The condition of the Washington economy and the revenue it generates in state taxes continue to concern everyone watching the state budget. All of us at the University are still dealing with the aftermath of the 2009 legislative session and the budget cuts resulting from a historically large revenue shortfall. The most recent revenue forecast from Olympia unfortunately reflects a continuing downward spiral in state tax revenues and an even larger budget hole the state will need to address in the 2010 session. Though the nation’s economy in recent months has shown welcome signs of recovery in various sectors, unemployment continues to be a nagging problem. And with our state’s heavy reliance on the sales tax, people’s confidence level and willingness to make purchases directly affect the condition of the state budget. The turnaround in state tax revenues we have all been hoping for has yet to materialize.

How the state will address what is now estimated to be a $2.6 billion problem is unclear. As all of us know, the 26% cut in our budget this biennium was unprecedented and took our state funding to a level we have not seen since 1999. To manage the cut, we had to make many hard decisions, among them, eliminating 850 mostly administrative and staff jobs, closing branch libraries and writing centers, freezing pay, dramatically reducing faculty hiring, and impacting the experience our students have in their academic programs.

The impacts of the budget reduction were offset partly by a 14% increase in tuition, continuing a 20-year trend of relying more and more on student tuition to fund the UW while the state shrank its share of funding. For the first time in our history, total revenue from tuition is larger than revenue from state tax dollars, a trend that is very likely to continue.

What all of this means is that we may be in for further budget reductions in the second year of this biennium. The Governor will release her 2010 supplemental budget proposal in early December, and the Legislature will take up consideration of its budget proposals when it convenes in mid-January. Whether the budget crisis in the state has reached such proportions that additional sources of revenue are considered is also at this point unknown.

What we do know with absolute certainty is that we will continue to make a forceful and passionate case in Olympia for additional state investment in the UW. The work all of us do is essential to Washington’s future. Working together with faculty, staff, and students and with the support of the thousands of UW alumni and retirees throughout the state, we will do everything in our power to ensure that work is supported. People in our state need to understand the role this University plays in the health and vitality of our region and that further disinvestment in the University of Washington is bad public policy and bad for the citizens of the state.

In the meantime, in this new era of declining state investment in the University, there are some things both the University and the state can do to enable us to be more effective in the way we manage ourselves:

1. Use our existing resources as efficiently as possible: Research shows that Washington’s public universities are already among the most efficient in the nation in producing bachelor’s degree graduates despite being among the most poorly funded. The UW awards more bachelor’s degrees per student than research universities in any other state, and we are second in the nation in degree productivity at the graduate level. The six-year graduation rate for freshmen in the state of Washington ranks third in the nation and has improved by 9% in the last decade. The UW’s six year graduation rate now stands at 81%, up from 71% six years ago. Bottom line: The state is getting extraordinary efficiency in the investment of its dollars in Washington’s public universities.

2. Manage undergraduate resident tuition: Now that the UW receives more of its core instructional budget support from students and their families than from the state, we need to be in a better position to manage all of our tuition revenues. Since 2003, we have been responsible for managing tuition for all graduate and professional programs, as well as undergraduate nonresident tuition. These tuition rates continue to remain at or below the average of our peer institutions. While UW undergraduate tuition is still the lowest among that of its global challenge state peers, future growth can be benchmarked in a fashion similar to those for graduate and professional programs. Further, the UW is deeply committed to increasing financial aid to continue to honor the Husky Promise program for low and lower middle income families. Bottom line: The UW needs to have greater control over its revenue.

3. Greater management and business process flexibility: There are numerous examples of millions of dollars that can be saved in operating our University if we had more flexibility over business processes and had to spend less money complying with a number of regulations in the way we operate basic management systems and processes. These include public works procurement, debt financing costs, purchasing authority, and relief from paying for state systems that we do not use. We want to use all of our resources as wisely and effectively as possible. Bottom line: The UW needs to be granted greater flexibility in costly and time-consuming regulations and processes.

