January 31, 2003


Dear Faculty and Staff:

Like almost every state in the nation, Tennessee faces revenue shortages
due to the poor economy and lagging tax collections. As the Governor asks
state agencies and others to develop contingency plans to address this
shortfall, we cannot expect The University of Tennessee to be exempt from
the process. In fact, I have told Governor Bredesen that we will be part of
the solution, not part of the problem. As we develop our plans, we shall be
guided by several fundamental principles.

-- First and foremost, we shall assign the highest priority to serving our
students and the academic programs, faculty and staff that support them. We
exist to educate students, and we shall do everything in our power to avoid
reducing support to this core element of our university's mission.

-- Second, we shall immediately review all financial commitments for the
remaining five months of the current fiscal year to identify opportunities
to realize short-term savings, especially in administrative areas. To this
end, we are now closely reviewing all pending commitments and obligations.
I have also slowed down the process of appointing a Chancellor at
Knoxville, so that we can be sure to avoid any increase in administrative
costs that might result from this change. While we continue to believe it
is important to appoint a Chancellor at Knoxville, I want to take the time
to review the cost implications with administrators, faculty, staff and
students before proceeding with the appointment.

-- Third, we shall accelerate our efforts to simplifying the administrative
systems and streamlining our operations with an eye to actually improving
processes. To achieve this goal, I have charged Steve Leonard, our new
Executive Vice President, with delivering a comprehensive set of
recommendations by March 31. Steve's experience in the corporate world has
prepared him well for this assignment.

-- Fourth, while the state will always be our largest source of support, we
cannot expect to achieve our long-term goals by relying on state funding
alone. We shall, therefore, continue our efforts to diversify our funding
base. I want to assure our students that we do not believe that a tuition
increase is the only solution to our fiscal problems.  While we cannot rule
out anything at this point, it is not our desire to increase costs to
students.

-- Last, but certainly not least, we shall not lose sight of our strategic
goals and the investments that must be made now if we are to realize our
long-term vision reflected in the "UT 2010 Scorecard" and the separate
scorecards for Chattanooga and Martin. If we want to have more of
Tennessee's high ability high school graduates stay in the state, we must
make investments that cause them to enroll at our campuses. If we want to
nearly double federal research spending by 2010, we must do more now to
enhance our relationships with funding agencies. If we expect nearly to
double the University's endowment by 2010, we must invest now in more
development professionals. These strategic investments will require us to
reallocate funds internally, but we must do so to preserve a dynamic future
for our university. Doing anything less would be shortsighted.

In speech after speech across the state, I have repeatedly declared that
The University of Tennessee is a "No Whine Zone." We have too many good
things happening to focus on the negatives. We have so many great partners
ranging from Battelle Memorial Institute and Oak Ridge National Laboratory
to St. Jude Children's Research Hospital and the City of Chattanooga. We
have innovative and inspiring ideas like UT Martin's unilateral quality
promise to any West Tennessee school system that hires one of its education
graduates. We have new energy reflected in the plan to refocus the Space
Institute. And our historic relationship with Knoxville and Knox County
will continue to guide our plans for developments in East Tennessee.

I look forward to working with all of you to address the challenges before
us and focus our energies on the bright future that awaits us.

Cordially,
John W. Shumaker
President