Testimony to the Appropriations Committee, 2015-17 biennial budget request

Chairman Mello and members of the Appropriations Committee, thank you for the opportunity to be with you this afternoon. I am Dr. Jim Linder (L-I-N-D-E-R), interim president of the University of Nebraska, and I am pleased to join Regent Phares in speaking in support of the university’s budget request. I’d like to spend a few minutes reviewing our request, and then I will answer any questions you may have.

My interactions with the university are diverse and long-term. I graduated from UNMC; subsequently as a faculty member I taught both undergraduate and graduate students, provided clinical service and outreach, did research and served in administration. I’ve also been fortunate to see how our family’s personal philanthropic involvement benefits students and academic programs. This is our university, the university belonging to everyone in this room, and I am proud of what it does for Nebraska.

Regent Phares stated the highest priority of the Board and the University of Nebraska is affordable excellence. Affordable in that we want all qualified Nebraskans to have the opportunity to benefit from higher education. And Excellence in offering programs that will allow our students to become the next generation of leaders in Nebraska. Today I am asking you to support a budget that would allow the university to do three things to advance affordable, excellent education on behalf of the people of Nebraska.

One, invest in our core needs: salaries and benefits, utilities, IT, and facility operations and maintenance. That first item, employee compensation, is by far the largest component of our operating budget and is fundamental to recruiting and retaining talented faculty and staff who teach our students, perform research and deliver essential services. Unfortunately we are not making meaningful progress toward the Board’s goal of paying our employees in line with market averages, especially at UNL and UNMC. A 3 percent increase in our salary pool, which is consistent with what the faculty collective bargaining units at UNO and UNK have negotiated, would help us “keep up” with our peers, most of whom are planning similar increases for the coming year. 

Two, make select strategic investments that would benefit our students and faculty. These include Collegebound Nebraska, our need-based tuition assistance program; initiatives to expand college-going among underrepresented students; and a salary “catch-up” effort, equivalent to 1 percent of our salary pool, to address some of the most significant competitive gaps.

And three, move forward on exciting initiatives that will grow Nebraska’s economy, meet workforce needs, attract talent to our state, and expand employment opportunities for our young people. This part of our request is captured in LB 154, so I will speak to it in greater detail a bit later. For the moment I will focus on the operational portion of our request.

We are fortunate in Nebraska to have enjoyed strong support for our state’s only public university. During the recent economic downturn, when many public universities experienced damaging budget cuts, causing students to bear higher tuition and greater debt, Nebraska was able to advance due in part to the stable base of state support provided by the state. We are incredibly grateful to policymakers — and members of this Committee in particular — for their long history of recognizing that the university is part of the fabric that makes our state strong.

Today the university is doing more than ever to serve the people of Nebraska and grow the state’s economy. Enrollment is at its highest point in more than two decades, and we are seeing impressive growth in areas critical to Nebraska’s workforce: agriculture, engineering, information technology, health care and business. Our students are increasingly diverse, and we have efforts to increase college-going among low-income, minority, first-generation and rural students. We seek for students to promptly complete their degrees with minimal debt, so they can enter the workforce. This has been aided by our use of new technologies that provide distance education to thousands of Nebraskans. The work is ongoing, but there are plenty of success stories. As one example, in the College of Agricultural Sciences and Natural Resources, more than 90 percent of students have their next step in place at the time of their graduation.

The research of our faculty is improving the quality of life for people in Nebraska and around the world. We are putting our talents and resources to work to address the significant global challenges of the day: hunger, poverty, cancer and disease, climate change, national security. In recent years we have launched new initiatives, engaging faculty on all four campuses and involving partners in the state and beyond, that focus on some of these challenges. These include the Robert B. Daugherty Water for Food Institute, the Buffett Early Childhood Institute, the National Strategic Research Institute and the Rural Futures Institute. Through these and other initiatives, the University of Nebraska has a seat at the table in some of the most important global conversations. Just a few weeks ago the Omaha World-Herald featured a team of UNO experts who are working with the Department of Defense on anti-terrorism efforts. The work of UNMC and Nebraska Medicine in responding to the Ebola crisis has been widely documented. Our faculties are leading the way in determining how to meet a global demand for food that will double by 2050. And I could go on.

Our research brings economic benefits. The most recent data from the Association of University Technology Managers show that the University of Nebraska is in the top 5 percent of institutions nationally in the number of startup companies created. And we are in the top 20 percent for inventions, patents, licenses and licensing revenue. All four of our campuses have, and are developing more, public-private partnerships that leverage the work of our faculty to create more businesses and jobs, attract talent to our state, and expand opportunities for young people. The Legislature has been a partner in some of these key efforts… the nursing and allied health expansion at Kearney, Nebraska Innovation Campus, and the Fred & Pamela Buffett Cancer Center, which, even before it is finished, is becoming a talent magnet for Nebraska. More on some of these later, as we discuss LB 154.

