The UM System is in a "strong position to manage financial uncertainty," CFO Ryan Rapp said at the UM Board of Curators' meeting Thursday.
The VP of Finance presented the FY2017 financial status report at the curators' two-day meeting in Kansas City.
Rapp outlined the positives and negatives from FY2017. The positives include healthcare growth, growth in grants and contracts and a strong investment performance. The negatives include pressure on benefit liability growth and a decline in academically driven revenue (i.e. tuition and state appropriations).
"We have a diverse source of operating revenues that gives us flexibility in how we respond to the challenges we face," Rapp said, adding that investment performance was the primary driver for improvement.
Rapp said the UM System has been executing a one-year budget for the past decade. He said they now need to think about a longer planning cycle.
Rapp shared some of the key drivers over the next five years, including:
- flat to declining state support
- limits on tuition increase
- enrollment pressures
- reduction in administrative costs
- increased productivity
He said the required investments are faculty and staff salaries, scholarships and research.
"It's not just a matter of cutting our way there. There's going to be multiple solutions," Rapp said.
Faculty and staff salaries came up numerous times during Thursday's meeting. Curators, as well as President Choi, were in agreement that increases in faculty and staff salaries needs to be a top priority.
"Much of this cutting is because we recognize the value of our faculty and we want to increase their salaries," Curator Steelman said. "Bringing those really talented teachers is good for the whole state and that’s a competitive business. There are other institutions. We have to compete in salary and we haven’t been as competitive as we need to be. That’s going to change."
Due to budget constraints, Rapp said the university also needs to make smart and strategic decisions.
"We need to have a more disciplined approach to what we will and won't invest in."