October Memorandum

The following was sent to all faculty and staff today. It talks about EOU and where we are financially. I have been sharing these thoughts with many service groups and governance committees of EOU. Please let me know your thoughts. Bob

Greetings Colleagues,

I want to take this time to update you briefly on a couple of items facing our University.

First and foremost I want to send a message of gratitude to our SEIU employees. Tomorrow, we will all receive our pay notices. For most of us, this will be routine and our pay amount will only fluctuate a penny or so due to rounding. However, 121 employees, all represented by the SEIU, will see a greater reduction as a result of their furlough days. They accepted the contract based on the bleak economic conditions and forecast that lay ahead of us. As a result of their actions, a quarter of a million dollars will be saved and this represents a significant amount for EOU and will enable us to keep on track with our goals of providing exemplary service and a quality educational experience for our students. This Friday, please take the time to extend a “thank you” to these individuals who tirelessly and selflessly serve EOU every day.

Along these lines, I would like to discuss briefly our financial outlook as a university. As Jeff Johnson said during my interview process, “You will be at EOU in a boom of prosperity and in the dread of poverty.” Only a philosopher could be so conflicted in the same sentence, yet be so right.

First, let me talk about the prosperity. Last Friday was the famous “end of the fourth week” for enrollment counts. While still unofficial, we will announce next week exceptional gains in our enrollment. Our total headcount is up; our credit hours are up; our on-campus headcount is up to near 2002 levels; the number of students living on campus is up; our freshman class is among our largest in recent history; and our student retention went from the low 50 percent range into the 70 percent range. All of our performance indicators are up and this is great news. This comes on the heels of very good news about our financial condition at the end of the fiscal year. We were able to curtail spending mightily last year. Every penny was pinched and the result was that we came in with a positive fund balance. While we are not “financially robust,” we are financially stable. All individuals in the University must be applauded for their efforts in student recruitment, retention and budget consciousness. Additionally, we were very fortunate to receive a smaller than expected cut from the state system. A bulk of this came in the form of a one-time subsidy in recognition of the unique market we serve and the inelastic tuition model we have. All of this is good news to share!

Now, let me shift to the second part of Jeff’s accurate portrait. We balanced the budget by not rehiring many vacated positions and by eliminating spending on core functions and elements of the University. We can not do this for long as this is not a sustainable budgeting practice. Symbolically, I look at the stack of paper I use to print my memos and letters. On one side, it is white and useable; and on the other, I see memos from Dixie and other reports—a great way to see what happened over the course of the year. But, this stack of reusable paper is diminishing quickly. I will have to buy a ream or two of paper soon! This may seem small, but think of all of the items we have done without and at some point, in the not too distant future, we must replace these items or quality will decline dramatically. Our colleges and many, if not all, departments have computers that are broken and must be replaced among many other items we must replace or repair; we have patched things together with bailing wire and duct tape! While we must remain budget conscious, we do have to invest and replace core equipment, otherwise we will slip back into an enrollment freefall.

Despite our own efforts to control spending, I fully expect to receive notice shortly of a reduction in our base budget. This is due to economic forecasts and other potential imbalances. Furthermore, I fully expect this February to be brutal with the special legislative session that is planned. This will be exacerbated if the taxing legislation that was passed last year is repealed by the referendums. This will force even more reductions in our budget allocation for this fiscal year as well as the total biennium budget. This is based on the discussions I have had with a series of legislators where they have stated that if the tax increase is repealed, no new revenue measures will be put in place—the only method to balance the budget will be through reductions.

At the same time the RAM budget model (the model used to distribute state funds to the OUS institutions), is being discussed and will be revamped. This could be done as early for FY11. On the first run of some of the new models, EOU will lose funding in the low six-figure range. However, that also assumes some of our “prized possessions” remain intact—for example, 100 percent RAM funding for out of state students. These issues are now being debated heavily and, while they may not take effect in FY11, in the following biennium I believe that they very well could be eliminated.

Additionally, I believe the February 2010 special session is just a prelude to the FY13 biennium budget process. I have yet to see a positive economic forecast that would indicate additional funds for the state. Furthermore, with a new governor we will have a whole host of new issues. And a final element to all of this is the discussion to re-engineering of the OUS model—what prospects may arise from this are very interesting, compelling and overwhelming.

This past year, we did the things we had to do: we grew and we managed our budget. Over the remainder of this fiscal year, we must again control our budgets, despite the impending cuts. We must continue to show growth in enrollments; we must seek out opportunities that will ensure long-term and predicable student recruitment outcomes and enhance our retention rates. Because of the economic uncertainty and projections, we must act now to properly position EOU. We have run many budget models and continue to refine these based on information as we receive it. Over the course of the next several weeks, I will be making difficult decisions so that we can ensure our long-term stability and viability. Some of these will include the implementation of reductions and costs savings that was discussed with administrative faculty and others over the past spring and summer—albeit not at the levels we discussed at that time. I have communicated with Les Balsiger several ideas and he will be discussing these further in the appropriate forums next week.

To be honest, I feel like Jeff in my confliction. Through all these challenges, we do have opportunities and that must be our focus. The opportunities are the things we must seize upon to control our own destiny and future. We must focus on the things that we can control—our recruitment and retention of students among them. We are on the brink of an incredible recovery for EOU and we have tremendous momentum as we head into yet another storm. However, given our history and recent success, I know we are battle-ready and I am ready to fight the good fight.

Thank you for your support and dedication to this great University. It is gratifying to be here with you.

Sincerely,


Bob