waste and theft/fraud here on campus that it is sickening. It is way beyond time to end this foolish quest to be a “Top 20 Reasearch University”, that has just been a bunch of smoke & mirrors designed to get more money from donors and the State Taxpayers. We are no closer than we were when this farce began 10 years ago. It is beyond time for the people of this State to wake up and wise up to the fact we are getting hosed and ignored. Get on your phone and begin to demand some accountability from those in charge of this out of control crowd running things.
Sixty percent of The Commonwealth of Kentucky $9.1 BIL Budget is obligated to Medicaid and Education (20% Medicaid, 20% Higher Ed, 20% Ed). The University of Kentucky has been one big money bucket, a heavy weight around the neck of the taxpayer. Screw UK and all of higher ed. It is time for the so-called educated to practice what they teach. UK should be self sustaining, having all of its operating funds arising from goods and services sold (tuition raise it to market prices). Governor Brown insisted that State Government, to include higher ed, should run itself like a business. It is unfortunate that the Federal, State and Local Governments can not balance the books. The current financial crisis was created by the educated upper class, deal with it.
@ Debora Reed
You wrote a good comment, but you mentioned “we have increased in national rankings”.
Which national rankings you are talking about and which division accomplished that “increase?”
In case you mean the entire University, re-check your numbers. On the US News Rankings UK went down to #64 among public national doctorate-granting (i.e. research) universities. See it here: http://colleges.usnews.rankingsandreviews.com/best-colleges/national-top-public.
In fact, UK has been sliding in this most widely used and most legitimate ranking ever since Todd was hired, and by now lost about 10 spots. That’s a lot! Since 2003 the entire University didn’t rise in its rankings as a whole, only on few select measures that make little difference on its standing among peers.
The benefit expenses you mention most likely include increasing medical benefits costs which grow in large measure because of the outlays that the Medical Center incurs due to its construction. It has to pass on its patients (most clearly UK employees and their dependants) its direct payments and bond coupon repayments for construction activities set at well over 700 million dollars.
Via increased healthcare premiums every employee pays for the new hospital construction, like it or not. Hence, much of your potential salary increases are buried in new construction sites. I hope that UK community doesn’t think that the UK Med Center generates its profits solely by treating out-of-state Martians. No, it is us who pay for it through UKHMO, and hence we pay for the America’s Greatest Construction Site via increased out-of-pocket expenses and forgone salary increases.