The University of Washington is at a turning point. We must find a way to replace critical state dollars that are gone and no longer available to support our instructional activities. A new financial model and new, more entrepreneurial approaches to doing business are called for. Greater management flexibility is required to fulfill the University’s commitment to serving the citizens of Washington. If we are able to make these changes, the UW can continue to serve the state for decades to come in the exemplary manner we all expect.

Sincerely,

Mark A. Emmert
President

As we approach the start of the new academic year, we are beginning to experience a resurgence of the novel H1N1 influenza virus, much as was expected. As has been reported in the news, colleges and universities across the country have had outbreaks of the virus as classes began. While the virus appears to be easily transmitted from person to person, the good news is that it also seems to be relatively mild as an influenza illness and most people not in high-risk populations recover fully within a week.

The University’s Advisory Committee on Communicable Diseases (ACCD), chaired by Vice President for Student Life Eric Godfrey, has been monitoring information related to the H1N1 influenza since last spring and preparing for its arrival at the University this fall. From everything we know at this point, we can expect a substantial fraction of our community to become ill with H1N1 influenza. A vaccine against H1N1 is expected to be widely available by mid-October, and when it is, we are planning for a mass inoculation program to get it to people as quickly as possible.

In the meantime, there are things we can do as a community to try to stem the rapid spread of the disease when it occurs. The virus can live on surfaces for up to eight hours, so frequent hand-washing with soap and water is crucial. It is also recommended that as soon as possible, people get the regular seasonal influenza vaccine to protect against seasonal flu. It is widely available from various community outlets. If Seattle campus students are unable to get the vaccine prior to arriving on campus, it is available at Hall Health’s Immunization Clinic. It would also be wise for students (and others) to prepare a self-treatment kit for the flu that includes a thermometer, anti-fever medication (such as Tylenol™ or acetaminophen), hand sanitizer, surface disinfectant wipes, tissues, electrolyte packs to mix with water, and throat lozenges.

Most importantly, if you do become ill with flu-like symptoms (high fever and cough or sore throat), we encourage you to make every effort to isolate yourself by staying at home or in your room. We would prefer that you miss work or miss class if you become ill. The best method we know for trying to limit the spread of the disease is to avoid contact with others after you become ill. You may return to work or classes when you have not had a fever for 24 hours without taking fever-lowering medication.

We are all vulnerable to catching the virus, and we are all in this together. We will all need to find ways to be flexible and accommodating, both in terms of covering staffing shortages due to unusual absenteeism and helping students make up missed work. Students are encouraged to contact instructors or professors via e-mail to see how they can make up missed work. We will be making online resources available for faculty to supplement their instructional materials.

There are a number of campus resources for information and guidance about the flu. On the Seattle campus, Hall Health Center provides care for students, and they should contact the Center if they have questions or concerns. Information specific to the novel H1N1 influenza virus is posted to the Campus Health Services web site at www.uw.edu/flu Look there for updates and the most recent developments regarding influenza at the University.

There is no way of knowing how widely the novel H1N1 influenza virus will spread or when, but I think it is fair to assume that many of us will become ill this fall and will miss some days of school or work. We will keep the campus informed as information becomes available during the quarter, both in terms of the incidence of the disease in our community as well as when a vaccine becomes available and the plan for administering it.

In the meantime, I hope you come to campus healthy and that you stay healthy throughout the academic year.

Sincerely,

Mark A. Emmert
President

The news today from Olympia about the further decline in state revenues is another sign that the economic recovery will be difficult and slow. While today’s revenue forecast will not mean further cuts at this time — a scenario hard to imagine, given what we are going through — we do need to be mindful that the economic situation has yet to stabilize and we need to act accordingly. The next revenue forecast will come in September, and we hope that will show more encouraging signs that an economic recovery is taking hold.

In the meantime, we are about to start the new biennium, and the economic environment in which we do so is very fragile. We have worked hard over the past few months to do everything we could to protect core instructional activities and programs, and we remain committed to maintaining the highest possible quality instructional programs for our students. Governor Gregoire has asked state agencies to continue to conserve spending. I am urging the deans and chancellors, vice presidents, and others as we start the new biennium to keep the current economic climate clearly in view and to proceed cautiously and prudently in committing resources as we await the next revenue forecast in September.

