October 14, 2008
Dear Members of the University Community:
The state of our nation’s–and the world’s–economy is much on people’s minds these days. The University experienced firsthand some of the effects of the Wall Street investment jitters when we decided a few weeks ago to initiate legal action against Northern Trust of Chicago, the bank that held in custody a significant portion of our investment portfolio. Thanks to some expert work on the part of the University’s Treasury Office and our investment team, we were able to avoid significant loss and are back on track in managing and protecting the University’s assets. The approach the University takes to managing our assets enables us to weather a prolonged period of volatile and uncertain capital markets.
The nation’s credit crunch and its impact on the economy are being felt everywhere, including Washington state, whose economy had been rolling along at a fairly healthy clip. But the effects of the nationwide economic slowdown are being seen and felt here as well, and recent revenue projections in our state have shown that we, too, are in for significantly tighter economic times. We expect the 2009-11 state budget to be under considerable pressure, and we will be working very hard to preserve the University’s budget and fiscal health.
In the meantime, the first signs of the economic slowdown have appeared. Last week, as part of her effort to slow state spending in the current biennium and recapture funds from all state agencies, Governor Gregoire ordered $4 million in further budget reductions from the University and other higher education institutions for the remainder of this biennium (June 30). These reductions are in addition to the $36 million she previously directed state public higher education to save through a hiring freeze. For the University, our total budget reduction from these directives is approximately $10 million from our fiscal year 2009 state general fund budget of $402 million. We will be looking for ways to identify this amount of funding while at the same time protecting the University’s core educational mission.
The past four years have been good for the University, and we have prospered in a robust economy. The outlook for the next biennium is different, and we are determined to preserve the progress we have made as we enter leaner times. I will continue to keep you informed of how we are doing and what our prospects are as we move forward.
Mark A. Emmert