Northern Arizona University

Budget and Buildings Update

July 7, 2003

Dear Colleagues,

After careful deliberation, the Cabinet and I have reached decisions in two areas of crucial importance to the campus, the coming year’s budget and the schedule for building construction and renovation. In both areas, the final shape of state support emerged late in the legislative year necessitating a process of planning and revising in which we involved a wide variety of campus groups. We are genuinely grateful for the help and support we have received, and I think our decisions are truly university decisions.

As we move into the fall semester, I will hold a series of meetings to explain these decisions and to answer questions about their impact and significance. Let me here introduce the general outlines of the budget and of our capital construction plans in the context of some of the key factors that shaped them.

Fiscal Year 2004 Budget

We went into the budget process with one overriding idea, that faculty and staff need a substantial raise. The budget we have approved includes, starting in January, a raise for faculty and staff consistent with fiscal responsibility. The university will also pick up the entire employee share of a hefty increase in medical insurance costs, and yet we know this compensation package is still not sufficient. We were fortunate to get through the year with no cut to our state budget and with a significant tuition increase, but as a result of medical insurance, contributions to ASRS, and skyrocketing utility bills our budget remains very tight. Fall enrollment projections are sobering as well. Simply stated, we are not going to have as much revenue as we thought, and we have last year’s structural deficit and important one-time expenses that cannot be put off. Some of the projected increase in statewide tuitions must be reinvested if we want to start the programs in Phoenix and Tucson that Changing Directions finally allows. If we do not move now, some other institution will fill the gap. We have one more year of SOLAR sustainability before we can save part of the costs by turning off the old system. We have whittled down all special initiatives, even in such crucial areas as diversity and marketing, and we have asked larger local accounts to bear part of the burden. In spite of all our efforts, we cannot avoid imposing a 2% cut to state accounts. This is 1% less than units have prepared for, but we are asking for 2005 budgets to reflect the additional percentage. If the Governor requires a mid-year rescission, we may have to put off the anticipated January raise to April. The budget projections will be discussed in more detail as we approach the start of the Fall Semester, but in the meantime, any of us in the President’s Office are willing to answer your questions as best we can.

Building Construction and Renovation

The legislative research bill, a wonderful show of faith in the centrality of the universities to the economic future of the state, required rapid-fire adjustments to our capital plans because the money to support the bonds that finance construction of research buildings does not come to us until two years after we are expected to start building. We now have three sources of state money for capital asset improvement, the $4M the Legislature gave us last year to support bonds, Prop 301 money, and future research bill money. Each source comes on a different schedule and with different limitations, and we had to figure out a way to make them fit together. Essentially we are using the Prop 301 funds as a bridge between last year’s appropriation and research bill funding. What this means is that as “phase one” we will continue with our current plans for the School of Communications (started), swing space (started), South Campus infrastructure (major upgrades already accomplished), College of Engineering, and shoring up the old Business Building (which will later become additional swing space). We will immediately start planning a new building for the College of Business, the Applied Research and Development Building on which so many of you have done such fine work, and a complete renovation of the Engineering Building. We are also committed to building a small research building in connection with our Yuma Center and Arizona Western College. A third phase will include North Campus infrastructure improvements and a new Arts and Sciences laboratory and teaching facility, which research funding will enable us to make larger and better than we had planned. Along the way, we will look for money to spruce up some of the important buildings that have to wait for renovation.

Again, I am more than open to questions. The good news is that we are about to embark on an ambitious capital construction program; the bad news is that traffic, dust, and inconvenience will almost surely follow. Next year looks a whole lot better than last year, and I am very optimistic about our prospects. Please do not hesitate to call the Office of the President if you would like me to visit your departments and offices to explain these decisions and the outlook for our future.

Sincerely,

John D. Haeger
President