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By all measures, UNH is extremely efficient in its use of resources, including personnel. In testimony at a budget hearing before the New Hampshire House Finance Committee early this year, university system chancellor-elect Edward MacKay pointed out that spending per student at UNH is 16 percent below the median for comparable universities and 23 percent below the median for the other New England land-grant colleges.

The downside of having an extremely efficient operation is that it is not easy to cut the budget without reducing the range or quality of services when the economy goes into a downward spiral and revenues fall short of projections—which is exactly what happened last year.

The economic downturn cut into UNH's revenue in a number of ways. State funding budgeted for the 2008-09 academic year was cut by $7 million. The value of the UNH endowment, which had stood at $240 million, dropped by about 25 percent, and federal funding for research dropped dramatically. Early this year, budget projections indicated a $9 million shortfall in the university's fiscal year 2010 budget and a $17 million shortfall in 2011.

In a series of messages to the UNH community, Huddleston announced a number of escalating budget-cutting measures. In May 2008, he instituted a hiring freeze and a broad budget review to cut $8 million from the fiscal year 2009 budget. Subsequent measures froze salaries for nonunionized employees making more than $40,000 and restricted expenditures on a variety of expenses, including travel, use of consultants and printing and mailing costs. Finally, in June this year, the president announced that 27 open faculty and staff positions would not be filled, 40 staff positions would be reduced from full- to part-time, and seven staff members would be laid off. "The personnel actions are particularly painful," he wrote. "We promised that the sort of layoffs and other reductions now common at other colleges and universities would be at the far end of steps we would contemplate. Unfortunately, in some of our units, that far end has been reached."

Both the positive and the negative effects of budget cutting are cumulative. A lot of small savings can add up to a substantial sum, but eventually there is not enough left for UNH to keep doing everything it used to do. The intercollegiate athletic program is a good example. "We've cut the operating budget virtually every year since I've been here," says Marty Scarano, who is now in his seventh year as director of intercollegiate athletics. The result is that there are fewer Wildcat teams competing at the varsity level. Two decades ago, the university fielded 30 varsity teams; now the number is 20. One sport after another has been sacrificed so UNH could continue to compete in the others.

"We have a lot of fixed costs and a lot that we can't control," Scarano points out. There are requirements that have to be met to comply with Title IX of the Equal Opportunity in Education Act, other requirements for membership in NCAA Division I, and still others for league memberships. Those aren't optional—if UNH isn't in compliance, it can't compete.

The intercollegiate athletic program is central to UNH's history and character. While it has to be frugal, it also has to be competitive. "There is an expectation that we are going to be excellent in all that we do," Scarano says, and his department generally delivers. UNH teams compete at the highest level and earn national recognition. That's a tradition that the university is determined to preserve, even in a difficult economy, because once lost, it could probably never be regained.

Building maintenance is another area where cost-cutting beyond a certain point becomes self-defeating in the long run. While UNH has been receiving state money for renovating buildings like Kingsbury, DeMeritt and James, the funding has been a one-time allocation. For decades, UNH kept tuition and fees artificially low by postponing maintenance work that really should have been done. As a result, says Dick Cannon, vice president for finance and administration, "there is a tremendous backlog of deferred maintenance in our buildings that involves extra investment to catch up, even as other buildings continue to age. We have to set aside money each and every year to maintain our assets. If we don't, eventually we have to catch up or lose our buildings forever."

The Way Forward

No one at UNH thinks that continuing budget cuts are a long-term solution. The only way forward is to increase UNH revenue from sources other than tuition. That's not easy to accomplish in a slumping economy, but the university is exploring a number of possibilities.

One significant source of income that has shown substantial growth over the past decade is research funding, which contributed almost $99 million to the fiscal-year 2008 budget and is expected to total about $90 million in 2009. Revenue from research has been on a downward trend over the last few years because of reductions in targeted grants and because the federal government, which provides most of the funding for research, has its own budget problems. Still, as one of only 13 universities that have land-grant, sea-grant, and space-grant charters, UNH has broad opportunities to extend its research activities.

Not only does sponsored research create income for UNH, it also enhances its reputation, which helps to attract further grants and makes the university more appealing to graduate students. "Research is the leading edge of knowledge," says Janet Campbell, interim vice president for research. "The stronger our research enterprise, the more graduate students we attract, and expanding graduate programs is one of the university's goals."

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