The health of our nation's economy continues to be weak and revenue collections by the Commonwealth of Virginia continue below original projections. Thus, on September 8 Governor Kaine announced another round of budget cuts for 2009-10. Since these cuts affect budgets for the current fiscal year, we must move promptly to implement actions to balance our budget.
For 2009-10, we have been assigned reductions targets of $21.9 million for the University Division and $4.5 million for the VCE/VAES Division, resulting in a total cut of more than $26 million. It is our understanding that the University’s base General Fund appropriations will be reduced by these amounts. However, these reductions will be partially offset by the appropriation of additional federal stimulus funds into our budgets on a one-time basis in the current year. As a result, the net reductions for 2009-10 will be $11.7 million for the University Division and $2.4 million for VCE/VAES. Unless additional federal stimulus funds are appropriated by the State for 2010-11, the University will feel the full effect of the base budget reductions in the next fiscal year.
This is bad news at any time, but particularly difficult in context of prior state funding losses. As we have previously reported to the University community, the University has absorbed General Fund reductions of $42 million from the first round of budget reductions in October 2007 through the last reduction which was effective July 1, 2009. These new reductions will increase the total reduction in state support to $68.5 million; this represents a cumulative reduction of about 26 percent of our General Fund budget.
We have kept our programs strong and educated increasing numbers of students. Demand for admission remains strong. However, implementing more cuts will be challenging. Our primary goal will be to again protect the quality and integrity of our academic programs to the greatest extent possible.
Tuition will almost certainly rise again. We can not keep the doors open with cuts of this magnitude without some revenue increases. I know that this will be difficult for our students who will be asked to bear an increasing share of the instructional program budget. In fact, with this reduction the state is now funding approximately 27 percent of the instructional budget in the University Division. In comparison, just nine years ago, the state funded about 55 percent of the instructional budget.
Unfortunately, the State's budget reduction plans will have impacts on our University personnel. The reduction plan requires that state employees take one unpaid furlough day during this fiscal year. The furlough is planned for the Friday before Memorial Day, but the University may have flexibility with regard to this date. The State plans for the furlough to apply to all state employees. Additionally, almost any level of reduction will likely result in more position eliminations, possibly as soon as this fiscal year. This may or may not result in layoffs depending on when and how the resource managers elect to implement cuts.
I will be meeting quickly with senior resources managers – deans and vice presidents were aware of the pending cuts – to develop near term and longer term action plans. As with the prior budget reductions, our goal will be to absorb as much of the reductions centrally as we can in order to minimize the portion of the university budget target that must be allocated to colleges and vice presidential units. We currently envision a two-phase process, with phase-one dealing with the current fiscal year on a one-time basis and a more deliberate planning process to effectuate permanent cuts in the FY 2010-11 fiscal year.
However, having to absorb an additional $26 million reduction in FY 2010-11 will result in significant changes, and we plan to consider a wide range of options to deal with these new reductions. Within this environment, we will do what is needed to preserve the university's academic programs and we will strive to minimize the impact on University personnel. Any significant changes in operations will require careful consideration, and as in the past, we will have more in-depth campus discussions as the year progresses.
Charles W. Steger