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Phase One Budget Reduction Process, 2004
MARCH 1, 2003

Harvey Perlman, Chancellor
University of Nebraska-Lincoln
Colleagues:

I know last week was a difficult one for this campus as I announced the first set of my proposals for budget reductions. I am resigned to the fact that there are no easy answers and that any decision I make will involve risks for the University and for the State of Nebraska. All of us burdened with the obligation to make these decisions are working hard to minimize the damage and to preserve the essential strengths of this University for the future. There are no easy targets, no low-hanging fruit, no unimportant programs. There are no programs, at least of which I am aware, that are so lacking in quality that we would all applaud their elimination. Nor do I believe, although others I'm sure disagree, that we have too much administration that can easily be pruned to get us through this budget reduction. That is not to say we will not take further administrative reductions, but these will have serious consequences for our ability to manage the campus.

Certainly, the elimination of the research division of the State Museum represents a calculated risk because it required the termination of tenured faculty. I think it is fair to say that how that affects our ability to recruit faculty in the future depends on our compliance with AAUP procedures which require our good faith efforts to assist terminated tenured faculty to move forward. I can assure you we are working hard toward that end. For example, we currently have developed plans to place four of the eight terminated tenured faculty from the Museum in tenured positions within academic departments where part of their new assignment will be to continue to curate the collections we are retaining. I am hopeful, and have reason to be confident, that these departments will approve the appointments. We intend to use every other tool at our disposal, including the early retirement options, to assist tenured faculty affected by our circumstances. The current early retirement plan approved by the Board of Regents has some restrictions that may make it difficult for tenured faculty affected by these reductions to access the program or to determine whether this is the best option for them. We are exploring ways to make the program time frames fit our current situation. I have also placed on the Web site a document entitled "Policies and Procedures to be Invoked for Tenure, Tenure-Track and Equivalent-Rank Faculty whose Positions are Eliminated through Program Eliminations." This document outlines the benefits we intend to provide to these individuals.

I continue to believe that an effort to make appropriate vertical cuts runs less of a risk to our future than other options. However, I also understand that without seeing the details of the other alternatives, it is difficult for you to make your own assessment. I have never been persuaded by the argument "trust me" and I suspect you won't be either. I have tried to provide the APC with more detailed information on the University's budget so that they could explore other alternatives, and I will be making an effort in the next few weeks to model for that committee what a horizontal budget reduction might look like, at least for some of the larger colleges.

There is also the issue of revenue enhancements. We are continuing to examine ways to increase revenue. However, there are limits to what we can impose back on our students and continue to be accessible to young Nebraskans. We also have to recognize the basic economic fact that an increase in price does not necessarily assure an increase in revenue.

Finally, let me also put our situation into context. Most of us, at least us old-timers in higher education, have experienced the normal cycles of expanding and tightening budgets throughout our careers. However, I know of no one in higher education nationally who thinks this is just one of those normal cycles and if we can only get through the next year or two the good times will return. States across the country will continue to face rising entitlement and corrections costs and Nebraska is not the only state to see the responsibility for K-12 education shifted to the state resources. While the immediate situation facing higher education differs from state to state, we are not alone in facing a very different future than has been our past experience. If I thought that we could "hold out" for a year or two by eliminating non-personnel operating expenses and then replenish these funds in the near future, I would be a strong advocate for that strategy. After we get through these reductions, I doubt we will have, in the foreseeable future, sufficient resources to both build back our existing capacity and also continue to enhance the University. Our future success will depend on our current ability to preserve our fundamental strengths.

Many of you have commented to me in recent weeks about the fact that "I didn't ask for this" when I became your Chancellor. I personally appreciate that support but my guess is that none of us came into higher education expecting the times we are now and are likely to continue to experience. We can take heart in the fact that we are performing one of the most important functions in any society--preparing its young people and the general society for the future. I remain convinced that being in higher education will continue to be among the most fulfilling ways to spend one's career. But, we face some very real, important, and long-term challenges. I will continue to need and heed your guidance in addressing them.


Harvey