Chairman Stinner and members of the Appropriations Committee, thank you for the opportunity to be with you. I am Hank Bounds (H-A-N-K B-O-U-N-D-S) and I am president of the Ӱԭ of Nebraska.
Today IӰԭd like to have a conversation with you about NebraskaӰԭs future. About what kind of Ӱԭ and state weӰԭd like to leave to our children and grandchildren. About what we see on the horizon for our communities and our workforce, and what our plan is to get there. And I would like us to talk candidly about the hard choices we face, and the consequences that result from some of those choices.
Senators, I donӰԭt think itӰԭs an overstatement to say that there has never been a more important time for this conversation. We are at a defining moment in NebraskaӰԭs history. We have a choice to make.
Are we going to reaffirm the partnership between the state and its public university that has opened the door of opportunity to young people and driven economic growth for almost 150 years?
Or will you decide that you no longer see the value that the Ӱԭ of Nebraska provides, and make it harder for us to offer affordable and excellent education to our 53,000 students?
You have made hard choices before and you have hard choices ahead. I recognize and appreciate the LegislatureӰԭs work, particularly that of Chairman Stinner and this Committee, and especially during these difficult times. I know you are committed to the best interests of our state and that you share our concerns about the delicate balance between budget cuts and the need to invest in long-term growth.
The Ӱԭ has been and will be a partner in helping you manage this challenge. But my view is that if we want Nebraska to compete, if we want this to be a place where our children and grandchildren will live and work and raise a family, if we want to build a workforce that will sustain us into the future, we have to invest in one of the primary economic drivers our state has. And that is the Ӱԭ of Nebraska.
I want to be clear, because IӰԭve been asked about the idea that the Ӱԭ ӰԭcanӰԭt take a cut.Ӱԭ It is the LegislatureӰԭs job to decide what kind of future you want for Nebraska. The Ӱԭ will manage the consequences of whatever choices you make. I do want to be completely candid with you about what those consequences are. You have probably read news stories about the proposed cuts weӰԭve announced in the past few days and I will review those in a few moments.
First let me provide some of the history that has brought us to this point.
The budget proposal before you now represents the third cut to the Ӱԭ in roughly the past year. Under the GovernorӰԭs recommendation, our funding would be cut $11 million this year and $23 million next year. These represent one-third of the GovernorӰԭs proposed cuts, even though we make up only 13 percent of state spending. And they come on top of cuts we took last year which, combined with our unavoidable cost increases, created a shortfall of $46 million.
We have made difficult choices to close the gap. I would remind you that we have very few levers to pull when it comes to managing our budget. I have heard the suggestion, and I think this Committee has heard in testimony over the past few weeks, that the Ӱԭ has greater flexibility than other agencies in tapping alternative funding sources to deal with reductions in state dollars. ThatӰԭs not accurate.
Certainly we are fortunate that the private sector has invested so generously in the Ӱԭ, and that our faculty attract federal research grants to support their work. But those dollars donӰԭt pay for what you think of as the educational enterprise of the Ӱԭ. Donors invest in scholarships and initiatives that grow our state, not in utilities. Research grants support research; they canӰԭt be used to keep an Extension office open or fix a leaky roof.
Our day-to-day operations are funded by two main sources: state funding and tuition. So in balancing a shortfall, we have had to turn to a mix of unappealing options.
First, we launched a Ӱԭ-wide Budget Response Team to re-think the way we do business. These teams have examined our operations in human resources, IT, facilities, energy, purchasing and a number of other areas. And they have done extraordinary work in finding $30 million in reductions.
In fact, maybe their work has been too good, because the difficulty resulting from these reductions isnӰԭt always obvious. But we will lose more than 150 jobs in this process, and the truth is that rebuilding our operations requires diligence and time.
The best example I can give you is IT. We experience a billion attacks on our network every single day. We have to bat a thousand. Even as we collapse five IT teams into one, we canӰԭt make a mistake. If cybercriminals get it right even once, we would have a security disaster on our hands.
Second, we made the difficult decision to increase tuition by 5.4 percent this year and 3.2 percent in 2018-19. Next yearӰԭs increase was intended to help students and families plan, but it was contingent upon no further reductions in state funding. Unfortunately, we will have to revisit that figure.
And these decisions come at a time when NebraskaӰԭs future workforce demands greater accessibility to higher education, not less.
Every analysis IӰԭve seen shows that a college degree is the surest pathway there is to economic mobility. Do we really want to close that door for our young people? Do we want to price out kids just because they werenӰԭt lucky enough to be born into a family of means? Is it wise to increase their student debt loads and make it harder for them to contribute to economic growth when they graduate?
That seems exactly the wrong message to send for an institution that was founded on the principle that a Ӱԭ education should be accessible not just to the wealthy, but to the sons and daughters of farmers and ranchers and middle-class families who dream of a better future for their children.
