Chancellor Erroll B. Davis Jr. in his final “State of the System” address noted that the people in the University System of Georgia and the students enrolled at the 35 colleges and universities are the constant that provide it strength and stability during a trying economic period in the System’s 79-year history.

“They have remained focused on our mission and on why we are here under some extremely trying conditions,” Davis said in remarks to the Board of Regents.

Eschewing a more traditional set of remarks that reviews the past year, Davis focused on the challenges facing the regents and the University System with an expected 10 percent additional reduction in state appropriations over the current and upcoming fiscal years.

The two greatest, immediate challenges facing the System are, Davis outlined, declining state resources (a net $500 million reduction in state funding from fiscal year 2009 through fiscal year 2012) and rising enrollments (up a projected 37,000 students over this same time period).

While the current budget situation is difficult, Davis in his remarks was more upbeat, noting that these two challenges are, like the variables in any science experiment, subject to change and improvement as the economy recovers. He noted that he shared the “unbounded optimism of Americans for the future” and pledged the System would harness all of its resources, “this board, our presidents, and the great intellectual capital in our institutions, to serve this state.” Davis said that despite the challenges, “we are resolute in fulfilling our core missions of teaching, research and service. Let no one doubt this: we have managed and will continue to manage this economic situation with a sense of purpose and with a growing set of skills.”

The goal this year is to lay the groundwork with the General Assembly for next year, Davis said, when “we absolutely must return to a renewed commitment to continue the historic investment Georgia has made in public higher education.”

The governor’s budget recommendations for the System in fiscal year 2012 did not include any of the $177 million generated by enrollment growth. “The current budget must be a one-time, special circumstance,” Davis said.

The critical need to resume funding for enrollment growth will help the System in efforts to ensure a supply of college graduates once the economic recovery takes hold, Davis said. He cited U.S. Labor Department statistics on the difference between unemployment rates for those with less than a high school diploma – 14.2 percent – and those with a bachelor’s degree or higher – 4.2 percent.

“Once the recovery is fully in place, there is a strong case to be made that those with postsecondary education will be the ones filling the jobs of tomorrow in this country,” Davis said. “That is the future and our mission is to prepare individuals for it.”

The University System of Georgia is comprised of an 18-member Board of Regents, appointed by the Governor, and 35 colleges and universities, employing approximately 42,000 faculty and staff and serving in fall 2010, 311,000 students with a total annual budget from all funding sources of $6.5 billion.