I write to update you about strategies we are considering to prevent administering such a significant cut to all units across the board by July 1, 2001. We are seeking management tools appropriate to an academic community that will enable us to avoid imposing a large, across-the-board cut on July 1, 2001, and to provide adequate time for us to consider strategic adjustments to our budgets.

If we were required to absorb a cut of this magnitude as of July 1, 2001, our only recourse would be to eliminate positions. As the sole solution, this method is not acceptable to us; therefore, we are investigating a combination of institutional measures--including reductions in force, reductions in campus services, furloughs, internal budget reallocations, tuition increases, and restored enrollment--to minimize the impact of the budget cut.

While the management tools we select will be applied to all campuses, each of our eight campuses will also require additional campus-specific plans to absorb the cut. We will begin meeting with these campuses in the next few weeks to discuss possible strategies to ensure equity and operations.

At USC Columbia, for example, the following institutional measures are necessary to help offset the impact of the budget cut:

1.Increasing tuition to the extent permitted by state guidelines. A new legislative proviso under consideration limits tuition increases to $125 per semester ($250 per year) above the Higher Education Price Index (HEPI), which is currently 3.75 percent. However, the proviso also imposes a freeze on tuition until the HEPI collectively and ultimately exceeds the percentage represented by the $250 increase. This contingency is punitive in that it does not consider future inflation or the reality that tuition increases provide the only revenue source for us to cover unfunded portions of state-mandated salary and fringe benefit increases. Even as we work for relief from the punitive aspects of the current proviso, a maximum tuition increase at this time is crucial to reducing the overall cut to the University.

2. Restoring freshman enrollment to 1993 levels without returning the entire student population to 1993 levels, which means increasing the freshman class by approximately 500 students. We had already planned to increase freshman enrollment at USC Columbia for the fall 2001 semester, and with applications nearly 15 percent above last year’s level, I believe we can increase the number of students without sacrificing the quality we have worked so hard to achieve.

These two measures and the net effect of non-discretionary, fixed cost increases (i.e., utilities and health insurance) will leave a total cut of approximately $14 million for USC Columbia. Without applying the management tools being considered, this $14 million would result in an eight-percent budget cut spread across all administrative and academic units.

Because USC Columbia endured the painful-yet-productive internal reallocation process just seven years ago, we are hopeful that an appropriate combination of management tools will reduce to less than eight percent the cut we all will be required to sustain. At this time, until we identify these management tools, I have asked department chairs and directors to consider how their units would implement a budget cut of as much as eight percent, effective July 1, 2001.

Many have expressed the need for latitude in dealing with budget cuts, and we are working to provide this latitude. The hiring freeze will remain in effect throughout this fiscal year, and I encourage all of you to continue to observe stringent standards on equipment purchases and travel expenditures. As we face this budget crisis, I also hope that you will keep the following in mind: All units will be permitted to carry forward unexpended "A" and "E" funds in their budget from this fiscal year to next fiscal year without the five-percent limitation so that savings from the current year can help offset the impending budget cut.

While the entire budget cut will be a permanent reduction in the recurring base budget, the carry-forward balances can help address the budget cut in FY02. We must manage this budget cut without penalizing students or compromising the academic mission of the University. Thus, each academic unit will be expected to remain stable in terms of enrollment productivity, and increasing summer school courses may help generate new revenue.

Ninety-eight percent of the gifts received through our successful Capital Campaign are donated to specific academic programs. These gifts cannot be used to offset state support or general operating shortfalls. After the full House of Representatives considers the budget in mid-March, the Senate will begin its deliberations. Although the budget the House approves will determine to a large degree the final budget, letters, phone calls, and e-mails to your senator at this critical juncture may help USC.

We are still working diligently to reduce the budget cut and to seek additional revenue for operational or capital projects. Yesterday, the House Ways and Means Committee recommended a $206 million of a bond bill for specific capital improvements for the state’s colleges and universities.

Of that total, $47.5 million was earmarked for USC projects, including for USC Columbia: $10 million for the School of Law's new building (completing the state's $20 million portion for this project), $9 million for the renovations to LeConte College, and $11 million for renovations to the buildings on Gibbes Greene (Sloan and Callcott buildings). Also included in the bond bill is $3 million for USC Aiken's Convocation Center (totaling $9 million authorized for this project) and $14.5 million for the Information Resource Center at USC Spartanburg. As you may recall, capital projects are not funded through general operating appropriations (those appropriations affected by the cuts).

Instead, capital projects are funded by bonds, private donations, student fees, athletics funds, and other government sources. I hope you will express support for the capital projects/bond bill that the full House will soon consider.

I appreciate your patience, good citizenship, and efforts to help the University successfully weather this difficult time. As soon as we receive additional information, I will forward it to you. Thank you.