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Good morning and welcome back. The purpose of this message is to explain what we are doing to handle our unallotment in FY 2009 and to describe how we are preparing for the likelihood of further and deeper cuts in the next biennium. This announcement is the fifth in a series of messages that I am sharing with the WSU community about our budget planning. If you wish to review the previous messages, go to the WSU homepage and click on the President’s Office link. When you reach my home page, click on Budget Planning. You can also go directly to the site by using http://www.winona.edu/president/10590.htm. In addition, the Fiscal Affairs Web site contains a budget toolkit with further budget information. You can visit that site by clicking on the Faculty and Staff section of our Home Page, then on Fiscal Affairs and finally on Budget 101. Our current situation: In response to the projected state budget deficit of $426 million estimated at the end of November and released in early December, Governor Pawlenty has exercised his authority to “unallot” during the fiscal year in an effort to avoid a deficit in the state budget. Our share of the $20 million unallotment assigned to MnSCU is $921,985. The state budget deficit projected for the next biennium is estimated at $4.8 billion. If MnSCU receives its proportional share of the necessary reduction in state appropriation and if the distribution of those reductions follows the pattern used to handle the unallotment we could face a further cut of $4.1 million in our state appropriation. Approximately 29 percent of our total budget comes from the state. The rest is almost entirely from revenue generated by our enrollments in the form of tuition as well as revenue funds from auxiliary operations such as the residence halls. How we are handling the initial unallotment: We have already taken several actions to reduce our expenditures for the remainder of FY 2009 and to build up some flexibility to help us manage the transition into the next biennium. We are now applying two simple tests to every major expenditure or investment. The first question is whether this is something we must do in order to maintain our appeal to prospective students, support student success, generate additional revenue or maintain the integrity of our core. The second question is, if this is something we must do, is this the best way to do it? We have continued with our strategy of selective recruitment. Approximately $3.2 million in essential faculty and staff positions that meet our two tests are going forward. We are holding another set of positions until our future budget situation becomes clear, at which point, we shall decide whether to proceed with further recruitment or to freeze the positions. The value of the positions that are already frozen is $495,000. It should be noted that in all cases these frozen positions were vacant and represent no job losses for currently employed personnel. We continue to view layoffs as a last resort. We are limiting the back fill for contractually required sabbaticals. The estimated cost of these temporary replacements is $900,000. We have reduced that cost by half and are grateful for the willingness of our academic departments to find ways to manage during the absence of their colleagues who are on sabbatical. In addition, we will examine any remaining discretionary expenditures in all of our units and attempt to hold back approximately 25 percent of our unexpended discretionary resources in anticipation of the very real possibility of a second round of unallotment after the February economic forecast. Vice Presidential approval will be required for any major expenditure or investment this spring. In the case of academic units, the approval of the Dean will also be required. One of the most immediate areas to reduce discretionary expenditures is travel. We are asking everyone to apply the two-part test to all discretionary travel. These considerations should be applied to travel within and outside the state. We recommend substituting webinars, on-line networking or teleconferencing wherever possible to reduce cost and allow for continued interactions with colleagues elsewhere. How we are approaching the development of the next biennial budget. We will ask the Facilities and Finance Committee to design a process to involve the campus community in reviewing and assessing the additional cost-saving and revenue-generating strategies. In doing so, we will continue to employ an investment approach to our budget by viewing our budget as an investment portfolio. We will think about how we use the resources we have for the greatest possible good rather than simply how we can cut our budget. To plan for the next biennium we need to know: the size of our state appropriation, our enrollments, the tuition guidelines that will be set by our Board of Trustees and the effectiveness of our current efforts to generate additional revenue and produce muchneeded cost savings. The next critical dates are Governor Pawlenty’s State of the State address on January 15th, the Governor’s Budget Message on January 27th and the February economic forecast, to be released at the end of February. As we learn more about the depth of the budget deficit and the implications of the recession for the MnSCU budget and for Winona State University, I will hold additional open sessions and send budget messages to the campus community. Judith A. Ramaley President