Vol. 2, No. 2

Fiscal Year 2008 Budget

I am writing to give you an initial report on the Fiscal Year 2008 budget recommendation for Missouri State University and public higher education in Missouri. Fortunately, my message this year is more positive than the one a year ago.

Almost exactly a year ago, I found it necessary to write the campus about what were some grim budget scenarios that had been shared with Missouri's public universities for Fiscal Year 2007. Specifically, we were asked to draw up plans for how we would handle cuts in our state appropriation ranging from 10-12 percent. The University responded to this news with various strategies that included the imposition of a freeze on new hires, which was in place for a good portion of the past academic year.

As the state's economy improved, the picture for higher education brightened, until ultimately, the Governor was able to recommend a 2 percent increase in the base appropriation for higher education institutions, a recommendation that the legislature approved. We are very grateful to the Governor and the legislature for this increase, while at the same time we – and our state's leaders – recognize that public higher education remains under-funded relative to five years ago and relative to our competitor states, almost all of whom spend considerably more per capita on public higher education than Missouri.

I write now to inform you about the current plans for higher education funding for Fiscal Year 2008. Although very early in the process, the news is much better than last year.

The Coordinating Board for Higher Education (CBHE) has recommended a $110 million increase in operating expenses for the public four-year institutions. This recommendation was based on a methodology that has the unanimous support of the Presidents of the public institutions. Our approach considered a number of factors, in which an institution's funding was restored either to its Fiscal Year 2001 or Fiscal Year 2002 level, or was adjusted to achieve more equitable FTE funding, whichever was greater.

In the case of Missouri State, the reinvestment in our institution would be about $9.6 million, approximately an 11.7 percent increase in the appropriation. The Presidents have unanimously endorsed the CBHE recommendation and have recently met with several legislators and the Governor to communicate our unanimity. Obviously, it is very early in the process; the legislature has not even convened, and it must confront several difficult issues this year, including the Lewis and Clark initiative (which remains the Governor's first priority for higher education) and Medicaid reform and funding. Although no funding or budget commitments have been made, the early indicators point to a shared recognition among our state's leaders that a reinvestment in public higher education is necessary and appropriate at this time.

At the numerous meetings we have held with policy makers during the past two weeks, it has been made clear that an appropriation increase of this magnitude is contingent on several elements:

• The ability of the Presidents to present a unanimously agreed-to distribution of the funds recommended by the CBHE. We were able to come together around this proposal in a matter of a few days, and our solidarity has been cited by a number of legislators as a key ingredient in the initial support this recommendation has received.
• A commitment to "tuition constraint" as the institutions set their tuition and fee rates. The parameters for such constraint have yet to be specified, but they will likely be influenced by the size and timing of the increase in the state appropriation.
• A companion approach to the increase in institutional operating expenses is an increase in financial aid, specifically in need-based support for Missouri's students. The CBHE and the presidents have agreed to a proposal that would consolidate two existing need-based programs, the Charles Gallagher Student Financial Assistance Program and the Missouri College Guarantee Program, into one program and increase the funding for this merged aid program by upwards of $80 million over the next two years. I think it is fair to say that the institutional operating increase proposal and the increased student aid proposal must both go forward and both be approved; it is unlikely that one will be advanced by the legislature without the other also being advanced.
• The development of a new institutional funding formula, developed and agreed to by the Presidents, that would guide the appropriation process in the future. This will be a complex exercise and will take time. The components of such a formula will need to address several factors, including enrollment/FTE; maintenance, repair and capital needs; program mix; special opportunities; and performance on specific measures. Missouri will need a formula that is aligned with the diverse missions that direct its public institutions. The Presidents have agreed to tackle this assignment.

These four points will be emphasized frequently in the discussions that will take place over the next several months. For our institution's agenda, I believe it is important for Missouri State to remain committed to these two initiatives, as well as maintaining our vigorous support for the Lewis and Clark initiative.

Higher education has not had a better opportunity in a number of years for getting back on its feet. I welcome your comments on this information and also urge you to communicate your support for this vital reinvestment in higher education so that we might serve our students, our communities, and our mission with renewed effectiveness.

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