That is the briefest snapshot of our momentum. The University of Nebraska is in a strong position today thanks to the hard work of many, the generosity of alumni and friends, and your support and partnership, based on our shared goals for education and economic competitiveness. What’s important is that we can do even more to serve Nebraskans, if the right investments are made.

I want to be clear. We understand that this Committee is balancing many important priorities. We are grateful for the support you have provided in your preliminary recommendation. But I would ask you to consider an investment in the University of Nebraska that meets our core needs and allows us to make real progress in areas that we are convinced will benefit our state.

A few quick comments about the Committee’s initial budget. First, you have recommended that any unexpended state appropriations at the end of the biennium not be re-appropriated. I would note that we spend our appropriations each year, except for funds encumbered for near-term recruitment or programs.

Second, I’m pleased the Committee has reaffirmed funding for the Veterinary Diagnostic Center, an important component of our Building a Healthier Nebraska partnership. The facility is expected to be completed in 2017. LB 660 would skip the 2015-16 payment and extend the financing until 2024. Our preference is to restore funding for 2015-16, but at a minimum, the future funding figure for the project currently included in LB 660 appears inaccurate and needs to be adjusted.

State support is the vital ingredient in meeting the core needs of the university. As you know, there are two main funding sources that support our general operations: state appropriations and tuition. These funds keep the University of Nebraska running. They pay for ongoing operation and maintenance of our facilities — important state assets where teaching and research take place. For example, we need funds to operate and maintain the new Health Science Education Complex on the UNK campus so we can open the facility alter this year. And the bulk of our operating budget, 80 percent, goes toward salaries and benefits. We are competing in a global market to attract and retain our employees – the people who teach our students, who conduct groundbreaking research, and perform outreach in every county of the state.

My view is that we should not ask Nebraska students and families to bear an undue share of the cost. For the past decade the University of Nebraska has implemented moderate and predictable tuition increases, including a tuition freeze for all Nebraska students in the current biennium that was made possible by your support. We are very proud of the results. Tuition at each of our campuses is well below the peer average; UNL’s tuition is the lowest in the Big Ten. Most of our students, on average, graduate with less debt than their peers. Our student loan default rates are well below the national averages. In part because of private philanthropy, more than half of undergraduates at the University of Nebraska receive financial aid, including 7,000 students who, because of means, qualify to pay no tuition through our Collegebound Nebraska program. Many of these are first generation college attendees.

Today it is more important than ever to expand access to higher education to even more students. Our economic competitiveness depends on it. In just a few years, 71 percent of all jobs in Nebraska will require postsecondary education. Many of the fastest-growing jobs are in the STEM and health care fields. The Pew Research Center has found that the earnings gap between bachelor’s degree recipient and a high school graduate has never been greater. And by almost every economic measure — income, employment rate, likelihood of poverty — the cost of not going to college is rising. The facts are clear. If we want to meet the workforce needs of the future, and keep our economy strong, we must ensure that a college education is within reach for all students who are qualified and want to attend. Maintaining low tuition rates compared to our peers and providing adequate financial aid are two fundamental ways to do that. Our plans for tuition will be a discussion with the Regents, once we know what our state appropriations will be. I can tell you that our commitment to moderate and predictable increases remains.

I have spent the past few minutes talking about opportunities for investment. Let me say a word about a topic that is equally important: cost control. We must be accountable with the resources you entrust to us, and I want to assure you we take this responsibility seriously. The University of Nebraska does much more today than when I was a student, even while receiving a smaller percentage of the state’s budget. We have managed to grow our research enterprise by winning grants and contracts. We have kept staffing and administrative spending to levels that are lower than our peer institutions. The number of university employees funded from tax and tuition dollars has remained relatively flat since 2000, despite significant growth in enrollment and research activity, and we have been successful in growing jobs using federal, private and other non-state funds. In fact, currently 42 percent of university employees, representing $326 million in wages, are funded from sources other than tax and tuition dollars — an impact that might not exist without the university’s ability to leverage non-tax dollars. And, since 2000 we have made $80 million in budget reallocations, which recur annually, and our efforts to find more savings are ongoing.

Mr. Chairman, members of the Committee, thank you for your attention today. I will close by saying I feel honored to be serving as Interim President at such an exciting time in the history of the University of Nebraska. Our success is rooted in the support of policymakers who have generously invested in affordable, excellent higher education. I thank you for that support, and ask you to continue that partnership as we work to build a bright future for Nebraska.

With that, I would be pleased to respond to your questions.

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