To:

To: Board of Regents

From: Richard A. Crofts

Commissioner

Date: September 11, 2002

Subject: Budget Request 2004-2005 and Legislative Planning

Since the special session I have met with the university relations group and held separate meetings with the CEOs and CFOs of each university. The purpose of these meetings was to discuss (1) what changes, if any, we should make in our 2004-2005 budget request; (2) what changes, if any, we should make in our legislative planning; and (3) how to move forward in planning our operating budgets for the next two fiscal years - - including what assumptions should drive that planning. The context for these discussions has been actions during the special session and more recent information that suggests: (1) the structural imbalance of the State budget is likely to continue into the next biennium requiring action by the Executive and Legislative branches; (2) revenue projections for the State have not improved to this point and, in fact, preliminary information from the Department of Revenue suggests the potential for continued worsening of the revenue picture.

The fiscal condition of the State and my discussions with campus leadership have led me to conclude that we should significantly reduce our new proposals to the Executive for the next biennium. Our collective judgment is that there is little reason to believe that any significant new proposals are likely to be funded by the next Legislature. In fact, we believe that the focus of our efforts should be on avoiding further reductions to our base funding and securing present law adjustments that deal with inflation, annualization of the pay plan, increases in fixed costs, and the funding of enrollment increases. The July budget request document included over $3 million for Initiatives 1 and 2, $4.5 million for Initiative 3, and a little over $1 million for technology in Initiative 4. These numbers are, of course, all in addition to a very substantial increase in our base budget and present law adjustments that we believe is appropriate and needed.

It is my recommendation that we propose to the Executive that only Initiative 3, Making postsecondary education and training more accessible for Montanans, be continued as a formal new proposal. Given the large tuition increases originally approved for this biennium and the imposition of additional tuition surcharges this year, I believe we must continue to seek increases in financial aid. Attachment 1 is a revised version of that initiative.

As we diminish our new proposals it is important that the ideas and programs we have worked on for so long not be lost. My second recommendation is that we have available a second document entitled Investment Opportunities in Workforce and Rural Development. This would provide a shortened version of what we included in initiatives 1 and 2 in our July document and would be backed up by the detail for all of the proposals that was included in July. This list of investment opportunities is included as Attachment 2.

Both documents are easily printed on a single piece of paper. My third recommendation is that we have a third piece of paper that would be a Montana University System Fact Sheet. These facts would support our efforts to retain our base budget without further reductions and to attain the appropriate level of present law adjustments. Examples of these facts would include the following:

State support for the university system since 1992

Per capita support for the university system

Montana s support for the university system per $1000 of personal income

Enrollment growth

Economic benefit of Federally sponsored research programs

Economic benefit of non-resident students

I am working with Regent Semmens and others on this fact sheet and will have a sample available for you at the Butte meeting.

These three sheets of paper would provide a simple message that could be delivered consistently to the public, the media, and the Executive and Legislative branches. Regents, senior administrators, lobbyists, students, employee groups, alumni and others interested in the welfare of the university system could be provided this information and asked to share it with others.