Weathering the Storm

By Susan Vogel

The worldwide economic downturn of the past year has required that individuals, families, businesses, and governments all reassess their priorities and determine how best to budget their declining resources. Institutions of higher education are no exception. Across the U.S., they are facing significant budget cuts from government and private sources. Colleges and universities have responded to the challenge in a variety of ways, from cutting whole departments to laying off staff to instituting campus-wide pay cuts.

The University of Utah has chosen an approach to the problem that focuses on reinforcing its core mission and rewarding excellence. While the choices the administration has made will collectively help the University weather the storm, its unique position in the community may be the main factor that, in the words of U of U President Michael K. Young, permits it to continue on its “upward trajectory.”

The National Landscape

Across the nation, private and public universities are facing budget cuts caused by shortfalls in state revenues, the loss of value of investments and endowments, and in some cases, a slowdown in giving. Forty states made cuts midway through the 2008-09 academic year totaling nearly $60 billion, in many cases because unemployment has reduced state income tax revenues. In the first quarter of 2009, income tax collections were down 26 percent. These reductions have hit state-funded higher education the hardest.

Many universities have responded by imposing spending cuts “horizontally,” making it a priority to keep academic programs and faculty jobs while attempting to meet their budget cuts through furloughs, hiring freezes, layoffs of staff, and reductions in operating expenditures. This “share the pain” approach seeks to spread the cuts across an institution’s programs.

Other universities have cut “vertically,” slicing out entire departments from top to bottom. When Washington State University faced a $54 million budget cut over two years, it eliminated programs that it felt were not crucial to its mission, enrolled fewer students, and did not draw outside money through grants. Dance and theater programs, as well as 11 tenured and tenure-track professors, got the ax. The University of Louisiana at Lafayette had to cut its free-standing philosophy major, which had a low rate of completion (graduating only four students a year). The university kept its basic philosophy courses and tenured faculty, but saved the cost of administering the major and maintaining that major’s accreditation.

For quick results, some universities, such as Greensboro College in North Carolina, have turned to pay cuts. To slash $5 million between April and fall, it imposed a cross-campus 20 percent pay reduction for salaried employees, nixed sabbaticals, and trimmed benefits.

The View from Utah

The State of Utah’s primary sources for funding higher education are derived from income tax and sales tax revenues. These began to slip last fall when the economy began losing traction. The State went from a $1 billion surplus in its 2008 session to a $1.8 billion deficit in 2009. Since the Utah Constitution requires a balanced budget, lawmakers had no choice: During the course of the 2008-2009 academic year, they reduced the U’s State funding by nearly $21 million. By the end of the 2009 legislative session, they had reduced the U’s base State funding for the 2009-2010 academic year by $45 million, or 17 percent.

While trying to absorb the concept of a 17 percent cut, the University received some good news: Nearly $22 million in federal stimulus money would soften the blow for the upcoming year, reducing the cut to approximately $23 million.

Still, the cut has presented a major challenge. The State’s funding is critical to core institutional activities. Some programs and departments rely almost entirely on State funds. In addition, State money funds “the base,” or the v

In determining how to proceed, the University considered its options. Rather than have the Legislature order an across-the-board slash, Young was confident that the cuts would be better made in consultation with professors, deans, department chairs, staff, and even students. Says Young: “There is a powerful sense here that we are all in this together and committed to keep the University on the upward trajectory we’re on.”

The U created a Web site asking for input from the entire University community—from senior long-term faculty to part-time workers—and the trims were made, according to Senior Vice President for Academic Affairs David Pershing, “at the lowest decision-making level.”

With a mandate from the Park Building to make cuts as equitably as possible and consistent with the University’s core mission of teaching and research, as well as the value of rewarding excellence, the deans of the various colleges had the departments make strategic decisions on where to begin trimming.

How will the budget cuts be felt? “It depends where you are in the University,” says Brinkman. The administration is taking the biggest hit: cuts of 6 to 9.5 percent, for an average of 7 percent. Most of the colleges, with the medical school being a major exception, are having to cut 2 to 4 percent.

The Effect on Students

During economic recessions, colleges and universities—especially those with affordable tuition—often see a jump in enrollment. Returning to school is an attractive option when the job market is weak. The U is seeing applications increase at both the undergraduate and graduate level as the economy continues its slump.

