More lean times could be down the road for public universities in Missouri. The Missouri Department of Higher Education sent a memo this afternoon to the presidents and chancellors of the state’s two-year and four-year institutions about possible budget scenarios for next year that include 15, 20, and 25 percent funding cuts.

“As I had previously mentioned, the last time the state was in a deficit situation the request was for impact statements for 5%, 10%, and 15% cuts,” wrote Paul Wagner, deputy higher education commissioner, in the memo. “Unfortunately, the situation appears to be much worse now.”

Every state agency and program is being asked by the House and Senate appropriations committees to come up with similar impact statements about how they would grapple with cuts of that size.

As my colleague, Virginia Young, reporter earlier today, the state is expecting to face a $340 million budget deficit by the end of June. And state revenues continue to look dreary for the next fiscal year, hence the 15 to 25 percent budget cut scenarios being explored. But Wagner told me in a phone interview today that higher education institutions have been given no notice yet that there might be mid-year budget cuts to deal with current deficit. (The Illinois State Board of Higher Education recently told state universities and community colleges to hold onto 2.5 percent of their current budgets in reserve because of potential mid-year cuts.)

Public universities in Missouri, which depend on state funding and student tuition as their main sources of revenue, have been well aware of the less-than-rosy state budget forecast. Some schools have already begun to make changes to brace for the potential storm ahead.

The University of Missouri instituted a hiring freeze at its four campuses a couple weeks ago. And Missouri State University President Michael Nietzel has slowed some hiring and asked his staff to identify contingency plans for a possible 5 percent cut.

The Coordinating Board for Higher Education had been hoping for a 7.4 percent funding increase to get higher education state funding back up to the 2001 and 2002 levels. But Wagner said that given this memo, he is not optimistic about higher education getting any increase at all next year.

“Now we hope to just maintain where we’re at,” he said.

If higher education does end up facing a double-digit percentage in cuts, Wagner acknowledged that universities will likely consider large tuition increases. A recent state law caps tuition increases to the level of inflation. But Wagner noted that the inflation rate, as measured by the consumer price index, has been dropping significantly to about 2 to 3 percent. That means that the rate of tuition increases would be further curtailed.

So one issue Wagner and the Department of Higher Education is going to have to look into is the possibility that a number of universities will apply to have the tuition increase cap waived. Under the law, schools can appeal to the department to increase tuition above inflation. The commissioner then decides whether or not to grant the waiver. If the commissioner refuses the request, the school will face a financial penalty if it still increases tuition above the level of inflation.

But Wagner noted that large tuition increases is not very appealing.

“It is not an easy solution in this economy when so many people are already struggling to make ends meet,” he said.

The state’s budget situation will likely be a hot topic of conversation at a meeting of the state’s public university presidents later this week in Kansas City. Nietzel chairs that group.

“I think the presidents will want to make the case that one way you want to grow out of this economic difficulty is to have a well-prepared workforce and support for universities is crucial to having that,” Nietzel said. “We realize that the budget solution is dire. But we think we can be a solution, or at least a significant part of the solution.”

And finally, I have copied here below the memo that the House and Senate budget leaders sent to all state agencies and programs asking them for impact statements of 15, 20, and 25 percent cuts:

MEMORANDUM

To: Department Directors & Budget Personnel

From: Senator Gary Nodler and Representative Allen Icet

Date: December 1, 2008

RE: Information Request

The current status of our economy is quite volatile and it is imperative that we remain ready to act in response to these conditions during the upcoming budget process. Therefore, we are requesting your assistance in providing information relating to your department and the agencies assigned to your department for budgeting purposes. Please provide responses to the requested information noted below to the Senate and House Appropriations Staff no later than December 22, 2008.

1. A list of all budgeted vacant positions as of December 1, 2008. A template has been provided for vacancy information requested.

2. General revenue core reduction scenarios of 15%, 20% and 25%. Each department is directed to put forward reduction scenarios that would have the least impact on the services provided to the citizens of Missouri. Departments have the latitude to choose which programs to include for this exercise, provided that the overall target is met in each scenario (not to include fringe savings). A template is attached which provides your core reduction target for each percent scenario. Only the appropriations listed on the template can be used to reach the core cut targets. The target is based on the FY 2009 appropriations, less one-times. The impact/comments section should include the following:

• What will not be done that is currently being done if this reduction or cut is made?
• Who will be impacted by the reduction and how will they be affected?
• How many people will be impacted?
• Will this result in any loss of Federal, local or other funding/match?
• Will the reduction impact other departments (for example, will clients that your department served move to programs offered by another department, increasing its costs)?
• List legislative or other changes that would have to be made in order to realize savings in the area(s) reduced.

3. Please provide organizational charts for your department which reflect the FY 2010 Department Core Request for positions with an annual salary of $50,000 or greater. The organizational charts should reflect the budgeted title, working title, employee name, current annual salary and the number of FTE directly supervised.

The Grade is the St. Louis region’s premier blog on education and child welfare. To read other recent posts, go to www.stltoday.com/thegrade.