Third, we have used cash. As I testified to you last year, I have significant concerns about our cash position. One of the most important financial ratios that we monitor is days of cash on hand. This is a measure of operating flexibility and cushion. We dropped almost nine daysӰԭ cash between 2016 and 2017 as we dealt with previous budget cuts and we will drop additional days of cash during the next two years. That trend puts us in the company of Kansas and not many other of our peers and neighboring states. We are now more than 50 daysӰԭ of cash below the average among institutions that have the same bond rating as us.
That matters. Think of a bond rating as a report card grade for an institutionӰԭs financial strength. We are saving millions of dollars in financing costs when we issue bonds to build new buildings and renovate existing facilities. That, I fear, will change.
There is no question we will use more cash to manage additional budget cuts. Closing an academic program isnӰԭt like shutting off a light. We have a responsibility to help students in the affected programs finish their degrees, and we have employment obligations with our faculty. We will have no choice but to cash-flow the process. We will do this even though MoodyӰԭs has warned us that sustained erosion of cash could lead to a bond rating downgrade and the cost increases that would result as a consequence.
When the Governor informed me of his proposed cuts, I convened Ӱԭ-wide leadership teams to begin discussing our options. Each chancellor was tasked with identifying programmatic cuts to reach the $23 million re-basing proposed by the Governor.
I canӰԭt speak to all of the proposals today, because we have not had an opportunity to properly communicate with students, faculty, staff and stakeholders. But per Chairman StinnerӰԭs request for as much detail as we can provide, I am prepared to tell you how we propose to address slightly more than $9 million of the reduction.
I want to note that each campus has unique processes that will be followed as part of our shared governance process. These are recommendations that various campus committees will vet and consider.
At UNL, the initial campus proposals include:
- Closing the Haskell Ag Research and Extension Center in Concord.
- Reducing the Rural Futures Institute budget by $1 million.
- Eliminating the Bachelor of Science in electronics engineering program.
- Eliminating the Bachelor of Arts and Masters of Arts in art history programs.
- Eliminating two teacherӰԭs certification programs: one in business, marketing and information technology; and the other in French, Latin and Russian language education.
- And eliminating bachelorӰԭs, masterӰԭs and doctoral degrees in geography.
At UNMC, the initial campus proposals include:
- Eliminating the Munroe-Meyer Institute Developmental Neuroscience Division.
- Eliminating the Community-Oriented Primary Care concentration in the College of Public Health
- Eliminating the Gerontology Clinical Specialist track in the Master of Science in Nursing program.
- Eliminating the Masters in Forensic Science program.
- Consolidating College of Medicine faculty and support staff.
- Consolidating nursing didactic offsite courses in Kearney, Norfolk and Scottsbluff.
- Consolidating dental hygiene didactic offsite courses in Gering/Scottsbluff.
- Eliminating research faculty, fellows and staff positions in the College of Pharmacy.
- Eliminating research faculty positions in the Fred & Pamela Buffett Cancer Center.
- Eliminating research faculty and staff positions in the College of Public Health.
At UNO, the initial campus proposals include:
- Eliminating the Career Services Office in the College of Business.
- Reducing continuing studies at Offutt Air Force Base by 75 percent.
- Closing one or more rural sites Ӱԭ Scottsbluff, Chadron or North Platte Ӱԭ of the Nebraska Business Development Center.
- Eliminating program support for KVNO radio.
- Eliminating faculty lines in key workforce areas, including finance in the College of Business and social work in the College of Public Affairs and Community Service.
And at UNK, initial campus proposals include:
- Merging the College of Fine Arts and Humanities and the College of Natural and Social Sciences.
- Eliminating the menӰԭs baseball, tennis and golf programs.
- Reducing the police force by one officer, to nine instead of 10.
- And eliminating the driver education educatorsӰԭ program.
It is difficult for me to capture the full impact of these cuts.
In numbers alone, they will impact approximately 100 FTEs. They will upend dozens of lives and they will reduce the number of people living in our communities, buying groceries at local stores, and sending their children to our schools.
Our momentum in producing 11,000 new graduates for the workforce each year will be impacted. We will have to work that much harder to maintain our record of returning six dollars for every one dollar you invest in us. We will have to retreat at the very time we are becoming a global powerhouse in feeding the world, keeping our warfighters safe and treating cancer.
If the numbers donӰԭt resonate, let me try to articulate the very real ways these cuts will impact people in your backyards.
Earlier I mentioned that we are losing positions at the Buffett Cancer Center and the College of Public Health. Of all the academic health science centers in the country, we are ranked 11th overall and fourth in quality and safety of care. We are in essence the Ӱԭsafety netӰԭ hospital in Nebraska.
Yet cancer rates in our state are significantly higher than the national average.
We are the highest in the United States in age-adjusted prevalence of cancer in men and No. 14 among women. These are driven by unusually high rates of colorectal cancer, lymphoma, leukemia, brain tumors, esophageal cancer and kidney cancer.
