It’s the economy, stupid – this campaign slogan helped propel Clinton into office during the 1990s and once again, the most recent presidential election hinged on the state of the economy. One cannot open a newspaper, turn on the television, or listen to the radio without reading or hearing about our fragile economy. With the media frenzy currently circulating, you may wonder how all this affects you. Paydirt asked Dr. Lopez to answer some of the vital questions that you need to know about Tech’s economic state.

  To provide some context to the interview, Dr. Lopez explained how the State of New Mexico and NMT manage their finances:

  Dr. Lopez: Everybody recognizes that we are in a very depressing economic downturn. The state generates a lot of its revenues from a series of taxes that are closely tied to the performance of the economy. A big portion of the state revenues come from oil and gas, and while that was at a high level, meaning the price of oil and gas, New Mexico was doing very well. But prices have fallen precipitously; they were at a peak of $147 a barrel and today they are down over half of that. The same is true with gas; it did not fall as precipitously, but it did fall significantly.

  There is also gross receipts tax, meaning sales tax. As unemployment goes up, there are fewer people in the workforce and they have less money to spend. Consequently, as they buy less, that gross receipts tax goes down and that’s a major revenue generator for the state.

  Finally, there is corporate tax, which is not as big as some other revenue streams, but is still significant. Investments are a big portion of the revenue portfolio for the state and as Wall Street has gone into a deep recession, that’s limiting New Mexico’s finances.

  Collectively, all these sources of revenues have declined significantly. That means that the state has to find a way not only to finish paying for what it budgeted for the current fiscal year, which doesn’t end until June 30, 2009, but it also has to anticipate budget cuts beginning in January, such as reducing the remaining budget by $10 million , for instance. That means we would have to compress our expenditures so at the end of June 30, we would end up spending less than had originally been budgeted. This is a possible scenario. I think there is going to be a cut back, but I hope it’s not that significant. That only takes us to June 30, 2009 and then we have a brand new budget on July 1, 2009 that goes for an entire year. That budget, in my opinion, will be no higher than what we currently have and may even be lower.  You may wonder what this means for NMT. If there is less money to spend, obviously new polices have to be initiated to spend less. I suspected that the current economic situation would happen because I had experience in public finance in the past, so starting back in August 2008, NMT began to put policies into place to restrict spending.

In the college division, for example, we have achieved a projected savings of 5-7%, which creates a pretty good cushion. This means the administration would not have to do anything in order to have a balanced budget at the end of the fiscal year. Of course there are other portions of the university, and some of these are a little harder to achieve some of the savings as fast because there are fixed costs, such as utilities, which are hard to shrink.

  We are confident that all of the things that we have done, such as not filling new positions funded through the state general fund, have made this time easier for NMT. I try to make that distinction between positions funded through the state general fund and other positions because we can have a lot of hiring going on, which is actually good, that is being financed from federal or private funds. New hires generate an overhead, so it’s actually good for the university to hire in those areas, but not when the job is tied to a state general fund. This is one area we have to keep a close eye on; we are very careful not to replace anyone unless we absolutely have to.

  Right now, I think the measures we have in place will serve us for the balance of the fiscal year and I don’t think there will be a significant notice of these changes. They certainly shouldn’t impede the academic progress of any student because all of the courses that are required will be offered. We will have slight impacts, like in the language area, for example. We have been trying to expand that over the years so students would have more options. We may have to have one less language offering in some area. On the other hand, we will certainly have enough foreign languages to meet the requirements. When I face the choice of canceling a math class or a language class, I’m going to cancel the language class before I’m going to cancel the math class because this is a science and engineering and math curriculum. Those courses need to be offered so students’ progress will not be delayed. Students should feel very little change over the balance of this fiscal year, and if we achieve enough savings and continue to have a pretty stringent hiring freeze, we may even be able to get through next year with our current policies. If this happens, we hope the economy picks up by then and we can return to more normal budgetary practices.

  My prediction for the current fiscal year says there will be very little, if any, real notice among the student body especially, and to some extent, the faculty of these restricted expenditure policies we have put into place. Sometimes, we have a professor that retires and is in a department where there is enough faculty that can pick up one or two courses that are required. In those cases, we may delay replacing that particular position. My plans are not to cancel any of those positions, but simply to delay the hiring in the hopes that the economy picks up. When the economy does get better, we can budget for those particular positions and those departments can hire the same number of people they had prior to us going into the hiring freeze.

