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FY 2016 Budget Update
In my Jan. 26 letter regarding Fiscal Year 2015 budget reductions, I said I would share FY 2016 details once the University System of Maryland had made decisions about cuts to be absorbed by each of its institutions. While we won't have these decisions until the General Assembly passes a budget bill this spring, I'd like to update you on what we do know.
Gov. Hogan came into office confronting an FY 2016 structural deficit of $750 million. His budget proposal engages several strategies to eliminate this deficit, including a 2 percent expense reduction across all state agencies and no funding for merit salary increases next year. Additionally, the proposal discontinues (effective July 1, 2015) the 2 percent cost-of-living adjustment that state employees began receiving on Jan. 1.
If passed, these cost-saving measures would shrink the University's FY 2016 budget shortfall, but would not erase it. Spending cuts will therefore be necessary. Fortunately, the budget actions we're taking to close this year's gap of $6.9 million leaves us in a better position to reconcile next year's budget.
Based on the information we have at this time, we're planning to implement an additional $3.5 million cut next fiscal year. That amount can change, of course, depending on the content of the budget bill passed by the legislature in April.
I've directed University leaders to address our fiscal challenges by implementing targeted reductions that will not harm our critical missions or support functions. In some cases, these reductions will result in the elimination of University positions; however, we will strive to make these eliminations as modest as possible.
Once the 2015 legislative session draws to a close and we have definitive information regarding next year's budget, I'll write to you again.
I remain mindful of our exceptionally important work and of the faculty and staff who carry it out every day. I'm deeply grateful for your effort and sacrifice as we balance our budget while keeping the University as strong as ever.
Jay A. Perman, MD