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Budget Projections for Fiscal Year 2005-2006

To: University Community
From: Stephen T. Hulbert, President

Through this correspondence, I would like to brief the Nicholls State University community with regard to the status of current budget planning for the 2005-2006 fiscal year ahead. This correspondence comes at the outset of the 2005 Legislative Session, a period involving several months of on-going budget discussion and related financial decision making. Before that session ends, the University’s 2004-2005 academic year will conclude and faculty and students alike will leave the campus for the summer. Significant financial decisions will be made at the state and local campus levels before everyone returns in August.

Often as we enter the Legislative Session and the academic year concludes, University community members leave the campus hearing about financial challenges facing the institution and return only to find the budget set. This is common in public higher education and seldom have we, or other institutions, given the members of the University community a full explanation of the impact of decisions made both in Baton Rouge and here on campus. The purpose of this correspondence is to initiate communication with faculty, staff and students regarding current institutional budget projections for the new fiscal year beginning July 1, 2005.

Obviously, at this point in the year such budget projections are fluid in nature and will be subject to constant adjustment throughout the months ahead. Those adjustments will not only result from actions taken in the Legislature but also will reflect the continuing refinement of actual cost demands across all areas of the operating budget of the University.

Simply stated with total revenue increases for Nicholls State University estimated at $1,248,451 and expenditure increases estimated at $4,223,616, approximately $2,975,165 is needed in additional funds to balance the University’s projected 2005-2006 fiscal year budget. Without further operating budget reductions and no additional state support, it would take a 13.44 percent tuition increase (above the previously approved 3 percent tuition increase) to cover the $2,975,165 figure. Such a tuition increase is clearly unacceptable.

Of that $2,975,165 total $1,666,172 is comprised of still unfunded mandated costs attributable to action at the state level (see attached breakdown). If that was the total unfunded impact projected for the 2005-2006 fiscal year ahead, it alone would require a 7.53 percent tuition increase (above the previously approved 3 percent tuition increase). Beyond the yet unfunded mandated cost increases, the University faces scholarship and fee exemption increases much of which are necessitated by the Fall 2005 transition to selective admissions standards. Additional increases are attributable to required accreditation and/or Board of Regents commitments as well as increases in maintenance contracts and operating materials. The University also faces the annualization of modest employee compensation increases for the current fiscal year. The cost of these initiatives totals $1,308,993 (see attached breakdown).

The above summary is part of a complex financial plan and analysis of projected 2005-2006 fiscal year funding levels. If there is any message that I am trying to convey it is that at present at least $1,666,712 of mandated state cost increases still remain unfunded. Additionally, critical need operating budget requirements comprise the remaining $1,308,993 totaling the $2,975,165 difference between projected revenues and mandated and/or critical institutional expenditure needs.

In preparation for the situation at hand, Nicholls has budgeted conservatively, eliminating or deferring some faculty and staff positions and deferring program initiatives. Further such activity may be necessary over the spring and summer months ahead. I would note that this same situation occurred for the current fiscal year. Even with the 4 percent operational fee revenue approved late in the last Legislative Session, Nicholls had to implement a $1,066,764 or almost 2.5 percent budget reduction to maintain balanced operating conditions over the course of the current 2004-2005 fiscal year. The recent 1.75 percent or $408,500 savings target reduction, as implemented by the state, only further exacerbated financial conditions this year in support of the academic programs. Simply stated, it is progressively becoming most difficult to make further budget cuts without a harmful impact on the academic program and the students it serves.

One final issue involves the apparent difference between H.B. 1 that indicates $591,862 less funding for Nicholls than does the Governor’s Executive Budget. As we understand it, that difference is the University’s portion of the Governor’s Supplemental Budget “below the line”, thus, representing items for which revenue is not yet available. The current Executive Budget shows a total decrease in State general funds and statutory dedications of $274,430 for Nicholls State University.

The President’s Cabinet, with representation from the faculty, staff and student body, will monitor on-going financial decision-making and planning around the operating budget for the 2005-2006 fiscal year ahead. Every effort will be made to keep the broader University community apprised of the outcome of the planning and decision-making through the beginning of the new fiscal year on July 1, 2005. As importantly, every effort will be made to protect the quality and integrity of the of the academic program and the students it serves.

Budget Information – (PDF) (Excel)

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