FY 21 Budget Planning
Dear Western Community,
I want to start by acknowledging the complexities in communication during this unprecedented time. Since none of us has definitive solutions or timelines as we navigate this unfolding crisis, I know that my messages can trigger more questions than answers. At the same time, I expect that most of you are looking for as much information as possible and an understanding of the decision-making process underway including the tradeoffs that are inherent in complicated decisions.
I have been holding back on sending you this message on budget planning so as not to add to an already uncertain environment. Yet, I don’t want you to hear about university budget matters through the grapevine and make either premature or wrong assumptions. With that I mind, I want to share with you what we know today about the economic picture.
It has been a little over two months since Washington began taking sweeping actions to combat the worst global pandemic in more than a century. As you know, the necessary actions to combat the deadly coronavirus have also taken a significant toll on our state’s economy.
Preliminary unofficial projections released earlier this month show that Washington could face a $7 billion shortfall in state revenue through 2023. About $3.8 billion of that shortfall is expected to hit the current 2019-21 budget. We don’t expect official projections until the next state revenue forecast in June. However, even using all of the state’s record reserves, if the unofficial forecast holds true, the shortfall is still expected to be more than $4 billion over the next three years.
In order to prepare a four-year balanced state budget, as required by law, we have been directed by the Office of Financial Management to begin the process of identifying operating budget saving options from our fiscal year 2021 appropriations. The targeted reduction amount for the higher ed sector, as well as other discretionary areas, is 15%, or in the case of WWU, approximately $13.4 million.
As you may likely know, about half of our operating budget comes from state appropriations; the other half is from tuition revenue. It is too early to project fall enrollments at this point, but several national and regional surveys of high school students and their families indicate that they are taking longer to make decisions, waiting to see trends in health indicators and assessing—from their own perspective—the value of the education they will likely be receiving. For this reason, we, like many other universities, have extended the confirmation deadline to June 1.
Nevertheless, in the midst of this uncertainty it is prudent for us to start planning for the next fiscal year, recognizing that we will be continually visiting this process as state appropriations and enrollments firm up over the next few months. We are also waiting to see whether the federal government will provide more stimulus dollars to help states and municipalities with their budget shortfalls.
Keeping in mind this background and complexity, I have asked Business & Financial Affairs Vice President Rich Van Den Hul to lead a budget planning process to look at possible external funding scenarios and their impact on our operations. The process will be informed by a consultation group comprised of faculty, staff, and student leadership, to better understand the drivers and impacts and to help us better communicate with the campus community. This work does not replace existing governance structures such as UPRC, and I fully expect that the final budget plans for FY21 will be presented to UPRC and the Western community for input before going to the Board of Trustees for their review and approval at the October Board meeting.
Because of the current uncertainties, we will develop a continuation budget with appropriate planning guidance to units to allow operations to continue while the final budget is developed. We will seek review and approval of the continuation budget at the June 12 Board of Trustees meeting.
Since much of this work will have to happen over the summer, I encourage the Western community to stay tuned to the Budget & Financial Planning website for regular updates, progress on key milestones, and input opportunities.
You may recall in my last message on fall quarter that I referenced an upcoming video Q&A with senior leadership to address your questions and concerns. A date has been set for that on Wednesday, May 27 from 1:00-2:30 pm. Further details with a Zoom link will be forthcoming. For now, I invite you to send any additional questions to email@example.com. We will endeavor to get to as many of your questions as we can.
I offer my profound gratitude to all of you for your determination in the face of adversity, and I thank you for your partnership and guidance as we carefully and compassionately steward WWU through the difficult times ahead.