The University faces the possibility of its first budget deficit in 15 years, a $1 million shortfall caused by recent cuts in state funding, the University Trustees were told yesterday. At a meeting of the Trustees' Budget and Finance Committee, officials revealed that the 3.5 percent cut in appropriations to the University consumed the entire $150,000 contigency fund that had built into the budget. The Trustees did not discuss specific ways to remedy the problem, but committee chairperson Robert Fox said the deficit will force the University to "squeeze costs." During the University's financial problems during the late 1970s, officials were forced to spend a portion of the University's endowment, which is normally used only to produce interest. Senior Vice President Marna Whittington said that yesterday's prediction will set off a new round of financial planning designed to balance the University's budget by the end of the fiscal year next June. "We're working on a strategy to get it into balance," Whittington said. She also said that she thought it was important for the University to operate in the black. "It affects how people look at you," she explained, because the University's financial position contributes to how it is perceived by potential donors and by banks, on which it depends for credit. Robert Fox, the chairperson of the committee, said that the Trustees will meet again in March to determine what they will do to meet the budget constraint. "If we're going to be looking at increasing costs and expenses," he said yesterday, then "everything is going to be impacted." "We're going to plan to balance the budget," he said. Fox said that his committee would meet with the University's budget office to determine in which areas costs could be cut. The committee would then make a recommendation to the Trustees for approval. This decision would be made at the March meeting, he said. Rick Nahm, the director of University development said funds from the University's current billion dollar capital campaign would be used. He said that instead the University will probably tap the capital reserves, funds used for future maintenance, like fixing roofs and sidewalks. Officials also said they were concerned about falling state appropriations to the University for next year. Whittington said judging by the current situation, there is "good potential that this does not bode well for next year." Nahm said that while the Univerity has operated with a balanced budget for the last 15 years, it is not unusual for universities to have budget deficits. Staff Writer Emily Culbertson contributed to this story.Comments powered by Disqus
Please note All comments are eligible for publication in The Daily Pennsylvanian.