State funding for the University of New Mexico could soon plummet some $53 million or 15%, according to UNM’s top finance administrator, raising questions about cuts and reductions across the University in the coming months.
Teresa Costantinidis, UNM’s vice president for finance and administration, told the Board of Regents on Tuesday that UNM is prepping budget scenarios for the likely loss of a significant chunk of state funding due to a historic crash in oil prices and a reeling COVID-19 economy.
Costantinidis said a pre-COVID compensation increase of 4% for staff and faculty could be on the chopping block as a result. She said the 4% increase represents about $9.5 million for the main campus-side of UNM and that some or all of that increase might be eliminated.
UNM is already in the midst of a hiring freeze and travel restrictions.
“The hiring freeze and pause on things like travel, those types of things are short-term, small items,” Costantinidis said. “(We’ll) have to do something bigger and more significant depending on the scope and what we expect the amounts to be.”
Otherwise, it’s unclear how and where UNM will contract, what departments may see budget cuts or how other cost-cutting measures will affect University operations.
“During this time, we have to look at every aspect of our business operations on campus, and we need to streamline. We need to deal with these financial challenges,” Regent Marron Lee said. “(The Regents) did a hard job three years ago with cutting sports at UNM ... We’re going to have to start those discussions about making those hard calls (again).”
Last week, Costantinidis told a Board of Regents committee that UNM has lost nearly $50 million in revenue due to COVID-19 so far.
While UNM Hospital’s net revenue losses ($22.8 million) and the Health Sciences Center’s net losses ($17.4 million) made up the biggest chunks, housing and meal plan refunds ($9.6 million) played a major role, according to budget documents.
UNM Athletics also took a big hit.
The Athletics Department expects its deficit to balloon to $3.5 million, Athletics Director Eddie Nuñez said.
Several cancellations and partial cancellations affected Athletics’ incoming shortfall, including:
- Parking and concession revenue from several state high school tournaments
- The yearly PBR rodeo in The Pit
- Parking revenue for Albuquerque Isotopes baseball or New Mexico United soccer
The increased deficit bucks off two years of balanced budgets following a ten-year stretch that saw the Athletics Department rack up a $4.7 million deficit, according to budget documents.
The two years of balanced budgets were floated by at least $1.8 million from elsewhere in UNM’s $350 million budget.
The state’s budget (and by extension UNM’s) was drastically impacted by the loss of tax revenue from closures and the collapse of global oil prices — a major source of New Mexican revenue.
On Feb. 3, when state lawmakers passed the spending bill to the governor, oil prices were starting to fall amid fears the coronavirus might spread globally. That day, crude oil was worth $49.92 per barrel.
On April 21, crude oil was worth $11.17, one of its lowest points in history, according to a number of crude oil price indexes.
As such, Senate Finance Committee Chairman John Arthur Smith (D-Deming) and House Speaker Brian Egolf (D-Santa Fe) told multiple media outlets last month that a special session was imminent. Governor Michelle Lujan Grisham would have to call a special session — something her press secretary told the Albuquerque Journal said she would do “as soon as it’s safe.”
The meeting concluded with a virtual applause for the 2020 graduating class.
Justin Garcia is a senior reporter at the Daily Lobo. He can be contacted at firstname.lastname@example.org or on Twitter @Just516garc