Projected budget deficit zooms!!! Brodhead unlikely to make three year goal of a sustainable budget.

✔ Fact Checker here

My fellow Dukies, the financial health of this university is not getting better. It is not staying the same. It is getting worse.

And any member of the faculty or any administrator who even suggests cuts like those made to the Arts and Sciences Research budget will be restored needs a wake up call.

Read, please, the words of Peter the Provost, who was "interviewed" by a Duke PR man for November 2 article in the employee publication Working@Duke:

"... we have people who still believe that someday in the not too distant future, things will just go back to the way they were. I don't think that's going to happen. We're now in the new normal. We will need to continue to operate in much the same way as we have the last couple years. There are lots of places where we've made changes, and that will be the new normal."

This same article -- little noticed on campus, not picked up by the Chronicle, but luckily a Deputy Fact Checker was alert -- revealed the red ink in the coming fiscal year (starting July 1, 2012) is not the $40 million that President Brodhead has been talking about. Exec VP Trask said that total does not include any money to end the two-year salary freeze nor to pay for soaring fringe benefit costs.

(Loyal Readers will recall that the freeze does not affect employees at Duke Health, which has its own revenue stream from patients. But FC can report that at Duke Health, the highest administrators agreed to have their personal contracts recast and their pay frozen, a previously unknown fact)

President Brodhead said in an e-mail to staff on September 22 that the new budget most likely would have a "modest" pay hike. FC assumed he meant this was within the boundaries of our income, rather than as it now appears, only adding to the deficit that will have to be covered by another special appropriation from our endowment.

The new total projected deficit: $70 million. As bad as this year.

More ominously, that red ink number -- coupled with the continuing problems in Arts and Sciences -- mean that the fiscal crisis will extend into a fourth year, and not be resolved by three years of staging to "a smaller Duke."

✔From Trask, some peaks into the future:

"We are going to have to have some conversations about benefits. Our benefits package is valued at the high-end among other universities and is well above the rest of the market. I'm not sure we can sustain that in the future."

"We probably need to pull out about 100 more positions by (June 30, 2012). It's unlikely that every person who does leave will be in positions that we will be able to do without. So there will need to be some rearrangement of people and responsibilities to help deal with that." Translation: more layoffs. Duke has never revealed the total number of people who have been laid off so far in the fiscal meltdown.

And from Peter the Provost: "The increasing expense for total compensation -- pay and benefits -- is going to run up against some of our programmatic goals." Translation: we cut the grounds keepers, we cut the thermostats, we started using two sides of paper. Programmatic goals -- additional tough decisions about the academic core -- are next.

✔Trask said "the single biggest thing we have left" is to try to save on university purchases, which run $650 million a year. Everything from paper towels to laboratory test tubes to light bulbs and vehicles.

Duke has recently contracted with an outside firm that has a program that sounds like Google Shopping; it leads us to the lowest cost supplier of everything we need. It's not known if suppliers will be paying the outside firm -- CyQuest of Cary NC -- to be listed, or for preferential positions.

The outside firm will be costing Duke -- not saving -- in the next fiscal year as it gets up to steam. Then Trask is hoping... well praying might be more accurate... for savings. Sheepishly, he mentioned five percent savings, or $30 million a year.

Trask may be skeptical though he's going along with buying the program, paying its annual fees, and installing its hardware. In a October 22 story, the Chronicle quoted him: “Don’t count on $30 million yet.”

As Trask told Working@Duke "interview," "The big push will be on the procurement side. We know we have too many transactions where we don't get the best pricing we could get."

✔ In this so-called "interview" by a PR man for Working@Duke (Trask and Lange ought to sit down with Fact Checker for a real interview!!) and in other comments, FC can report one area Duke is really gunning for: computer purchases.

After discovering you can get a better price if the entire university buys in bulk rather than department by department each buying a couple -- you need a PhD to figure that out -- Duke has now concluded that everyone is ordering with bells and whistles as if they were doing atomic research. The push is on to strip down, with one estimate showing $250,000 savings if new rules had been enforced in the last three months alone.

✔✔ There are some huge unknowns in the new budget:

A) Can we sustain the rate of spending from our endowment? We plan on a long-term return of 8.5 percent, but in the past decade it's only been 6.5 percent. If we have to lower our spending, the new crisis will be every bit as tough as the current one.

B) How much of federal stimulus funds -- Duke got more than $200 million -- expire this year, and how much next year.

C) How much will Republicans succeed in cutting university research in general. There's a short-visioned buffoon named Ralph Hall, congressman from Texas, who will become, in all probability, head of the House science committee with authority over the key budgets for the National Science Foundation and the Energy Dept's Office of Science. He wants to hold spending down to the current level for three years -- wiping out Democratic plans for an increase -- and during the three years figure out how deeper cuts can be made. The federal government is the largest supporter of Duke, providing far more money than tuition, or our own endowment, or lackluster contributions.

✔ Trask's estimate of the amount of money needed to break the two-year-old wage freeze is interesting, in that it points to a very very modest increase. With most of the pot drained by fringe benefits, Fact Checker made this calculation: in some instances, people who earned less than $50,000 and thus got a $1,000 one shot payment in the first year of the freeze, and people who earned less than $80,000 and thus got a one shot payment of $1,000 in the second year, may find their increases smaller than $1,000.

Their sole consolation is that the increases will be added to their bases, which are unlikely ever to be restored to pre-meltdown levels.

There is no word from the Brodhead Team if lower paid employees will receive a larger slice of the pay hike. As FC has written, their personal budgets were particularly squeezed. They had no where to turn, while members of one of the highest paid faculties in the country had more flexibility. I view this as a very important moral issue.

✔ Lastly I would like to know how come it is on November 12 2010 that we learn the faculty research budget was sliced by 75 percent. All stakeholders deserve to know information like this immediately -- rather than having administrators dribble out what they want, often serving only their own perpetuation.

I am also puzzled by Dean Crumbliss saying “The promise was that those funds would be given back when the University’s situation had improved. I hope that’s next year.”

This conflicts with my understanding of the Duke budget process, where various Deans are given certain allocations -- but they determine what to cut. This indicates to me the 75 percent cut was made by Crumbliss' predecessor, George McLendon, who has departed for Rice.

Have a good weekend@. Go Duke.

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