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UNM facing $7.2M deficit, exec says

ALBUQUERQUE, N.M. — A top University of New Mexico financial planner said Tuesday that UNM is facing a deficit of about $7.2 million for the 2015-16 budget year that begins July 1.

Associate Vice President Andrew Cullen of UNM’s Office of Planning, Budget and Analysis told a regents’ committee that a major part of the problem is enrollment, which is expected to remain flat for the near future. Because educating students is the university’s primary function, a decrease in the student body is, by definition, serious.

In the fall 2012 semester, a total of 29,100 students were enrolled; in fall 2013, the number was down to 28,644; in 2014, it dropped again to 27,889. Over the past five years, enrollment is down by just more than 3.02 percent.

For every potential student who does not enroll, UNM loses tuition money and fees. Additionally, a significant portion of the state’s funding formula for higher education is based on enrollment.

“By far, the biggest risk to the University of New Mexico is enrollment,” Cullen told the Board of Regents’ Finance and Facilities Committee.

A special budget committee put together last year by UNM President Bob Frank, the Cost Control Group, is considering a variety of measures to rein in spending without laying people off. However, the group is scrutinizing employee benefits. “Labor has to be on the table,” Cullen said.

The problem is exacerbated by a $42 million reduction in state funding for higher education in recent years. “A lot of the low-hanging fruit is gone,” he said.

To make matters worse, state revenue is down dramatically this year due to sharply declining oil prices.

Committee chairman Jamie Koch asked Executive Vice President for Administration David Harris to put together a “zero-based” budget to be presented at the panel’s meeting next month. Harris said he and Cullen would do just that, to take current proposals to a “greater level of specificity.”

Not all of the $7.2 million stems from low enrollment. The university expects to pay $1.3 million more in health care costs in 2015-16 than this year, and more than $600,000 in higher utility costs.

Specific areas in which UNM hopes to save money include:

  • Labor reduction – attrition through retirement and separation; more efficient scheduling; centralizing information technology to get rid of overlap; and shared service centers.
  • Employee benefits – making sure UNM is within range of standards of other universities; evaluating usage and cost of all benefits; examining the possibility of higher user fees for non-core benefits.
  • Program reductions, particularly in non-academic areas.