The continued decline in state revenues underscores the importance of the University continuing to look for ways to increase efficiencies and creatively seek opportunities to cultivate new sources of revenue, a subject we will all be discussing and engaging more intensively in the weeks and months ahead.

Over the last several months, people from across our campuses have submitted many valuable cost-saving suggestions to help our University weather the economic downturn. I am deeply appreciative of all those who have taken the time to share their thoughts and ideas. I write now to update you on the actions we have taken in response to these thoughtful suggestions.

I received many suggestions related to energy savings, ranging from turning off unneeded lights to converting campus buildings into energy sources by adding solar or green rooftops. All of these ideas are now with our Finance and Facilities offices undergoing feasibility study and cost-benefit analysis. Those that we can implement — in addition to our already robust energy savings program — we will. Not only will we save money, we will help the planet.

There also were a number of innovative ideas related to waste reduction and process improvement. While suggestions were again forwarded to appropriate departments for review, I am very pleased that some of these ideas are already being implemented. For example, you may have noticed a marked increase in University communications coming to you by e-mail. This has decreased the amount spent on printing, paper, and mailing hard copy documents and publications for many units. Others continue to look into what they need to do to convert to electronic forms and record keeping. I am confident that we can find many more opportunities to reduce our publications and printing costs while still communicating effectively.

Unfortunately, no amount of turning down the lights or eliminating paper copies will make up for the budget cut we must take. Since the great majority of our state budget involves people and jobs, that is, unfortunately, where we must look for reductions. Human Resources received many suggestions seeking to preserve positions through such means as salary reductions, furloughs, reduced schedules, shortened work weeks or work year, and job sharing. Each option has been considered and thoroughly analyzed from both a policy and a financial perspective.

Among the most common suggestions was for the University to require an across-the-board salary reduction for all staff or to institute a mandatory furlough program, requiring everyone to take a specific amount of time off without pay. While these are sensible suggestions — and they indeed may work very well at other institutions — they are not well suited to the UW’s diverse and complex organizational and budgetary structures.

The University, of course, is made up of many different units, each with its own unique mission and mix of funding sources for salaries. Many of these funding sources — including grants, contracts, gifts, discretionary funds, and the like — are not connected to our state budget. Further, some units are self-sustaining and fund salaries from the revenue they generate. Instituting an across-the-board pay cut or mandatory furlough scheme would adversely and unnecessarily affect positions not funded by state dollars while doing nothing to help solve our budget dilemma. Moreover, the University has many contractual commitments to funding agencies and partner institutions to deliver specific programs and projects. Across-the-board actions would make it impossible to meet these obligations.

Although these types of across-the-board measures may not be suitable at the institutional level, colleges, schools, and departments nevertheless are encouraged to explore cost savings within their units through reductions in work shifts or schedules. We believe that the unit level is the best place to determine how a reduction in hours would affect operations and to develop staffing plans that would allow them to continue the work most critical to their mission while discontinuing activities deemed less central. I am encouraging administrators to look into these options, but to recognize the limitations inherent in these approaches.

Another intriguing idea suggested by concerned faculty and staff is to set up a payroll deduction charitable contribution to a UW program, including their own departments. The deep and selfless generosity evidenced in this suggestion says a great deal about our community, and it is greatly appreciated. The UW Foundation is able to set up giving programs that allow faculty and staff to voluntarily contribute a portion of their salary to their own department. Departments that wish to explore a voluntary payroll-deduction giving program should contact the UW Foundation directly at gifts@u.washington.edu or 206-685-1980. Such contributions will not replace the state budget cuts required of departments, but they can bolster department finances and be used to help support departmental salaries.

Your ideas and suggestions are very helpful, and I urge you to continue to bring them forward by e-mailing them to bgtideas@u.washington.edu. We have only begun the process of managing the budget cuts, and the more good ideas we receive the better. Dealing with the uncharted waters of our new budget realities will take an enormous amount of energy and commitment, and I thank all of you for standing by the University during this difficult time.

