Address to the Education Subcommittee of the House Ways & Means Committee
Remarks to the Subcommittee on Education, Senate Finance Committee
Co-Chairman Giese, Co-Chairman Peeler, Members of the Committee,
Thank you for giving us this opportunity to talk with you today about Clemson University and the budget outlook for 2001-2002.
We appreciate the support you have shown Clemson in the past. We also recognize the difficulty of the task you face as you deal with a revenue shortfall.
You have asked that we address the impact of the budget passed by the House Ways and Means Committee, its impact on Clemson, including specific measures we will take to balance the budget, services to be eliminated or reduced, jobs likely to be lost, and other revenue sources that may be utilized.
As you know, the Committee recommended a base education and general (E&G) budget cut for Clemson of $12,036,369. In addition, their budget does not include funding for Municipal Services ($1,117,000), the Call Me Mister Program ($517,174), or annualization of the health insurance increase ($153,386). This brings the total E&G cut to $13.7 million, or about 12 percent. Although we are pleased that the budget includes a pay raise for state employees, the unfunded component will cost Clemson another $1,075,000.
Therefore, the actual reduction in available funds for academic and operating programs exceeds $14.7 million.
Although we recognize that this committee deals only with E&G funding, at Clemson we face a double cut because of our responsibilities as the state's land-grant university. The proposed budget cut for Public Service Activities (agricultural research, extension and regulatory services) is $5.3 million. Clemson faces the prospect of a reduction in state revenues of $20 million. The enormity of that sum is staggering.
We regret that the State is facing such a serious shortfall in funding, and we understand that Clemson must be part of the solution. However, the level of budget cut called for in the House budget will have a serious impact on Clemson's ability to fulfill its mission to the State. Although many details of our budget strategy are still being finalized, our discussions have progressed to the point where I can offer some indication of how such a massive cut would impact Clemson University.
- First, it will have a profound effect on tuition. Tuition is the only significant source of non-appropriated revenue that goes directly to academic programs. A 12 percent budget cut is the equivalent of more than $1,320 per in-state student. If we looked solely to tuition to offset the cuts, the cost of attending college would increase by about a third. However, we have pledged that we will not put the entire burden of the budget cut on the backs of our students. We expect tuition and fee revenues to recover about half of this amount (or about $600 per year for an in-state student). Out-of-state students could see a fee increase of as much as $2,000 per year. Fortunately, because of our prior constraint in raising fees, our in-state tuition will still be below the average of research universities in South Carolina.
Anticipated tuition increases will generate $8 million.
- Second, we will eliminate faculty positions. Eliminating contract instructors, not refilling vacant faculty and staff positions, and permanent cuts to programs will reduce resources for academic programs by more than $2.5 million.
We are in a position to eliminate these instructor positions because of a previous decision to reduce enrollment. For the past three years, Clemson has experienced significant, unplanned enrollment growth. There are two reasons: the impact of the LIFE Scholarship and Clemson's growing academic reputation. Our admissions models were not able to adapt quickly enough to a such a rapid increase in demand. We have made a conscious decision to reduce freshman enrollment by about 400 for next fall in order to preserve educational quality. This will allow us to terminate many of the instructors hired last year to handle the large freshman class.
There is a significant downside to losing these positions that should not be under-estimated. As our enrollment has grown, so has our retention. More students are staying in school and graduating on time. Our retention and graduation rates rank among the nation's top 20 public universities. This is good news. This is what you should expect of Clemson. But it also means that we have very large junior and senior classes.
Without the budget cut, we could shift those freshman-instructor positions to meet the needs of our upperclassmen. Instead, we will eliminate the positions. Our students could see the impact in larger junior- and senior-level classes and more difficulty scheduling the upper-level courses they need to graduate. Our senior faculty could see the impact in increased teaching workload, leaving them less time for research and outreach activities.
- We could even see further reductions in enrollment. Because we are at capacity, we do not have the option of recovering lost funds by enrolling more students. Significant budget cuts could require even tighter enrollment restrictions. It will be difficult to fulfill our pledge to industry to increase engineering enrollment.
