As you all know, the United States is currently experiencing an economic downturn. While the Kansas economy has benefited from high commodity prices and has not been hit as hard by declining home prices, budget forecasters in Topeka remain concerned about the revenue outlook for state government.

I remain optimistic that the Kansas economy will prove resilient and that budget reductions may not be necessary, but out of an understandable abundance of caution, the Division of the Budget asked the Board of Regents in July to prepare proposals for potential budget reductions of 2 percent in the current fiscal year and 5 percent next fiscal year, FY 2010.

For the University of Kansas, a 2 percent reduction in the current fiscal year amounts to $5.58 million. For next year, the reduction would be $19.46 million. In addition to these reductions all campuses are experiencing ever-increasing energy costs.

The Regents discussed the proposals by KU and the other universities under their jurisdiction at their retreat in late August. What is clear coming out of that meeting is that other Regents institutions face similar challenges.

Governor Kathleen Sebelius understands the value of higher education. She has expressed her strong desire that universities be protected and that any reductions, should they be required, avoid affecting key instructional programs. We will, of course, do everything in our power to avoid such an impact by focusing cuts on administrative areas wherever possible. We will also seek to avoid harming research endeavors, since they result in a 3-to-1 return on the state's investment.

No one likes to contemplate budget cuts, and we all remain hopeful that they will not be necessary. However, the exercise of identifying potential reductions can serve a useful purpose.

The current budget situation encourages us to find ways to focus on becoming more efficient. KU has already seen significant savings through a variety of innovative measures, ranging from a new computer contract that has saved us $172,000 so far to our efforts to increase energy efficiency. If you have suggestions on ways to be more efficient, I strongly encourage you to send them to me at kuchancellor@ku.edu. Some of our most innovative actions have resulted from the thoughtful observations of faculty, staff and students. Any suggestion will be carefully considered, I promise.

Ultimately, Kansans must have a serious discussion regarding the financing of higher education in our state. KU and its fellow Regents institutions are of tremendous value to Kansas, both in terms of the economic benefit that accompanies an educated workforce and in the return on investment that comes from faculty doing research.

Currently, KU receives only a quarter of its budget from the State General Fund - a figure that has declined significantly in the past two decades.

Such a trend cannot continue indefinitely without limiting some students' access to a high-quality college education. KU remains an excellent value, especially when the quality of a KU degree and innovations like the Four-year Tuition Compact are taken into account, but the path our state has been on for many years cannot be sustained without consequences.

As state leaders and the Board of Regents address the budget situation we will be vigorous in advocating for higher education in Kansas and in demonstrating KU's value to our state. The value of higher education and the many ways KU works for Kansas are consistent themes when I talk to people throughout the state and they will continue to be so. Kansas universities are vital to the future of our state, which is why we must tell our story.

Sincerely,
Bob Hemenway
Chancellor