Even with undergraduate tuition up 9.5 percent, or $358 per year to a total of $4,120 (for a full-time load of 12 hours), many students feel the U is still a great value. When Ana Flores-Sahagun, an in-state senior in communications, transferred to the U from California College of the Arts in San Francisco, she saw her tuition bill drop from $31,000 a year to just over $4,472. Her first thought was “I could go to the U forever,” but now she plans on pocketing the cost savings for graduate school.

“Even with increased tuition, the U is a bargain,” agrees President Young. “The U has historically and comparatively low tuition. Undergraduate tuition is just 70 percent of the average for our peer institutions.” A portion of the U’s tuition increase will be rolled back to students: It is specifically earmarked for need-based financial aid. The remainder is earmarked for employee health insurance.

Graduate tuition is determined somewhat differently, with 19 graduate programs setting their own tuition. All of these programs have raised tuition—19 percent on average. These programs are allowed to keep the additional tuition, which will mitigate their budget cuts.

Though many students say they will not be affected seriously by the 9.5 percent increase, ASUU Student Body President Taylor Clough notes that “between tuition increases and fewer jobs available in the community,” a lot of students are going to be facing tough times. He is especially concerned about student parents facing childcare costs on top of tuition increases.

Students at other Utah colleges and universities are also seeing increases. Snow College’s tuition increase is the same as the U’s, at 9.5 percent. USU students face a 5.5 percent rise, and Salt Lake Community College students a 4 percent boost.

Beyond the tuition hike, students will notice the budget cuts in other ways. They may wait longer for services, for example, or be required to do more online, such as pay tuition. They will also be charged for receiving tutoring at the math lab, and the Marriott Library may not have research materials instantly available, requiring students to wait for them to be specially ordered.

Classes attracting fewer than 10 students may be eliminated, and elective classes may be offered less frequently. Robert Newman, dean of the College of Humanities, says that even though some class sizes may be larger, the college is working to ensure that key courses are routinely scheduled as before.

Students at the School of Medicine (SOM) are facing increased tuition and, for those incoming, a smaller overall class size. The SOM, which is in a somewhat different position financially than the rest of the University, is looking at a 40 percent budget cut because of a $3 million reduction in funding from the State and another $10 million in federal funding. In exploring options, says Lorris Betz, senior vice president for Health Sciences and dean of the School of Medicine, the SOM had to either preserve the faculty-to-student ratio in its clinical teaching programs or risk losing its accreditation. Therefore, admitting more students or eliminating faculty was not an option. Rather, the school chose to raise tuition by 15 percent to $24,343, and reduce its incoming class size for 2009-2010 from 102 to 82 students. The school normally admits 75 students from Utah, eight from Idaho (per an agreement with the state, which has no medical school), and the rest from other states. This fall, it will reduce proportionally its admissions from Utah and from states other than Idaho.

The Good News

By Michael K. Young, President, The University of Utah

This extraordinary University has a proud history of battling through difficult times and succeeding against unbelievable odds. Call it what you will—our innate organizational culture or just plain stubbornness—but that historical heritage is helping us once again to wrestle success from the midst of crisis.

Consider:

• Despite the economy, our fund-raising this year is markedly better than that of last year. Generous friends and alumni understand that extraordinary things are happening at the U and have stepped forward in record numbers to support those noteworthy activities. In fact, more than 9,500 new donors joined the ranks of U of U supporters in the last 12 months, and almost 40,000 over the past three years.

• Funds secured for the University’s scientific, engineering, and medical research activities increased a remarkable 16 percent during the 2009 fiscal year. That almost $50 million increase boosted the U to $354.7 million in research funding, a record for the University and the State.

• Extraordinary researchers and faculty from Harvard, UCLA, Brown, the University of Chicago, the University of North Carolina, and other prestigious institutions are coming to the University of Utah—and bringing with them additional research funding and the promise of new business spin-offs. The USTAR initiative, so wisely funded by the State Legislature, is quickly turning Utah into a strategic world center for nanomaterials and nanomedicine, genetics, bioimage analysis, and the neurobiology of developmental disorders.

• Applications to the University of Utah from high-performing students throughout the U.S. and the world are increasing. While higher education opportunities are disappearing elsewhere, the U has strategically channeled resources into programs and curricula that foster an extraordinary educational experience. The result is a campus population in which fully 10 percent of the students now qualify for honors status.

I could cite dozens of other examples that illustrate how the University is stepping up to the budget challenge with unflinching commitment to fulfill its mission. Certainly this has been a difficult and painful time for higher education, but we have chosen to light a candle rather than curse the darkness. I am extraordinarily honored to be part of such a versatile, innovative, resolute, and yes, stubborn, organization.