  The following interview was conducted to answer some specific questions some students, faculty, and curious onlookers may have:

 Paydirt: Is there currently a hiring freeze?

Dr. Lopez: There is a hiring freeze, but only on those positions funded through the state fund.

Paydirt: What positions do those generally include?

Dr. Lopez: Most of the faculty, but not a lot of the researchers who are on sponsored funds. In the physical plant we have tried to cut back on some projects and slow down on some of the things we are doing and replace the fewest possible people we can.

Paydirt: In some departments, such as the Management Department, there is already an extreme lack of professors. How does the hiring freeze affect the ability to find new talent for those specific positions which have needed filled for several years now?

Dr. Lopez: If the curriculum can’t be rounded off to meet the requirements that are in the student catalog, then those are the positions that would have to be filled. I don’t want this to be an alarmist statement, but say the economy stayed in this posture for a long time, and even worsened. Someday, it’s possible we would have to look at a whole different retrenching, where fewer and fewer courses are offered. I don’t believe this will happen; I think within eighteen months to two years, the economy will begin to show different signs and we should be able to get back to a more normal hiring and budgeting process. A department that requires a minimum of courses offered would be considered a critical area, and we would certainly see if someone could be recruited to fill in those areas.

Paydirt: How does the hiring freeze affect MRO, EMRTC, and other NMT subsidiaries?

Dr. Lopez: It doesn’t affect them, because those are sponsored projects. Subsidiaries of NMT operate on restricted funds. NMT cannot take money that has been allocated for this purpose and use it for a different purpose; it’s illegal. It’s to our advantage to hire as many people as we can afford on those budgets because there’s an overhead attached to them. We make a certain percentage of money that helps us offset some of the costs of the physical plant, like the lighting. That overhead is an indirect cost used to support the facilities. So, no, it will not affect MRO or EMRTC or any of the faculty on sponsored research.

Paydirt: Rumor has it that a lot of humanities classes are being cut. I know you said language classes in particular. I think there’s a perception that a lot more than that has disappeared.

Dr. Lopez: The only one that has been affected, according to the academic officers, is that language class. To have a well rounded education, we do need to offer courses in those areas. I come from a liberal arts background. I would be very much against not having at least a minimum, and if budgets permit, more offerings in those areas to round off a student’s education. You can’t function in the world simply by knowing a mathematical equation. There’s the whole civil and social side to life that you need some exposure to. To the best of my knowledge, the language class is the only thing being affected.

Paydirt: Is tuition and room and board expected to rise substantially next semester?

Dr. Lopez: In the faculty council meeting, there was a suggestion to raise tuition to a level that would offset some of the potential cutbacks. My answer is very straightforward. When the economy is in the state that it is, the last thing I want to do is raise tuition to any significant degree. Number one, because I could end up losing even more money if I make school unaffordable for potential students. Dealing with tuition has to be a real delicate balance between what we need and what students and their parents can afford. One of the things I do try to get across to students is some of the tuition increases are necessary because of what the state does - it takes what is called a credit. In effect, what they do is budget $10 because that’s what we need to operate our organization; but the state only gives us $8 and we have to make up those other $2 from somewhere else. The only real place to do this is tuition and fees. If I had to guess today, I think the state will push a 2% tuition credit on us; we may have to do another 2-3%. I wouldn’t see a recommendation above 5%. If we can make things just fit, meaning we can have a balanced budget, then it may even be less than that. That would be my hope and I’m not going to impose a 10 or 15% tuition increase. It doesn’t make any economic sense.

Paydirt: Does the same apply to room and board?

Dr. Lopez: Well, inflation has slowed quite a bit. I think you would have some adjustment to meet some utility costs, but it would not be great. We can’t do it on the backs of the students.

Paydirt: Is there anything you would like to add in closing?

Dr. Lopez: In closing, I would hope as you hear rumors, you come and talk to someone like me. There is no need for me to try and hide anything, because eventually it will come out. I’ve been here for sixteen years and I’ve tried to make everything transparent so everyone can understand what we’re doing. I’ve been to faculty council meetings, I’ve told as many people as will listen, we are in a difficult situation; it’s not of our own making, but if the state gives us less money, we have to find a way to make it work. My plea is, as you hear rumors, come talk to me. All budgets are public information, so if you’d like to see it, I’ll show it to you. If we have transparency, people will be able to see why we do have to sacrifice a little over the next couple of years. The economy is not going to turn around overnight.

Paydirt would like to sincerely thank Dr. Lopez for his time