UNIVERSITY FACES SMALLER CUTS TO SCHOOL BUDGET

Southeast Missouri State University will have to cut $2.5 million from this fiscal year's $108 million budget or raise fees as a result of Gov. Bob Holden's decision Thursday to withhold more money because of a funding shortfall in state government.

Holden is seeking to trim nearly $200 million from the state's roughly $19 billion budget.

While the university's withholding is less than feared, salaries may remain frozen as a million-dollar cost-cutting move, school officials said. Even then, the university would have to cut another $1.5 million in expenses or raise student fees midyear.

"We don't know if we can hold the line on student fee hikes," said university President Dr. Ken Dobbins.

Any fee hike won't make up for all the lost revenue, Dobbins said. The university will delay filling vacancies, purchases of computers and other equipment, and maintenance work to hold down costs. It also plans to trim travel expenses.

Southeast had hoped to receive $48.8 million in state funding. Now the state's share looks to be coming in at just over $45 million.

Holden is withholding 8 percent of state operating money for all public two-year and four-year colleges in the state. That withholding -- $46.8 million -- includes the usual 3 percent withholding from state agencies and colleges.

Since the state traditionally withholds 3 percent of the appropriations funds to guard against lower-than-expected revenue or unforeseen costs, officials at Southeast had already planned for that loss.

While money that is withheld can eventually be released for spending, historically, the withholdings usually end up as cuts.

Economics professor Terry Sutton, who serves on the university's Budget Review Committee, insists the university could afford pay hikes by cutting other operating expenses and implementing a hiring freeze.

"There is an awful lot of waste up there," said Sutton. "If everybody just tightens up, you could do it."

But Dobbins said the school isn't pouring money down the drain. "I don't think there is a lot of waste," he said.

Employee morale hurt

The Board of Regents last month held off granting pay raises of 2 percent on average for the school's 1,200 employees, citing budget concerns.

The decision has hurt employee morale, Sutton said.

Sutton said pay raises are needed, particularly for clerical and technical employees whose salaries are far below those of faculty.

Don Dickerson, president of the Board of Regents, said Thursday that the board hasn't made a final decision on freezing salaries or other cost-cutting moves.

"I hope we don't have to raise student fees," he said.

Dobbins has instructed the Budget Review Committee to look at where cuts can be made and whether the school can afford even a minimal pay raise this year. The committee will meet Tuesday to begin the review process.

The final decision rests with the regents, who also will decide whether to hike student fees. The board could act as early as next month, Dobbins said.

The Associated Press contributed to this report.