This change makes Ben Metcalf, a Cornell graduate who plans to apply to medical school next year, uneasy. “Utah is my first-choice school, and it’s the only state in which I qualify for in-state tuition,” he says. It’s not the tuition increase that troubles him—“It’s still a great value,” he says—but cutting in-state seats means he may have to go out of state and pay much higher tuition. He and other med school hopefuls have asked the Legislature to consider raising taxes on cigarettes to help keep the class intact and address the shortage of primary care doctors in the nation and in Utah.

Luz Elizabeth Pacheco BS’08, an in-state student beginning medical school this fall, is concerned about the makeup of her class. “I wonder how fewer out-of-state students will affect the diversity of the class and the experiences they bring,” she says. Pacheco is also worried about the cost and is looking at loans and scholarships to pay for her medical education.

But along with the bad there is also good news. Students will find more need-based financial aid at the U. Historically, Utah students have not taken advantage of federal money to the fullest extent, says Young. Pell Grant amounts have been increased, and the Financial Aid Office is gearing up to help students find and apply for grants, loans, and scholarships.

The Effect on Faculty and Staff

With approximately 80 percent of the U’s budget going to personnel costs, employees understandably have been worried. “[President] Obama’s stimulus package saved hundreds of jobs,” says Pershing. Because of it, “no tenured or tenure-track faculty will be let go this year or next.” Nor will they face mandatory furloughs, as have faculty at USU. Rather, when faculty positions open up, they will not be filled, allowing the funds earmarked for their salaries to be used elsewhere. “We are also trying to protect full-time lecturers who are so critical to our teaching mission,” he says.

Faculty will feel the budget cuts in increased teaching loads, however, because, with faculty positions left open, there will be fewer faculty in general. Some adjunct faculty have not been reappointed, further increasing teaching loads. Also, many departments will have fewer graduate teaching assistants. At the School of Medicine, where faculty support their own salaries by providing clinical service, faculty may face more pressure to produce revenue, says Betz.

Administration at the U has itself coped with the budget cuts in a variety of ways including hiring and salary freezes. In addition, some employees of retirement age “have been offered an attractive special retirement package,” says Brinkman. A relative few employees are losing their jobs. Excluding the School of Medicine, around 350 full-time-equivalent jobs were lost at the U between July 2008 and July 2009.

The Overall Financial Shape of The U

The colleges and universities that are suffering the worst nationwide are those that were in trouble before the economic crisis hit.

Fortunately, the University of Utah began the budget-cutting process in pretty good financial shape, notes Young. The U has been recognized as one of the most cost-efficient universities in the West, he says. “We do more with less. We are, nationally speaking, the most efficiently run public research university. We are second from last in spending, but in the top third in receiving awards.”

Another strength is the faculty’s success in securing non-State funding. For example, through their efforts, for the first ten months of 2008-2009, research grants and other external awards were up by $50 million, or 21 percent, over the prior year. By the end of that same academic year, total awards, including graduate fellowships, totaled some $400 million. Given the federal government’s renewed interest in funding for research, prospects for continued growth look good, at least in the short term.

Nationally, although foundations’ revenues are down, their giving is up. Private giving to the University of Utah has set records for the past three years, with last year’s gifts and private support of research totaling more than $161 million. The comprehensive campaign, Together We Reach: The Campaign for the University of Utah, launched in 2005, has raised more than $650 million to date, including $60 million-plus toward scholarships so far. Since the campaign began, the U has acquired more than 38,000 new donors. “The community support for the campaign has been wonderful,” says Fred Esplin, vice president for Institutional Advancement. “More than ever, our friends and alumni are recognizing the great good the University of Utah provides the state and are willing to invest in its students, faculty, and programs.”

The Bedrock for the U’s Future

President Young credits the unique role of the U within the community for the high level of support it has received. He also acknowledges and appreciates the optimistic spirit that pervades the U, despite the budget challenges. While the end is not in sight—the U needs to cut an additional $20 million for 2010-2011 after the stimulus money is gone—“We are well positioned to come out of this strong,” he says, noting that the key to success is “the passion that the community has for the University and the dedication of the larger community of alumni.”

Young, who has taught at Columbia, Yale, and George Washington universities, says that the support the U has in the community is an anomaly nationally. “It’s very rare to have support of this strength in a state of just 2.5 million. The U is able to stay strong because of its connection with and integration into the community over the span of 158 years. This gives us hope and promise that is second to none.”

—Susan Vogel is a freelance writer and publisher based in Salt Lake City.

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