The University and other state agencies received a message from the state last week, asking them to prepare for state allocation reductions between 5 percent and 10 percent in the fiscal year 2003.

Major state revenue sources have already fallen $178 million short of projections in the first four months of the fiscal year. With unemployment at twice the level of last year, state officials said they might not have enough money to fulfill their biennial budget promises.

A shortage in expected revenue of 5 percent to 10 percent could mean $30 million to $60 million less for the University in 2003, prompting further tuition increases and program cutbacks.

“Clearly when you’re looking at cuts that are in the $30 million to $60 million range, I think everything is back on the table,” said Richard Pfutzenreuter, associate vice president of the Office of Budget and Finance.

The University was anticipating a $36 million increase in state funding for 2003.

Even with the boost, President Mark Yudof planned to raise tuition 13.2 percent in 2002-03.

University officials said if the state funding they counted on doesn’t come through, the institution will have to use a combination of additional tuition increases and program cuts to make up the difference.

“We’ve got debt to pay, buildings to open, faculty-staff pay raises to fund,” Pfutzenreuter said.

Employee contracts will not be renegotiated, but Pfutzenreuter said if the University has to make deep cuts “there is certainly the possibility of layoffs.”

The state will not determine cuts in 2003 state appropriations until after the Dec. 4 revenue forecast. But the state is asking agencies to immediately assess their budgets for possible cuts.

“We heard quite clearly from other agencies that across-the-board reductions are the least preferable option,” said Pam Wheelock, state finance commissioner, in a Nov. 15 letter to Yudof.

“Specific and achievable budget options will be critical in helping us avoid a less-focused, across-the-board cut,” she said.

University officials met with deans Monday and asked them to examine their colleges’ budgets in the next six months. The University has started planning the 2003 budget, but won’t have anything finalized until spring 2002.

The shortfalls won’t influence the University’s capital request this session for $186.5 million, officials said.

But things could get worse, Pfutzenreuter said.

“The possibility of a one-two punch is there too,” he said. “They may have a revenue forecast in December that drops and then if the economy doesn’t look like it’s turning around and it’s sliding further, then we’ll get another punch in the nose in February.”

K.C. Howard welcomes comments at [email protected]