New Mexico Highlands University regents received a grim briefing last Friday on the financial challenges the school will be facing as it wraps up this fiscal year and prepares a budget for the coming fiscal year that begins July 1.
Max Baca, the university’s interim vice president for finance and administration, told regents that the university would need to trim spending during the current fiscal year by more than $100,000. For the fiscal year that begins on July 1, he said, the university will need to decrease current year spending by $1.2 million.
“We have some tough decisions we’re going to have to grapple with over the next couple of weeks,” Baca said.
He said he had already sent a memo informing the campus community of the possible reductions.
Baca warned that the university will have to increase tuition and fees. He said the university is also looking for ways to save money, which includes the possibility of leaving unfilled vacant positions that aren’t critical.
“We have to look at the budget very carefully,” he said.
The reductions Highlands is facing are largely due to plummeting oil and gas revenues that the state relies on to build its budget.
The $6.2 billion state budget that state lawmakers approved last month reduced funding for most state agencies. Funding for colleges and universities was cut by nearly $20 million.
Baca said House Bill 2, which is the state budget bill, decreased Highland’s state allocation by $830,000. There were also decreases in state funding to such programs as athletics and minority services.
But Baca said state officials are warning that revenues could plunge even further and that agencies should plan accordingly.
“What that means to Highlands is that we have to build a budget that’s $1.2 million less than (the current year’s budget),” he told regents.
According to the Highlands website, the university’s operating expenses are about $63 million,with roughly half of that covered by state appropriations.
“Higher education is going through a very difficult time because the state revenues are still volatile,” Baca said. “It is the mindset in Santa Fe that we have too many schools for our population.”
Highlands President Sam Minner noted that roughly 80 percent of the university’s budget is spent on personnel. He told regents that Highlands would need to look at making cuts there.
He said Highlands will also be looking at low enrollment classes and the university’s portfolio of electives to see if there’s any room for savings there.
“At the very center is the delivery of instruction that allows students to graduate on time, without delay,” Minner said. “That has to be as sacred as possible. Everything else is on the table.”
aca told regents that they would likely be asked to approve a budget during the first week in April.
“It’s going to take a lot of effort from everyone to generate the budget,” he said.
But the news wasn’t all bad. Baca also told regents that lawmakers had included $2.5 million for the Rogers Hall renovation and $111,000 for athletics equipment in the general obligation bond package they approved before adjourning. Voters will be asked to approve that bond package during the November general election.
That funding is restricted and cannot be used to cover operational expenses.
Also at Friday’s meeting, regents were briefed on an Internal Revenue Service audit conducted at Highlands. Baca said that during the audit, the IRS questioned why Highlands wasn’t including the president’s house as a benefit to the president.
Like other New Mexico universities, Highlands provides a house for its president. Besides residing there, the president uses the residence to host gatherings for the university community. The house isn’t on the Highlands campus.
Baca said that under IRS regulations, if the president’s house is on campus, it isn’t considered a taxable benefit.
Due to the unforeseen tax liability, Baca recommended that regents amend Minner’s contract to increase his compensation to cover the tax liability he will be incurring for living in the president’s house.
Regents agreed and voted to increase Minner’s pay by $10,480 to offset the tax liability. His new salary is $242,480.