Archive for Saturday, August 16, 2003

State slashes $11.5 million from budget

August 16, 2003

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Lindy Eakin understands if people are confused over Kansas University's budget picture.

"On one end people are cutting, and on the other we're giving people all this money," said Eakin, KU's vice provost for administration and finance.

The cuts come from the state and the Kansas University Endowment Association, which will slash its contributions to the university by an estimated $9.7 million this year. The additions come from students' tuition, which increased by $16.50 per credit hour last year and will increase by the same amount this fall, putting an additional $8.6 million per year in KU's coffers.

Meanwhile, the state is both cutting and adding to KU's budget. During the fiscal year ending June 30, the state cut KU's budget by $11.5 million for the Lawrence campus. But it then added $6.2 million for employee raises, meaning KU's net loss between the two fiscal years is $5.3 million.

"At this point, if we get through the (legislative) session without another cut, we'll be happy," Eakin said. "Things are starting to look up. It's not going to get any worse."

Pay raises

Things also are looking up for KU employees. Morale sagged last year when the state budget provided no money for raises.

This year, classified employees will receive 1.5 percent raises, which were provided in the state budget.

Kathy Jansen, president of the Classified Senate, said the 1.5 percent was appreciated by nominal.

"It hasn't been talked about that much," she said. "It's better than nothing, but it's certainly not going to change the way any of us live."

All unclassified staff and faculty will receive about 2.5 percent, and some faculty will receive more. Tuition increase money also will provide additional raises for up to 25 percent of faculty members that are designed by deans and department heads.

The goal is to retain KU's best faculty, with some receiving double-digit salary increases, Eakin said.

"The idea was you could really make a difference," Eakin said. "You could have spread a little over a lot of people to make them feel a little better, and it certainly wouldn't have kept us competitive."

Endowment hit

An unexpected hit to KU's budget came in February, when Endowment Association officials announced they'd cut their contributions to the university by about $9.7 million, or about 20 percent less from most endowment funds.

They said the poor stock market had eroded endowed accounts to the point that the Endowment Association's future contributions were at risk.

"We were spending too fast for what our policy should allow," said Dale Seuferling, president of the Endowment Association. "We were spending at too high a rate. We need to provide for the future, so we can have the same impact 10 or 20 years down the road as we do today. While what we were doing was good for the current times, we were eroding it for the future."

At the time, another 700 funds had fallen "underwater" -- less than their initial endowed amounts -- which means the Endowment Association can only spend 30 to 35 percent of a normal payout until the accounts reach their original values. By mid-July, that number had decreased to 566.

"If it continued to erode, more and more of those funds would have gone under," Seuferling.

Still, the KU First campaign has increased the total amount the Endowment Association contributes to the university this year. The Endowment Association had contributed $69 million by April for the fiscal year ending June 30. That already surpassed the previous year, when $68 million was contributed.

Final-year totals were not available.

"Given the challenges to the university's financial circumstances with the state budget, we're providing a record year of support to KU," Seuferling said. "Even with the reduction in spending policy, we could come close to this same number next year."

Falling behind

A study released earlier this year showed that Kansas is second to last among states with Big 12 universities when it comes to higher education funding.

The study, by MGT of America, an Austin, Texas-based research firm, showed that for the fiscal year ending June 30, 2001, Kansas spent $5,988 per student at Kansas University, 74 percent of the average Big 12 university state funding. Kansas State received $6,125, or 75.7 percent of the Big 12 average.

Those figures were greater than only the University of Colorado, where state funds contributed $3,350 per student.

And the gap is widening between Kansas and other states.

Though large tuition increases have helped soften the blow to KU's budget, officials worry that addition years of cuts and tuition increases will put more of a burden on students for their education expenses.

"The bad news is behind us," Eakin said. "I'm a glass half full kind of guy. Yeah, it's a lean year, but they didn't cut us any more. There's a big scare for next year. They've got to increase taxes. They've got to be done with the smoke and mirrors."

-- Staff writer Terry Rombeck can be reached

at 832-7145.

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