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March 11, 2011
As we move through spring semester and work to develop the FY2012 and FY2013 budgets, I want to provide this update about our budget situation. You are understandably concerned about the budget picture, and I want you to know more about the measures we are considering and those that we have adopted.
Remember, we are planning for the budget proposed by the Texas House of Representatives that calls for a biennial reduction of $10M. We will spread the impact of the reductions over the two years of the biennium. As it stands now, we will first reduce UHD's base budget by $3.7M beginning in FY2012; that means across the two fiscal years, we will save $7.4M. We will address the additional $1.3M needed for FY2012 with one-time reserves, and we will determine base reductions for the remaining $1.3M for FY2013 as we build the FY2013 budget.
For the near future, we project that revenue from tuition and fee increases will be minimal, and our Board of Regents expects us to use any new tuition-and-fee revenue to fund student success and strategic initiatives, not to backfill for lost general revenue.
During the past year there have been several actions taken to identify areas where UHD could reduce costs. One initiative was the formation of the Budget Reduction and Efficiencies Task Force. This group has broad campus representation, has met regularly and has made numerous recommendations for savings.
Another initiative was launched when I encouraged members of the UHD community to e-mail their ideas for cost savings, revenue generation, improved efficiency and things that we just need to "do better or quit doing" to email@example.com. We have received many excellent suggestions and they are posted at http://www.uhd.edu/presidentsoffice/budget/. Please continue to send in your ideas and suggestions.
While the task force and website generated many good ideas, we still needed to begin forming a specific action plan. For this, I turned to the vice presidents, asking that they consider the recommendations that had come forward. I also recognized that they understood best the impact that specific cuts would have on their operations. I asked that they develop a plan for cutting $2.6M from our base budget. This $2.6M was prorated out to the divisions based on each division's current percent of the budget, with some relief given to Academic Affairs because academics is our core business. I received their plans before winter break.
Because the University budget is predominantly staff/faculty salaries and benefits, it should surprise no one that to cut $2.6M we have to look at positions - vacant and filled. The consolidated plan the vice presidents submitted contained approximately $600,000 of non-salary-related cuts and $2M of reductions in salaries and benefits. There were 29 positions identified for elimination, 23 of which were, and remain, vacant. Of the 23 vacant positions identified for possible elimination, 5.5 are faculty positions.
At this point, we have set aside the six filled positions and are concentrating on the 23 vacant positions. We evaluated the open positions, and though eliminating them would cause hardship, we would manage. If we capture just the savings from the elimination of the vacant positions, the related benefits and the non-salary reductions that the vice presidents submitted, the total base budget reduction would be approximately $2.25M. (Elimination of faculty teaching stipends for online and off-campus classes beginning summer session 2011 is part of the non-salary reductions from Academic Affairs that will lead to a $250,000 annual savings.)
Going back to our first goal of reducing our base budget by $3.7M for FY2012, we would still be $1.45M short of where we need to be ($3.7M - $2.25M = $1.45M). Where will that come from? Well, I have some good news to share with you.
Last year, we established a reserve that will cover $850,000 of the $1.45M if projections for summer session enrollments this year stand firm.
These carry-over reserve funds and the savings from the division cuts ($2.25M) bring the total of identified cuts to $3.1M, still $600,000 short of our FY2012 goal of $3.7M in base budget reductions. Therefore, we have taken additional actions in recent weeks to close the remaining gap, including:
We will use FY2012 to refine our business practices to become more efficient and more innovative. I believe we can address the last $1.3M of reductions for FY2013 on the revenue side rather than through additional cuts.
Let me make clear the seriousness of the situation we face. State support - and likely indirect federal support through grants and financial aid programs - will continue to diminish over time. Further, the back door to new revenue provided by tuition deregulation in 2003 has been closed, so we do not anticipate that tuition and fees will continue to increase at the rate they have during the past eight years.
We are also discussing other ideas, and over the coming weeks more information will be shared with the community. From the beginning, I have pledged an approach to budget reductions that will balance cuts across the University, and I remain committed to that principle.
Key is building our enrollment and improving our retention and graduation rates. Simply put, more students result in increased revenues from tuition and fees. Graduating more students increases our eligibility for incentive funding.
To succeed in this new environment, universities will need to find ways to deliver high quality educational experiences with fewer resources. All employees will need to demonstrate clearly the value that they bring to the organization. We will need to out-innovate our competitors, and challenge ourselves to move beyond the old ways.
I believe that UHD is up to the challenge and your assistance and understanding is imperative.
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Last updated or reviewed on 3/16/11