February 7, 2003

Dear Faculty and Staff:

You are aware from press reports that Governor Phil Bredesen is holding a
series of hearings with state agencies and others on ways to address
Tennessee's revenue shortfall for the current fiscal year and the future.
Higher education's hearing was this afternoon.

In the case of the UT System and the Tennessee Board of Regents, we were
asked to address state funding reductions in two ways. For the current
fiscal year, we could face either a 2.5% or 5.0% cut. For the UT System,
these translate into $10.6 and $21.2 million respectively. For the next
fiscal year beginning July 1, the Tennessee Higher Education Commission has
assigned UT a preliminary figure of $37.3 million out of higher education's
$100 million goal. I voiced concerns about this figure, which translates
into 8.8% for higher education, compared to state agencies, which were
asked to project up to a 7.5% reduction. I am hopeful the Governor will be
able to lower the figure to make the UT System's reduction consistent with
that of other state agencies. If he does, it would mean restoration of $6
million to the system.

In my presentation this afternoon, I continued to reinforce our message of
the "No Whine Zone." I told Governor Bredesen we will do what we have to
do, this year and next, and maintain our focus on quality, entrepreneurship
and accountability. I emphasized our guiding philosophy - placing students,
faculty and academic programs first, supporting strategic goals and
investments, diversifying our funding base, simplifying administrative
systems and streamlining operations, and always being concerned for the
welfare of our employees and their value to the University.

Obviously, cuts of this magnitude will have a serious impact on the
institution, but I challenge all of us to maintain a positive outlook. We
must not lose sight of our commitment to providing Tennessee the very best
University possible. We must continue to pursue the goals outlined in the
"UT 2010 Scorecard" and companion scorecards for the Chattanooga and Martin
campuses. Our efforts might be slowed down, but our resolve to succeed
shall be intensified.

As we make specific decisions based on the cuts we must make this year and
next, we will consult with faculty, staff and students to make sure we
adhere to our core values and principles of collegiality.

Cordially,
John W. Shumaker
President