From: John M. Palms

Subject: Gov. Hodges' Plan to Restore Funds to Higher Education

As you may already know, in a recent meeting with South Carolina college and university presidents at which Chancellor Hallman, Chancellor Stockwell, and I were present, Gov. Hodges declared his intention and presented a plan to exempt higher education from current budget cuts for FY2002.

The Hodges' proposal also would provide funds for technology and research initiatives. Given the challenges South Carolina faces at this time, we are extremely heartened by the governor's plan. Since January, the University has been preparing to face a budget cut. Initially, we were told to anticipate a cut as large as 15 percent. The House of Representatives reduced the anticipated amount of the cut and late last month passed a budget with a cut of nearly 12 percent in general appropriations to the University.

Such a cut would still have severe consequences for USC. In my last letter to you, I explained that we were investigating all possible means for the University to manage such a cut. We were pleased, however, that the House attended to other University needs with its recommendation of a bond bill for capital improvements that included $47.5 million for USC projects.

The governor's plan will require legislative approval, and I hope that you will endorse his plan to restore higher education and voice this support to your representatives and senators. Senate Finance Subcommittees are now considering the state's budget. Until the Senate Finance Committee completes its deliberations, we will not have a formal legislative response to the governor's plan or House-adopted budget.

Please also keep in mind that under the governor's approach the majority of funds we would receive are non-recurring funds. As a result, all measures we have instituted to reduce expenditures'the hiring freeze as well as curtailed travel and purchases'remain in effect. Still, the governor's proposal holds great promise for the coming fiscal year (relieving the immediacy of a devastating budget cut), and it would enable us to prepare appropriately for the FY2003 budget.

This plan would give us the time to conduct during 2001–2002 a thoughtful fiscal review in conjunction with USC's stated goals, a review necessitated by the nation's and state's economic situation and associated funding uncertainties. Only by this measure can we prepare successfully in the event of state revenue shortfalls or flat growth for FY2003.

This budget year has been particularly difficult for our state, and I deeply appreciate your diligence in supporting higher education and the University of South Carolina. Many citizens and students throughout our state have expressed their belief to both the governor and members of the General Assembly that higher education should be spared from any budget cuts.

This collective stand -- especially that of the students at USC and those throughout the stateÑwas extremely effective. If you participated in this effort, thank you on behalf of the University community and higher education as a whole.