University Receives Notice of Second State Funding Cut; Appropriation Reductions Total $2,668,194

FAYETTEVILLE, Ark. – The University of Arkansas has been notified that it will have another $3,208,542 reduced from its latest 2009-10 state appropriation, the second cut in state funding since the start of the fiscal year last July.

When factoring in the $2.42 million budget revision absorbed from the state last fall, the university has seen its appropriation reduced more than $5.6 million this year. Combined with a $5 million cut in fiscal 2009 – which was partially restored with one-time money this year – the university’s state funding line has been reduced by more than $10 million over the last 18 months.

“We understand the difficult fiscal dilemma faced by the state, and I know Gov. Beebe is doing everything possible to lessen the impact of these cuts,” said Chancellor G. David Gearhart. “We are grateful for his leadership in so many ways.

“Although we have been able to weather the economic storm much better than many of our peers nationally to date, this cut will pose dire challenges that directly threaten our mission as a major academic and economic engine for the state,” he added.

Gearhart indicated that every option to address this shortfall is under consideration, especially since the impact of the cut is exacerbated by the reduced time frame over which the lost revenue could be recovered.

A number of budgetary triage measures are under consideration. For example, the university may implement a hiring freeze for all positions. Some jobs may be eliminated through attrition, while current faculty and staff may be required to take mandatory unpaid furloughs.

In addition, departments throughout the university may be asked to further tighten their belts and strive for additional efficiencies, and some cuts to academic and outreach programs may be necessary.

Senior administrators will visit with deans as well as faculty and staff leadership in the coming days to discuss these and other potential measures to help determine the best course of action to take.

Virtually all units of the university already have been participating in a comprehensive cost-savings initiative that is estimated to have resulted in approximately $11.5 million in savings over the past year that has been reallocated for mission-critical priorities.

In an effort to be sensitive to students and their families during this widespread economic crisis, the university held tuition flat for this current year – the first time in 24 years that tuition was not increased. In addition, fee increases were kept to their lowest level in nearly half a century. However, university officials believe that a modest tuition increase will be required next year to maintain the level of quality and service provided by the institution – especially in light of additional cuts to state funding.

“Appropriations and tuition revenue account for approximately 91 percent of our educational and general operating budget, with state funding alone responsible for 47 percent of our income,” said Gearhart. “As such, whenever that revenue stream is reduced, tuition bears a greater burden for making up the difference. We simply don’t have other viable resources to turn to when it comes to basic operating costs,” said Gearhart.

It is expected that the university will continue operating on a limited budget and will need to prepare for additional fiscal challenges in the near future. These challenges will be amplified by the loss of one-time stimulus funding that was available this year, mandatory increases in the classified employee pay plan instituted by the state, increased energy costs and insurance premiums, and the need to address a severe shortfall in competitive faculty and staff salaries, which run as much as 40 percent lower than those offered by the university’s competitors.