As you know, we are living in challenging times. The economic downturn facing our nation has touched every one of us, and Indiana University is no exception.

Americans everywhere are tightening their belts, and we have not been exempt from hard choices. Recently, we have taken significant measures to trim our budget, increase revenue, and reallocate resources to priority areas. In the face of difficult challenges, IU is continuing to move forward confidently—guided by our understanding of our mission and our responsibility to the state.

Federal Stimulus Bill
The $787 billion economic stimulus bill recently signed into law by President Obama will help colleges and universities across the nation meet these challenges.

The “American Recovery and Reinvestment Act” supports the largest-ever increase in the maximum Pell Grant award for low-income students, expands the Hope education tax credit for two years, and adds $200 million to support working college students. It also provides about $20 billion for federal research agencies, including the National Institutes of Health and the National Science Foundation. Last year, IU research grants and awards totaled a record $525.3 million, and more than half of that amount came from these agencies and other federal sources.

Although the stimulus bill does not provide funding to states for the sole purpose of repairing and modernizing academic facilities, state governors will be allowed to target federal funds for university infrastructure projects, and we very much hope some of these funds will be allocated to Indiana University.

State Budget Request
Strengthening our infrastructure—which will enable us to maintain our strong progress in providing excellence in education and research—is central to IU’s biennial budget request.

At the halfway point of the 2009 legislative session, I am pleased to report that the budget plan passed by the Indiana House includes all of IU’s capital projects. It also includes $35 million for the Indiana Innovation Alliance, a historic research alliance formed by IU and Purdue to grow Indiana’s bioscience economy and improve Hoosier health.

This budget plan now goes to the Senate for its consideration. As the legislative process continues to determine the state’s budget in these difficult economic times, we remain grateful to all of the legislators who continue to regard higher education as a key priority in their plans for recovery in Indiana.

Increasing Efficiency
As we seek funding from our state and federal partners, we must be certain we are also doing everything we can to help ourselves, and more may be required.

To this end, I have ordered a slowdown in non-faculty hiring, frozen salaries for around 400 of IU’s senior administrators, and in January directed IU chancellors, vice presidents, and deans to reduce their operating budgets by 1 percent.

In addition, we have formed a 12-member blue ribbon committee to contain skyrocketing health-care costs. For the past several years, we have seen health-care costs for employees increase by 8 to 12 percent a year across the university. Current projections show that IU’s annual health-care costs could rise to more than $200 million in the next few years, or nearly 10 percent of the university’s budget, if nothing is done to contain them.

Private Support
In difficult times such as these, IU recognizes the vital necessity of private philanthropy to increase our efficiency and advance our education and research missions. We will need to rely on the concentrated and coordinated efforts of university alumni and friends, whose dedication, loyalty, and generosity are even more important during these times of economic uncertainty.

In this regard, IU Bloomington has raised the goal of its Matching the Promise fundraising campaign by $100 million to $1.1 billion by June of 2010. The campaign has already raised well over $300 million for scholarships and fellowships alone.

Thank You
To all members of the IU community, thank you for your unwavering support. As I mentioned, IU is fully engaged in responding to the economic problems that confront Indiana. It is our goal to play a leading part in the state’s recovery by strengthening higher education and improving Hoosier lives.