Mr. President, you are two months away from making several very hard decisions. As you look at your state budget revenue and the demise of your endowment funds, you are about to make budget cuts you had hoped you would never have to implement. To confuse matters further, the House has passed the Obama stimulus plan, and the Senate will follow shortly. Once Obama signs the legislation, you will face two additional pressures.
First, you will have a pot of gold to further fund Pell Grants—a good problem that could allow you to increase your total tuition revenue without having to implement double-digit tuition increases. This itself will offset pressure from the state legislatures to freeze tuition rates, but the downside is the state legislature will be tempted to pass larger state budget cuts to universities. This will be a political football that could really help or make planning almost impossible. One bit of good news is that states must meet a minimum level of higher education spending in order to receive funding from the stimulus plan, assuming that language holds in the Senate.
Second, the Obama plan could fund a number of new research building projects and even more deferred maintenance projects. One-time funding for the projects will appear to be manna from heaven. The operation and maintenance budgets will not increase with the stimulus funding, leaving Presidents/CAOs with greater pressure on the operations budget that the state will likely ignore.
The stimulus funding will result in the appearance of growth and activity. The lack of state funding for operating budgets and the continued pressure on lower endowment funds will result in sleepless nights for many Presidents. The next two years will be the most difficult in the recent decade.
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