- We are extremely concerned about the impact of the budget cut on our ability to provide fire protection. As a separate municipality, Clemson University is required to provide fire protection and emergency medical services for its students, faculty, staff and visitors, as well as to protect the $1 billion in state property represented by our physical plant. Funding for these services was not included in the House Ways & Means Committee's budget. We are faced with downsizing or eliminating our fire department.
- The future of our new "Call Me Mister" program is in jeopardy. The program, which seeks to increase the number of African American male teachers in our elementary and secondary schools, was not funded in the House Ways & Means Committee's budget. Currently, there are 60 young men enrolled in education programs throughout the state with the goal of becoming K-12 teachers. Their futures are at risk. Isn't this the kind of program you want to encourage?
- The budget cut will reduce our ability to provide seed money for research activities. We currently have a $500,000 central fund for research incentives. These are dollars the university makes available to faculty for matching funds for grants, start-up costs, or other research needs. This fund will be eliminated. The result will be the loss of millions of dollars in external funding that could be generated through such seed money.
- The budget cut will also eliminate a central fund that rewards innovation and creates incentives for continuous improvement. We have a central "innovation fund" of $500,000 that provides small grants to faculty and staff, through a competitive process, for new teaching ideas, lecture series or public forums, or special events. That fund will be eliminated.
- We will reduce our institutional reserves by $2.8 million, leaving us with virtually no flexibility to respond to emergencies or significant unexpected costs. Few companies would operate with a "rainy day fund" of less than 1 percent.
- We will capture any remaining deficit through additional reductions in administrative and student services. Students will feel the impact as student jobs on campus are eliminated and offices that provide critical services cope with reduced staffing and operating budgets.
- We may face the difficult choice of leaving a brand new and much-needed research facility unoccupied. A 12 percent budget reduction would make it difficult to identify funding needed to open and operate the new agricultural biotechnology complex (approximately $700,000 per year). It is possible that a building representing a $27 million investment by the State may sit vacant.
Although you have requested information on how we will handle reductions in the E&G budget, our concerns at Clemson are magnified by the proposed cut for public service activities. This cut will jeopardize lab testing for food and animal pathogens, testing and surveillance required for animal diseases that affect humans such as E. coli, Salmonella, Listeria, and mad cow disease, the state's meat inspection program, and programs to certify poultry and other meats for export.
Reduction in these services could mean some meat processing plants will close, and export business will be lost to other states. Elimination of some public service programs may jeopardize as many as 50 faculty and staff positions.
National reports, like the recent Kiplinger Letter, predict a 50/50 chance that "hoof and mouth disease" will arrive in the U.S. this year. Our inspections can help ensure that this problem stays off American soil; but this inspection service is at risk.
- Let me take just a few moments of your time to mention a less obvious impact of the budget cut - and that's the impact on the State. Perhaps the most lasting impact of a 12 percent budget cut for a research university will be on South Carolina's economy. A special report on "the new economy and South Carolina" in the State newspaper emphasized the need to invest more in higher education to ensure economic prosperity. To quote from that series:
- "High-tech companies are a hot commodity. But people who follow trends in economic development say . . . South Carolina continues to try to compete with an outdated approach, offering . . . large incentive packages and a labor force that will work for lower wages. That strategy is a losing proposition in the new economy, where workers with advanced skills and knowledge are the most valued resource."
and further quoting:
- "For South Carolina to improve its standing, the state must work to attract more scientists and engineers, build up research centers and improve its education system."
A national study indicates that every dollar invested in a research university returns $4 through additional grants and contracts. That's a pretty good return on investment, but at Clemson, we tend to be even more productive.
Allow me to offer one example:
Our Center for Advanced Engineering Fibers and Films received $1 million in state funding to help it get started. That commitment by the state was one reason the center earned status as an NSF national engineering research center - one of only 23 in the country, and the only one dealing with fibers and films research.
Last year, the center generated more than $5.5 million in external funding and won patent and intellectual property rights valued at more than $12 million. More importantly, the research now under way in the center could revolutionize the entire films, fibers and textiles industry, which accounts for about half the manufacturing base in South Carolina. Isn't this the kind of success you want to encourage?
That example demonstrates the economic impact that research universities can have. These are the kinds of opportunities that a serious budget cut can jeopardize. In essence, a 12 percent cut to higher education will slow down one of the state's key economic engines at the very time that we need to be revving it up.
