In higher education, few topics are as extensively discussed and as comprehensively misunderstood as the budget.
University budgets, especially for public land-grant universities, are complex. Revenue comes from many sources. For example: The state of New Mexico contributes to our annual budget and one-time funds; the federal government directly supports competitive research, agricultural research, Cooperative Extension Service and other activities, and indirectly by supporting students with Pell grants, student loans, veteran’s benefits and other similar programs; our students participate through tuition and fees; private and corporate donors contribute through philanthropy; auxiliary and other university units such as athletics contribute through sales, contracts, etc.
Every source of money has its own set of rules regarding how it can be spent, and each funding source has its own timeline. Some funding is recurring, meaning it contributes to the budget every year. The state Legislature, for example, gives us an appropriation annually, and it grows or shrinks depending on state revenues. Other sources do not recur (one-time funds), although they might pay out over several years, like a research grant. Similarly, expenditures can be classified as instruction, student support, academic support, research, Extension, salaries, benefits, operating expenses, etc.
NMSU’s budget was covered extensively in a town hall webinar on April 27, which is available online. The headline-grabbing moment from the webinar was that we eliminated 57 jobs (18 faculty and 39 staff) in response to the state’s budget cut. Most of the 57 positions were vacant because of the retirement incentive and the hiring pause, but regretfully, not all. Layoffs are the option of last resort, and in a handful of cases, it was, unfortunately, the only option to balance the university budget.
Many people have asked why we cannot use the federal emergency funds (CARES Act, CRRSA and ARPA, collectively called HEERF for Higher Education Emergency Relief Funds) to keep people employed. Although there are minor differences in these three acts, they are all one-time funds intended to prevent, prepare and respond to the coronavirus pandemic. Using these funds to pay salaries for ongoing employees would not follow federal guidelines, which is a bad idea for any institution that relies on federal support.
So, where are HEERF funds going? The good news is that about half of each of the funds goes directly to students, easing the financial stress they encountered during the pandemic. Another large portion will go to replace revenue lost because of the economic downturn. This will greatly assist our Housing and Residence Life operation, for example, to avoid deficit spending. HEERF funds have covered and will continue to cover COVID-related costs from the past year like technology, training, supplies and building modifications. We also launched the NMSU LEADS 2025 COVID-19 Performance Funds, and we are working through those proposals now.
The budget town hall last week covered the state budget cuts from 2020, HEERF funding and NMSU’s need for future investments to achieve our vision by 2025. Although we have made progress during the past two years, as you can see in the figure, our revenue is still about $500 million, roughly the same it was about 10 years ago.
If we are to make significant progress toward our vision and our strategic goals by 2025, we must grow revenue and invest in our future. Increasing enrollment, research and other sources of revenue will allow us to invest in faculty and staff compensation, technology for online programs, research infrastructure and many other needed improvements.
The town hall was well-attended last week, and we received positive feedback for sharing so much information. However, our commitment to transparency works best when the community is equally committed to being informed. Anybody with questions about the budget should review that information as a starting place.
One week from tonight, we will begin our celebrations for this semester’s graduates. Join me in congratulating Aggie graduates in spirit since the ceremonies will necessarily be limited in attendance. You can watch the Virtual Ceremony and the live stream of Friday’s Graduate Ceremony and Saturday’s Undergraduate Ceremony online.
Feedback is always welcomed at President.Floros@nmsu.edu.
Be Bold. Be Kind. Be Safe.
John Floros, Ph.D.
BE BOLD. Shape the future.