Missouri S&T

 

Dear Colleague,

As many of you are aware, I have asked all division leaders across campus to develop budget scenarios in response to declining revenues for Fiscal Year 2018 (FY18), which begins July 1. We learned recently that the state budget shortfall could require cuts of more than $450 million for FY 18, as well as additional withholdings – perhaps $40 million – in the current fiscal year. Given the magnitude of the state budget situation – our State Senator, Dan Brown, characterizes it as “pretty dire” – it is critical that we plan now for possible impacts to our campus by developing budget scenarios that consider these potential budget cuts and withholdings.

This budget situation is due to declining revenues to the state of Missouri. This decline, in turn, stems from previous tax policy decisions by the state legislature and a gap between projected tax revenues and what actually has been collected so far this fiscal year.

Senate Bill 19, passed in 2015, nearly eliminated the tax liability for an entire class of corporations. As a result, corporate tax receipts fell by over 35 percent in FY16, and FY17 already shows a nearly 30 percent additional decline in this same revenue category. In addition, bills have already been submitted to this General Assembly that call for substantial reductions in individual income tax obligations.

All budgets for services offered by the state of Missouri were based upon projected revenue growth of 6 percent, but the reality is that revenue through the end of December has grown only by 2.2 percent.

Because funding may be withheld from the University of Missouri System this fiscal year, that withhold will likely be passed down to each of the campuses. These declines are now part of tax policy and translate into less funding, year over year, for any state services supported by general revenue. This includes higher education.

Because we will have less in the way of recurring dollars, we need to reduce spending. We should not look at use of emergency funds, because we are not responding to an emergency; rather, we are anticipating a structural and permanent modification in our fiscal wellbeing. In other words, this is not temporary.

All divisions – including all administrative divisions – have been asked to consider ways to cut budgets based on several different scenarios, which will leave us with the ability to avoid across-the-board cuts. We are also considering substantial modifications throughout our campus structure.

I look forward to providing a more extensive discussion of this issue in an upcoming budget forum. For now, I am asking everyone to look at possible areas for reduction. We must formulate our budgets for FY18 and beyond by mid-spring. It is responsible that we begin this process right now. Each cabinet member, representing each division across campus, is to provide recommendations to allow for deliberation in February. These are difficult discussions resulting from a difficult situation over which we have little control. Therefore, it is imperative that we be proactive in developing a fiscally responsible approach to budgeting that will ensure our university’s continued success.

Regards,

Walter J. Branson
Vice Chancellor, Finance and Administration



Missouri University of Science and Technology
1870 Miner Circle, Rolla, MO 65409 | 573-341-4111 | 1-800-522-0938