Sincerely,

Mark A. Emmert
President

Over the weekend, the Legislature completed the unenviable task of writing and passing a biennial budget during the worst economic period in decades. Any budget that must bridge a biennial shortfall of $9 billion is bound to please no one and to result in serious consequences for the state.

For the University of Washington, the resulting budget decisions are dramatic. The bad news is that the Legislature decided to reduce state funding to the six public four-year college and universities more than any other sector in state government. The University of Washington received the highest percentage cut in all of higher education-26 percent. This is a stark and sobering number.

Beginning July 1, one quarter of our funding from the state will no longer exist. It is unprecedented in state history, and as far as we know, it is by far the largest reduction in state support to a flagship university by any state in the nation. It takes our state funding level back to where it was more than a decade ago and drops the portion of the state budget dedicated to four-year higher education to an all-time low.

The somewhat better news, though it may not appear so to our students and their families, is that the budget authorizes our Regents to increase resident undergraduate tuition up to 14 percent for the 2009-11 biennium, as I described in a previous message to you. Also, our Regents’ authority to set tuition levels for graduate, professional and non-resident students was extended an additional four years, though no decision about those tuition levels has been made yet. If approved by the Regents, tuition for resident undergraduates would increase $875 next academic year and $1,000 the following year.

These increases will partially offset the more dire effects of the state budget cut and, when combined with some federal stimulus funding the state also appropriated, will bring our effective budget cut for the biennium down to about 12 percent. This is still a very large budget reduction-about $50 million in each of the next two years. Moreover, increasing costs in such areas as utilities and debt service will compound our budget challenge.

The conversation about tuition would not have been possible were it not for several factors worth noting. First, historically, our tuition has been relatively low compared to our peer institutions, so any consideration about increasing it started from a comparatively low base. Second, the federal stimulus program includes increases to the amount of Pell grants and a widely expanded tuition tax credit, both of which make tuition more affordable for low and middle-income families. I do not underestimate the effect of increased tuition on many of our students, but without these elements in play, the conversation to increase tuition would have been much more difficult.

The impacts of the state’s budget cuts will be felt across our University community. A large percentage of our operating expenses involves people and jobs, and taking cuts of this magnitude without affecting jobs would be impossible. There will be a significant number of job losses. This will be hard on everyone, and hardest on those whose jobs are lost due to the budget cuts. We are exploring all available ways to manage this situation. We will do all we can to give as much notice as possible-60 days is our goal-to those whose jobs are lost. These losses mean there will be fewer individuals to provide the education and support services our students require, and we will need to find creative ways to fill the voids left, though we will not be able to do so completely.

Over the past months, there have been extensive discussions across the UW community about how to best handle the state’s budget cut. Based upon what we have heard and the information we have, Provost Wise will be sending budget allocations for the 2009-11 biennium to deans, chancellors, vice provosts and vice presidents later this week, and they will begin the process of implementing them. While no one has been spared, we have tried as best as we can to protect the instructional core of the University by taking much larger cuts in administrative and support units and smaller cuts in academic units. The Board of Regents must approve our budget, and we will be presenting it to them at their May meeting, with final approval to come in June.

Many of you have submitted thoughtful ideas for how the University can save money in our operations. Some of these ideas have already been implemented, and others are still under consideration. Your thoughts and ideas have been very welcome. Later this week, I will be sending you an update on where we stand on cost-saving ideas that have been suggested by members of our UW community.

State budgets are extremely complex with far-reaching implications. Cuts to other state agencies will also affect our University community. For example, health and human service budget reductions will have an impact on UW Medicine. Paul Ramsey will continue to communicate with those in UW Medicine regarding the impact of budget reductions as they become more apparent.

