A Phased Approach to Budget Realignment

Date:               December 16, 2020
To:                   NMSU Administrative Council
From:              Andy Burke and Renay Scott, BRI Co-Chairs
Subject:           A Phased Approach to Budget Realignment

NMSU’s Instructional and General (I&G) budget comes from two major sources. The first is funding appropriated by the state of New Mexico. The second major source of revenue is tuition and fees that students pay to attend NMSU, which varies depending on student enrollment.

After the economic downturn associated with COVID-19 and a reduction in our budget from the state in June of 2020, NMSU Las Cruces was left with a budget deficit of $11 million dollars, or 6.2% of the I&G budget. This reduction is permanent, meaning that it is in effect this year and into the future. Because enrollment was unchanged from the past year, our I&G budget was reduced by only this $11 million.

Although the budget reductions are permanent, NMSU temporarily paused hiring in the summer of 2020 to reduce expenditures. This allowed the university time to consider the manner, depth and distribution of permanent reductions. After consultation with faculty groups, NMSU administration agreed to a first phase plan to reduce the budgets of academic units by 3.75% and the administrative units by an average of 4.25%, ranging from 2% to 5%.

Additionally, the administration identified the remaining reduction needed through cuts to strategic investments ($0.9M) and moneys that are transferred to other units ($1.6M). The central reductions of $2.5M combined with $2.2M from administrative units, $2.5M from academic units, and estimated fringe benefits of $1.6M accounts for an estimated $8.8M of the required $11M recurring budget reduction. We plan to cover the gap with permanent reductions identified in the second phase of budget realignment.

In addition to the June 2020 budget reductions, the State Legislature warned that future cuts to state-funded budgets are likely. The revenue forecast for New Mexico is currently more optimistic, but it is unclear what effect the pandemic will have on student enrollment. We do expect that the pandemic will affect the enrollment of traditional students out of high school, adult learners, and international students.

We do not currently know how fall enrollment and the state budget will affect our future budgets. Because of these unknowns, the BRI is continuing to look at strategies to realign the budget with strategic priorities set out in LEADS 2025. Additionally, the BRI continues to consider various ways to reduce the budget through efficiencies, consolidation, and improved service in the future.

Second phase decisions will not be made until after April 30, 2021. Directions to academic and administrative units will be provided after review of the January 31 reduction plans.