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April 2003
May 5, 2003
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April 2002
April 17, 2002
Vol. 1
Issue 1
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Fiscal Year CHALLENGES and Opportunities
By Don Holecek, Editor of Michigan Tourism Business & Director of the MSU Tourism Resource Center
 Last month Joe Fridgen announced in this column that he had accepted a position at East Carolina University. Fortunately, he will be with us through the fall semester, so we’ll be able to draw upon his experience and expertise for a while longer. We will all miss Joe but wish him the best as he enters a new phase in his academic career.
The focus in this column will be on the challenges and opportunities that I see ahead over the next fiscal year, especially those confronting the Tourism Resource Center. Here at MSU, our 12-month budget planning cycle, or fiscal year, runs from July 1 to June 30. The late May to early June time frame is an especially active planning period for us as end of the current year accounting reveals whether or not any unexpended funds remain that can be drawn upon for the coming fiscal year and as we receive guidance from higher administration concerning funds available for the new fiscal year. This is the time of the year when unit administrators have enough information about their fiscal resource circumstances to develop their program plans for the new fiscal year. As the year unfolds, these plans are modified to reflect deviations that arise in initial budget projections. These can be negative in soft economic times such as those we are experiencing but are more often positive due to funds obtained from new gifts, grants and contracts.
The news we received about the budget is not good. The funding provided by the Michigan Agricultural Experiment Station (MAES) and Michigan State University Extension (MSUE) will be cut substantially again this year. The funding that we expect to have available from MAES and MSUE in the coming year will be less than half of what was available two years ago. Reductions in state appropriations to MAES and MSUE, coupled with substantive increases in health care costs, are especially problematic for them since neither has access to tuition revenues to offset reduced state appropriations and rising costs. Nonetheless, the far higher than average reductions in the Tourism Resource Center’s allocations from MAES and MSUE are not encouraging and cannot be fully offset by productivity improvements or from new funding from external sources. The bottom line is that there will be a lot less funding available than last year to support Center programming in the new fiscal year.
This reduced funding base will translate into a reduction in both the Center’s staffing and programming. Appointments of two staff members will not be renewed and the appointments of the remaining staff members will be reduced. The appointment of only one of our six graduate student assistants will be renewed. Obviously, there will be a smaller team available to pull the load. Less obvious is the effort that will be absorbed in realigning the remaining staff resources so that they can perform as an effective team. Even with the skill set, flexibility and strong work ethic that exists within the core staff that will be retained, it would be overly optimistic to assume that the transition to a much smaller Center staff contingent can be accomplished without some loss in momentum.
A reduced staff and operating budget makes programming reductions necessary. Some existing projects will be terminated and others will be downsized. Even in these tough economic times when program reductions are mandatory, I believe one should not lose sight of emerging opportunities; hence, our overall plan for the coming year also includes new initiatives. Highlights from our plan of work for the coming year follow.
- Programs to be terminated – the Michigan Regional Travel Market Survey (MRTMS) and linked programs such as image tracking, holiday travel forecasts, Internet usage tracking and travel intentions tracking.
- Programs to be downsized – this newsletter, on-line hospitality training program and the International Travel Tax Policy Center program.
- New programs – Climate change / weather variability and tourism (EPA funded), promotion evaluation in selected DMAs (Travel Michigan funded) and Tourism Investment Forum.
It is especially painful to be forced to terminate the MRTMS program, in operation since 1996, because the data generated through the monthly telephone surveys that have been conducted have many applications and are heavily used to serve our stakeholders. The costs of this program are high and can’t be managed in the current fiscal climate.
Although we do not expect to receive renewed funding support from the Michigan Virtual University for this newsletter and the on-line hospitality training courses it features, we are reluctant to terminate it immediately because so many readers have reported that they find its contents to be of high value. We plan to begin to reduce the scale of Michigan Tourism Business and maintain it for a few months during which we hope to find a new funding partner or partners. Should you be interested in sponsoring one or more future issues or have other suggestions for us to consider, we would be pleased to hear from you.
The new initiatives we plan to undertake will be funded externally, or in the case of the Tourism Investment Forum, by registration fees collected from participants. We will, however, generate timely data from these new programs, which will be incorporated across other existing projects to serve a wider audience. We also will be heavily engaged in the quest for other new sources of external funds since attracting new funding partners is now especially critical to generating data needed to support our overall mission which is to serve as an information “clearing house” for Michigan’s tourism industry to support its sustainable development.
The following are some of the major impacts that will result from the large reductions to the Center’s budget:
- The amount and currency of information that can be provided will be reduced.
- Our capacity to respond to requests for assistance will be reduced and will take longer to service.
- Our programming will be more driven by external funding partners’ needs than by internal priorities and the priority needs of the Center’s tourism industry stakeholders.
Despite all of this “doom and gloom” there is room for considerable optimism about the coming year and beyond. The economy finally appears to be responding positively to the wide array of pump priming actions that have been put in place (low interest rates, declining value of the U.S. dollar, increased money supply and another round of large federal tax cuts). These should eventually translate into renewed economic growth and improving state fiscal circumstances. The Tourism Resource Center—although certainly much smaller than before—will continue to be a viable unit for at least one more year. We will be able to retain many of our most valued programs and even mount selected new initiatives.
Your continuing support and patience will be especially appreciated as we struggle to overcome the CHALLENGES and exploit the opportunities that lie ahead for the Center in the coming fiscal year.
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