This dramatic reduction in state support signals a fundamental change in our relationship with the state. For the first time in our history, tuition revenue will exceed state support. The funding the state of Washington provides to its public universities has fallen to among the lowest levels in the nation. These realities will force us to change the fundamental financial model by which we operate and to reconsider the manner in which we approach our core mission. We certainly will not allow these cuts to become an excuse for slipping backward by simply reducing our quality or our commitment to academic excellence. On the contrary, as we work our way through this, I am confident that we can find new approaches that will allow the UW to become an even more prominent national and international university.

The next two years will certainly be hard. Many of our colleagues are going to be dislocated at a very difficult time. We will work hard to minimize the impacts on their lives. Also, we will have to work together as colleagues with more collaboration and consideration than ever before. It will be essential that we stay focused on the core values and mission of the University. All in all, this is going to be a challenging task, but I know the UW community is up to it.

Sincerely,

Mark A. Emmert
President

By now most of you have heard about the potential need to increase tuition because of the severe cuts in our state support. I am writing to clarify why this may need to happen and to explain the potential impacts.

Nobody, certainly not me, likes to raise tuition. We support a significant increase only because of the extraordinary circumstances in which we find ourselves. The proposed cuts to higher education in our state are enormous, ranging from 23 percent in the Senate’s proposal to 31 percent in the House’s. Reductions of this magnitude would eliminate 10,000 student openings across higher education in the state, while at the same time significantly increasing the time it takes for students to receive their degrees. Instead of graduating on time, students would have to stay—and pay tuition for—an extra quarter or two to get the classes they need to graduate. Moreover, without some partial relief, these cuts would greatly diminish the quality of the educational experience at the UW. There would be larger classes, fewer courses offered, and fewer support services available to students, including advising.

While we continue to argue aggressively for more state support, the fact is that our state faces a huge budget shortfall that makes some cuts necessary. We must consider larger tuition increases as one of the ways to reduce the damage these cuts would cause.

We support Governor Gregoire’s proposal for a 14 percent tuition increase for resident undergraduates during both years of the upcoming biennium. For next year, this would amount to about $875. Currently, the UW has the lowest tuition among our peers. An increase of $875 would not change that. For 2010-11, tuition would increase an additional $1,000. We have not made any decisions about graduate and professional school tuition or nonresident tuition.

While increasing costs during these tough times is regrettable, we are fortunate to have significantly increased financial aid to help thousands of students and their families manage these increases. Indeed, for many, their out-of-pocket costs will not go up at all, depending on a student’s annual household income. Our analysis shows that, with increased financial aid plus the expanded federal educational tax credit, students from households making less than $160,000 a year would not face additional out-of-pocket costs with a tuition increase of 14 percent in 2009-10. Families at the lowest income levels with taxes below $2,500 could actually receive a rebate of up to $1,000 with the expanded federal tuition tax credit. For 2010-11, our analysis shows that there would be no appreciable impact of an additional 14 percent tuition increase for families making less than $96,000 a year. This helpful chart illustrates how tuition increases would be offset for families at different annual income levels over the next two years.

We remain committed to the Husky Promise program, which guarantees zero tuition for our neediest students, those eligible for state need grants and Pell grants. Currently, twenty percent of resident undergraduates are Husky Promise students and pay no tuition.

If tuition were to increase as proposed, it would significantly mitigate the size of the budget cuts we face. The net effect, for example, of the increase in tuition and the Senate level cut of 23 percent would be an 11 percent overall reduction. That is still substantial and serious, but it is far more manageable than a cut of twice that size. Our over-arching goal is to make sure our students get what they pay for: a first-rate education at this great university.

Sincerely,

Mark A. Emmert
President

All members of the University of Washington Bothell community are invited to join me on Tuesday, April 14, for a town hall meeting on the University’s current budget situation. This meeting is an opportunity to discuss where we are in the state budget process, the implications of pending budget cuts, and our priorities and strategies as we move into the next biennium.

The meeting begins at 10:30 a.m. and will include a question-and-answer session. For those of you unable to attend, you may submit your questions in advance.

• When: Tuesday, April 14, 2009
• Where: North Creek Events Center
• Time: 10:30 a.m.

I hope you will join me and participate in this important conversation.

Sincerely yours,
Mark A. Emmert
President