It is particularly painful to know that Nebraska has one of the highest rates of pediatric cancer in the country and the second-highest rate of pediatric brain cancer. The incidence of childhood tumors in Nebraska has been increasing over the past decade.
We rank low in early cancer detection. We have been unable to provide adequate colorectal cancer screening. We are 16th-lowest in the country in mammographic screening. A direct result is an abnormally high incidence of breast cancer, particularly in young women.
And unlike in other parts of the country, the incidence of pancreatic cancer, bladder cancer, malignant skin tumors, liver cancer and thyroid cancer here are increasing Ӱԭ an alarming trend for our state.
I think most Nebraskans would consider these statistics unacceptable.
I point these facts out because the Fred & Pamela Buffett Cancer Center, the boldest public-private partnership in Nebraska history, has worked hard to obtain National Cancer Center Institute designation and is now poised to achieve the highest possible level, known as a Comprehensive National Cancer Center Institute.
This requires robust upstream research and treatment efforts in population health, which is primarily focused on the upstream determinants of causes, early detection, screening and treatment. We canӰԭt achieve Comprehensive Cancer Center designation without hiring population health cancer researchers. But our current fiscal issues mean we can't afford to do that. ThatӰԭs a huge negative for economic development in our state Ӱԭ and it will markedly impede our ability to recruit and retain faculty in the future.
Much more importantly, itӰԭs a blow to every Nebraskan Ӱԭ and this is 1 out of every 2 of us Ӱԭ who will at some point in their lifetime hear the words, ӰԭYou have cancer.Ӱԭ
Senators, we have some of the best cancer doctors in the nation right here in Nebraska who are working day and night to find answers to the statistics I just gave. But if we donӰԭt invest, the numbers arenӰԭt going to improve.
Meanwhile, more of our neighbors Ӱԭ more of our children Ӱԭ will die from this awful disease.
Cuts mean we have had to tell our UNK police chief that he must do the same work of keeping our kids safe with one less officer.
The cuts mean a $1 million hit to Concord, Nebraska, alone Ӱԭ not to mention the loss of an ag and extension lab that has done important work in driving innovation in our stateӰԭs No. 1 industry.
UNK has been playing baseball since 1906. With these cuts, that tradition will end.
The cuts mean less career services support for UNO students Ӱԭ the same young people we would hope to welcome into our workforce. And we will see decreased access to the Omaha business community for our business students.
With reduced support for our Offutt Air Force Base programs, our position as a national leader in serving the needs of military learners will be threatened.
Put simply, budget cuts mean that your Ӱԭ would be less able to contribute to the goal we all share to grow our state. They mean that the future of Nebraska Ӱԭ the future for our children and childrenӰԭs children Ӱԭ looks different than it otherwise would.
And these are not the full scope of what we would be forced to do if you and the Legislature adopt the GovernorӰԭs proposal. The list I just gave you totals slightly more than $9 million. We would still have more than $14 million to go. The decisions wonӰԭt get any easier.
And when we consider the unavoidable cost increases coming in the next biennium, I donӰԭt see an end to these extraordinarily painful conversations unless you, our elected leaders, decide that higher education, and all the individual and economic promises it brings, is a priority for Nebraska.
So today, I am asking you to limit future damage to your Ӱԭ and restore our base funding to $580 million in 2018-19. I am asking you to similarly restore funding for all of public higher education in Nebraska.
Everyone IӰԭve talked to is optimistic that the next revenue forecast will be brighter. Assuming thatӰԭs the case, shouldnӰԭt we declare that higher education is worthy of investment? ArenӰԭt our 53,000 students, our talented employees, our 187,000 alumni in the state, and our generous private partners important enough to wait before finalizing cuts that would halt our trajectory? DonӰԭt we want to send the right message to the young people, the faculty and the companies we are trying to recruit in this hyper-competitive environment?
And even if the forecast doesnӰԭt improve in February, wouldnӰԭt a special legislative session in August or September, when we know more about the stateӰԭs financial picture, be preferable to imposing cuts now that would do long-term harm to the institutions that can help you grow our state out of this fiscal challenge?
Senators, I am asking you to make a choice about the future of Nebraska.
If we donӰԭt figure out a way to grow our state, to provide opportunities for our children and grandchildren and compete in a global economy, weӰԭre in trouble. There will be no money for tax relief, there will be no money for K-12 education, and there will be no dollars to help the people who need assistance. There are those who want to divide us, but we need to unify this state. The folks here today understand that there is a critical linkage between education, public-private partnerships and the future of Nebraska. We must work together, all of us, and chart a plan for growth.
The proposed cuts on top of the previous cuts are sending the wrong message at a time when Nebraska has great momentum. Even the headlines in the past several days are damaging our efforts not only in the recruitment and retention of students, athletes, researchers and faculty, but also in how Nebraska is viewed by those on the outside looking in. I hope you will decide that the Ӱԭ of Nebraska is a priority for our state.
Thank you for your time. IӰԭd be pleased to respond to your questions.