Wednesday, January 14, 2009

Suggestions for WSU Budget

Our school asks for suggestions for our 2010-2011 budget under the current recession and the staggering buget shortfall of Minnesota State. Here is the email I wrote:

Dear Sir or Madam,

I have three suggestions:
1. Based on the Obama's "the Job Impact of American Recovery and Reinvestment Plan" released on January 10, 2009, one of the key components of $775 billion will be spent on state fiscal relief designed to alleviate cuts in healthcare, education, and prevent increases in state and local taxes (p.4). I predict that this stimulus package will be passed by Congress soon (no later than February 2009). Therefore, I suggest that WSU, MnSCU, and Minnesota government (congressmen) should work together to make sure that our state will get the appropriate proportion of this federal handout sooner than later. Our WSU 2010-11 budget should be planned based on this practical assumption.
2. In addition to our projected budget shortfall, the stimulus money will be desperately looking for shovel-ready investment projects which will enhance country’s long-term productivity (such as infrastructure, school repair etc) because of its timely mission fighting recession. So now WSU could prepare and get these kinds of projects ready and then we can do it right away when the possible stimulus funding is handed.
3. I expect that WSU's enrollment will probably increase in 2010-11 for two reasons. First, under the current recession, opportunity cost of being a student is lower (wage is lower, unemployment is higher), so enrollment will go up. Second, some private-college students will come (transfer) to WSU for a relatively lower tuition cost. WSU should plan the budget based on this assumption.
Basically I think that the current budget crisis and recession bring WSU more resources if we could understand the big picture of the stimulus package and use it well.

Wei-Choun Yu, Assistant Professor
Economics and Finance Department, College of Business