Budget 2010

October 17, 2008

Dear Clemson:
We continue to monitor the state budget situation, and we may have an indication of likely budget cuts when the House Ways and Means Committee meets today. This afternoon, I plan to give the Board of Trustees an update on where we are in our budget planning process, and I wanted to share these comments with you:

President’s Report to Board of Trustees • October 17, 2008

As probably everyone in this room knows, we are in an unprecedented financial situation. We in higher education probably feel the gravity of the situation more than most state agencies because it threatens just about every revenue stream we have – not just state funding. I need to report to the Board how the administration is responding to this financial crisis.
First, let me provide some background. We have already dealt with state budget cuts of more than $9 million in the current year. This means that our current level of state support per student, adjusting for inflation, is less than it was in 1981 – around the time that some of the parents of our current students were themselves students at Clemson. On top of this, the Board of Economic Advisors has adjusted state revenue estimates downward again, for a total reduction of $554 million this fiscal year.
But our challenge goes beyond state revenues. This national financial situation could also impact our endowment and our ability to generate private gifts. Tight credit markets could impact the availability of student loans. The federal bailout package and defense spending could affect federal funds for research and student aid. At this point, we have no way to predict what the impact will be on enrollment.
With that said, we remain committed to providing a high quality education for our students and delivering jobs and innovation for our state.  But understand that these cuts will be felt. We have already used many of our tools, such as increased efficiencies, outsourcing, and cost saving initiatives. Ironically, because we have been focused and have reduced administrative costs, additional cuts are more and more difficult to manage without negatively affecting academic quality.
• In managing the current financial situation and in setting priorities for the future, we will continue to be guided by our vision to be one of the nation’s Top 20 public universities. We have made a commitment to improve academic quality, help build a knowledge-based economy and serve the people of South Carolina – and it’s important that we find ways to continue to make progress, even in these uncertain times.
•  Our approach will be strategic rather than across-the-board. We have not instituted a hiring freeze, but we are hiring very selectively. We are looking at other tools including changes in the workweek, moving some positions from 12- to nine-month or full-time to part-time, and eliminating many vacant positions.
•  I have appointed a team to develop strategies to deal with the budget situation and set priorities that will guide us in both the near and long-term. I am personally chairing that group, which also includes the Mission Vice Presidents, Chief Financial Officer, the Chief Public Affairs Officer, and the Secretary to the Board.
•  We have asked each Vice President, by the end of next week, to list all programs and activities within his or her budget center, ranked in order of priority – with priorities determined by if and how they directly align with the core mission of the university.
• We are developing new communication tools to help keep the campus informed and to provide a system for gathering input from the campus, including a dedicated web site which should be available next week. We already are getting many good suggestions in response to a Dear Clemson letter that I sent last week. We will seriously consider each suggestion.
• We are carefully evaluating an enrollment management strategy that would allow us to grow in areas where we have capacity, to make better use of our academic and support infrastructure, and to serve more South Carolina students.  I should add a caveat that it’s always a challenge to predict enrollment, because it can be affected by so many variables – yield rates, retention and graduation rates, financial aid availability, and the general economic climate.
In closing . . .
• Over the coming days we will be communicating with leaders in the General Assembly and hope that they will take some strategic actions to protect higher education. We ask that they keep in mind two key points:
(1)  In years past the conventional wisdom has sometimes been that higher education can absorb cuts more easily than other agencies because we have additional revenue streams.  That is not the case this year. Every revenue stream we have has been impacted or may be impacted by this national crisis.
(2)  Higher education, and particularly the research university sector, is part of the economic solution. In order to increase prosperity, we need more college graduates, more high-tech jobs, more start-up companies, and more research to stimulate an innovation-based economy.
There is no better investment that South Carolina can make in the current financial situation -- none that would promise a higher return on the investment — than college students who will be tomorrow’s leaders, thinkers, entrepreneurs and global citizens.
Jim Barker