MEMORANDUM

To: NJIT Faculty, Staff and Students

From: Robert A. Altenkirch

Date: Monday, March 16, 2009

Subject: FY09 and FY10 Budget Update

On March 10, Governor Corzine delivered his FY2010 Budget Address to a joint session of the Legislature. A text of the speech and the FY2010 Budget in Brief document can be found at http://www.nj.gov/governor/home/budget10/.

As you know from media accounts, the US, and New Jersey, are facing an economic crisis, the reasons for which have also been reported in the media. During current FY2009, the State projects a $3 billion shortfall in its revenue to support the expenditure budget of $33 billion established July 1, 2008. That shortfall is being addressed through a number of approaches, including a mid-year reduction in the FY2009 public higher education budget that for NJIT translates to a loss of $850,000 in expected revenue. This reduction is being covered through a combination of drawing on the budgeted reserve funds and holding a number of vacant positions vacant for a number of the remaining months of FY2009.

For FY2010, the State’s base revenue projections are $29 billion.  However, the initial FY2010 budget, which is the FY2009 adjusted State appropriation plus projected growth, totals $36 billion. This $7 billion shortfall in the coming fiscal year is proposed to be addressed through a combination of a “wage freeze and a furlough program for State employees,” changes in tax policy to enhance revenue, use of federal stimulus money, and eliminating or reducing projected expenditure growth. The State budget for FY2010 is projected to be about $30 billion, $3 billion less than the original State FY2009 budget.

For public higher education, excluding UMDNJ, a 5.0% reduction in the base appropriation, on average, is proposed for FY2010. Further, NJIT’s FY2010 recommended appropriation is less an FY2009 out-of-state enrollment penalty, amounting to 1.7% of the base appropriation, that had not been accounted for in FY2009. There appears to be no out-of-state enrollment penalty for FY2010.   The overall base reduction to NJIT amounts to $3 million out of a base appropriation of $45.1 million, or 6.7%, resulting in a proposed State appropriation of $42.1 million, totaling about 20% of revenues to NJIT exclusive of restricted program fund revenues.

In addition to the reduced appropriation, there is no funding recommended for FY2010 salary increases for public higher education. With that, and language in the FY2010 Budget in Brief that proposed salary freezes apply to “public employees including colleges,” we can interpret that the proposed wage freeze for State employees is intended to apply to public college and university employees. The status of any furlough program for State employees as it might apply to public college and university employees is not spelled out in the FY2010 Budget in Brief.

We began developing an FY2010 budget two months ago based on a set of assumptions, which will be adjusted now that the Governor has proposed an FY2010 budget. There is little we can say definitively at this point beyond what is outlined above other than FY2010 will be a difficult budget year on the heels of a number of years of State appropriation reductions.  We will keep you posted as the State budget gets solidified in the Legislative process and we begin to hone in on our strategies for finalizing a balanced FY2010 budget.

Thanks,

Bob