- Furthermore, South Carolina's chance of having a top-ranked university will be significantly diminished. A recent survey shows that 88 percent of South Carolinians agree that South Carolina needs a nationally ranked university. They believe that having a nationally ranked university would help attract industrial development, enhance the state's national image, and keep the best and brightest students in state.
A critical component of national rankings is academic expenditures per student. South Carolina already trails North Carolina, Georgia and Florida in per-student expenditures. All of those states have universities ranked among the nation's top 20 public universities. Further reductions in per-student expenditures will cause South Carolina's institutions to fall further behind.
You also asked that we address any budget-related issues that could be addressed through Proviso and Statutory changes.
We need help in two areas: First, we need maximum flexibility in managing our resources.
Second, we need assurance that there will not be unfunded mandates that simply add to the cut by forcing us to redirect already short funds. Let me offer a few specific examples of each:
- An amendment to Proviso 72.27 could help us use grant funds to hire temporary faculty and staff, reducing the number of employees that are hired on state funds into permanent positions.
- A change in the Teacher and Employee Retention Incentive program to address the timing of annual leave pay-out could eliminate what has become a significant and unanticipated annual expense.
- If there is a raise component in the Senate budget, we request that there be no unfunded portion. We want to retain our best faculty and staff, but partially funded, across-the-board increases do not provide the flexibility to reward the best performers and maintain fiscal stability.
As you know, on Thursday Governor Hodges announced a plan to restore the 15 percent cut to higher education that was included in his original budget proposal through the use of one-time funds from several sources. We are encouraged by the Governor's recognition of the importance of higher education to our state, and we know that you will carefully consider the Governor's proposals during your budget deliberations.
In closing, let me add that Clemson has been a good steward of resources. We underwent a major reorganization in 1995 to streamline operations and become more efficient by consolidating programs, eliminating administrative positions, and reducing the number of colleges from nine to five. As a dean who lived through this restructuring, let me testify to its impact on the individual lives of students, faculty and staff. It was a tremendous challenge for Clemson, but one we accomplished to become more efficient and effective. It demonstrates to all that we were good stewards of resources given to us. There has not been as comprehensive an academic reorganization in our nation in the past 30 years.
Because of the millions of dollars that were captured for reallocation as a result, President Deno Curris was able to make much-needed investments in deferred maintenance, campus beautification, and information technology.
These efforts continue. We recently reorganized our agricultural areas to eliminate an administrative layer and increase efficiency. We have become stronger and more effective due to these continuing efforts, but we have also exhausted our ability to absorb budget cuts through such measures.
Recently, Clemson's momentum has increased on a local and national level. We were selected as TIME Magazine's Public College of the Year, a tribute to our efforts to improve communication skills. We have enrolled our best freshman class ever and continue to recruit the highest SAT-scoring students of any public school in the state. Our SAT's exceed those at Michigan State, Purdue and N.C. State. Demand for admission to Clemson has doubled over the past 10 years and shows no sign of slowing. We experienced a record one-year increase in external research support, bringing additional millions in external funding that benefits both the university and the state's economy. Isn't this the kind of success you want to encourage?
Despite the prospect of a budget cut, we remain committed to our goal of becoming one of the nation's top 20 public universities. We have done the analysis and know where we compare well against the top 20 - SAT scores, graduation rates, and freshman retention. And we know where we fall short - primarily in academic resources. We believe that our vision is attainable, and we believe it is in the best interests of the State.
When the prospect of budget cuts first began to materialize, we at Clemson established a set of principles to guide our decision-making. First on the list was this guiding principle: Our goals are non-negotiable. Even in this environment, we will find the resources to make progress toward our vision. That makes our challenge greater, because it means we must find revenues and reallocations beyond what is needed to cover the budget deficit. It would have been easier to give up, to back away from our goals and say, "We can't do it. We can't worry about making Clemson a better university right now." The path we have chosen is more difficult, but it is the right one for South Carolina.
I know that you also have a difficult task ahead, and if I can provide any additional information, please let me know. Thank you for your interest in Clemson, your support for higher education, and your service to the State.
Cathy Sams (cathy.sams@pubaff.clemson.edu) Ph: (864) 656-4233 FAX: (864) 656-0812