Email Response to Budget Concerns
Chancellor Perlman has invited inquiries (via email) from the campus community, to which he responds in periodic emails-to-all. The following text is from Chancellor Perlman's email of August 7, 2002, and discusses issues relating to the university budget.
I'm sure many of you are following the special session and know that we face the daunting prospect of another major reduction in this fiscal year. We are doing as much as we can to assure that we are not asked to do more than our fair share. I thought before we head into the academic year and the budget reductions I should respond to the rest of the concerns or suggestions I have received. If my brief response provokes other questions let me know.
Athletics: A few colleagues made suggestions of ways we could get the athletic department to help us with the reduction including a surcharge on tickets. And concern was expressed about the bonuses recently granted the coaches who had good success. I know it is tempting to resent the apparent financial state of athletics vs. academics and some of you think we overemphasize athletics to the detriment of the University. We have one of the few athletic departments that financially contributes to the academic side and does not consume tax dollars or student fees. We should consider ourselves very fortunate in that regard. Obviously, its continued ability to do so depends, in part, on its success and this depends on it being competitive with other top athletic programs, for coaches, in facilities, and in attracting athletes. Let me say that athletics faces its own serious budgetary problems with escalating costs. Our ticket prices are already at the top of our competitors, and we are sustained only by the success and the creativity that Bill Byrne and his staff have demonstrated in exploring ways to increase their revenue. In our current situation, there are no deep pockets that can rescue us from budget reductions.
Colleagues asked about leasing the empty space in the 17th and R parking garage or selling Whittier. For tax and other legal reasons the garage space can only be rented to activities normally found in student unions. The economy has made finding such tenants difficult but we continue to try. Any rental income goes to paying off the bonds for the garage. (We cannot reduce parking fees because of our commitment to those bondholders.) Whittier is now a part of the community development efforts associated with Antelope Valley. I have granted the City of Lincoln a 3 year option to acquire the property for $1 but reserved the right to approve any use they may want to make of the property. We are jointly searching for ways to have the property start contributing to the neighborhood. Given the costs associated with the demolition or rehabilitation of Whittier, it is unlikely we could see it as a source of income.
A colleague suggests combining the Agricultural Research Division with the Vice Chancellor for Research. We have good coordination between the units now and there is little to be saved. Both units are seriously understaffed given the increase in research and the increase in regulations governing that research. ARD has fewer staff today then it did in 1988. ARD also has budgeted faculty; except for a few in the Museum, the VCR does not directly supervise faculty.
A number suggested making the Scarlet an electronic publication and reviewing other unnecessary publications. We are doing so. There was also a discussion of centralizing publications and communications offices across the campus. We have seen increased coordination of communications activity in the last year and certainly budget reductions will force us to look at all areas of potential collaboration and consolidation.
A colleague suggests that our construction costs are much higher than you and I experience at home. This is probably true because we build to institutional not residential standards. Our buildings are built to last 100 years (and many make it that long). Thus even for modest remodeling projects, in the long run, this is probably more cost effective. Within these standards, we do constantly monitor our costs and we permit units to engage in public bidding if they do not like the charges of our internal units. You should remember also that beyond the major rehabilitation of old buildings that was financed by LB1100, all of the current construction of new buildings is financed privately.
What about creating incentives for early retirement? We are looking seriously at this prospect. It is a system-wide issue and I am hopeful we will have something to share with you soon.
What about consolidating our information service units? Again, we continue to monitor. Right now we are looking at ways to consolidate across campuses. I do not have the sense that we have too few IS personnel given the projects we have underway but we may have too many projects. I am looking closely at this issue but it involves more than this campus.
Another concern about health care costs. I can't give you any assurances we have seen the last of our increases; indeed I can pretty much assure you we have not. We are not alone; every employer is facing serious issues here. We are self-insured so the only way we can reduce our costs is to stop getting sick or to reduce coverages. We will have to face the question soon of whether we can afford the coverage we currently have.
Promotion increases will be preserved, if at all possible, regardless of what ultimately happens to the salary increase generally.
A colleague again asks why the Foundation can't just raise money for the general operating budget of the University. Trust me, neither I nor the Foundation have any objection to doing this but you just don't find donors willing to contribute to the general welfare. In this economy it is hard enough raising money for particular projects. In addition, because the cuts we face are permanent, private funds for this purpose would need to be endowed. Assuming we had a $10 million reduction, this would require and endowment of $200 million.
These are the comments and concerns I've received to date. I hope my responses have shed some light.