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UT Board of Trustees Kicks Off Discussion on Multi-Year Initiative

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KNOXVILLE – Benchmarking, economic forecasts and hypothetical strategies to overcome declining state appropriations and make the University of Tennessee more effective, efficient and entrepreneurial was the subject of the UT Board of Trustees’ Wednesday workshop.

UT President Joe DiPietro had set the stage for Wednesday’s discussion about funding at the trustees’ annual meeting in June. The board’s workshop covered the issue more in depth and allowed trustees to ask questions. The purpose of the discussion was not to devise strategy but gain a better understanding of the issue in order to plan a multi-year initiative.

Projections are that the University could face a gap in state funding of more than $150 million over the next decade–assuming the University could limit tuition increases to 3 percent annually, inflation did not exceed 3 percent annually, and state funding did not increase. To cover such a gap, tuition would need to be compounded to 55 percent or 4.5 percent each year.

DiPietro has said that continuing to increase tuition to cover declining state appropriations is a business model that is struggling, and it is not sustainable to continue to pass along additional costs to students and their families. The University has three options: take no action, get smaller or start on a bold initiative to fix the problem, he said.

“We own this problem. We have to fix it,” DiPietro told trustees. “Change is normally painful for everybody. We will seek broad input. We will make tough decisions.”

Bill Fox, director of the Center for Business and Economic Research at UT Knoxville, provided the trustees a forecast of state revenues, and each chancellor presented initial thoughts on ways to streamline operations and increase revenues.

The trustees looked at data comparisons with other university systems and heard the president talk about ways other university systems and universities have addressed similar funding issues. UT has been using cost-saving measures since the 2008-09 recession and identifying lean processes. Ideas pitched included increasing enrollment of out-of-state students to raise revenue, reviewing academic portfolios, and analyzing better uses of campuses’ space.

“The current funding model of the University of Tennessee is perilously close to broken. Given the fiscal constraints on the state budget, which includes a structural budget deficit, it is unlikely that significant increases in state appropriation to the University of Tennessee will be forthcoming unless the sense of priority for funding higher education becomes widespread and improves. Thus, it is incumbent upon the University to be become more entrepreneurial, efficient and effective, by enhancing existing revenue streams, reducing expenditures, and reallocating existing resources to better achieve system/campus goals and objectives,” according to a UT benchmarking analysis submitted to the trustees.

The board next meets Oct. 2-3, when the discussion will continue. A more set strategy is expected to be revealed at the winter meeting Feb. 25-26 in Memphis.

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