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SEQ CHAPTER \h \r 1MEMORANDUM

March 26, 2004

To:         Dr. John Welty

President

Dr. Jeronima Echeverria

Provost and Vice President for Academic Affairs

From:    Dr. Ray Abhold, Chair

University Budget Committee

RE:        Response to Draft Financial Plan: 2004-05

     The University Budget Committee appreciates the opportunity to provide feedback on the financial plans of the Divisions prior to their implementation.  By allowing the Committee to review the complete proposals, informed and thoughtful deliberations have been possible.  The University Budget Committee does take pride in being able to set aside parochial interests and examine issues from a University-wide perspective.  It is from this perspective that the following comments and recommendations are made:

General Comments:

1.  All participants, faculty, staff, and administration, should be commended for their participation, for they have engaged in an important and valuable process.

2.  The Provost, Vice Presidents, and Deans should be encouraged to share their ideas and approaches to common problems. Some units may benefit from the consideration of ideas and approaches taken by others.

3.  All participants should be encouraged to continue their discussions. The State and System budgets are not set and may be revised at any time. Thus, the University must maintain some degree of flexibility and readiness in its plans in order to accommodate the potential for further reductions.

Response to areas indicated for specific comment:

1.  The overall consultative process in which colleges/schools engaged.

     In general, the described consultative processes have the appearance of being engaging and substantive. The level of faculty, staff and student involvement, the budget detail provided for consideration, as well as the options provided/allowed for discussion varied between schools/colleges, yet a general improvement in quantity and appearance of consultation was noticeable. The primary effect of this is that more of the faculty and staff are now aware of the University's budget process and the difficulties we now face.

     Despite significant advancements in the consultative process, however, there is considerable room for improvement.  While some schools evidenced a significant improvement in the quality of consultation, others did not.  It is apparent that faculty within some schools/colleges struggled to participate in the consultative process.  Without full disclosure of the school’s/college’s budget, the budgeting process, or the number and extent of centrally administered school/college programs, some faculty found it difficult to provide advice on either school/college priorities, proposed modifications of existing programs, or even prioritization of budget reductions.  Under such circumstances there was still some consultation, though perhaps not specifically on those measures that were ultimately included in the final plans.

2.  Whether actions recommended meet the possible financial reductions we may encounter?

     Though the reduction in percentage or total dollars may be met, there is some concern that across-the-board reductions may impact some areas of operation more significantly than others.  In other words, while the cuts may be equal on a percentage basis, they may not be equitable.  This differential impact may have effects across divisions, effects not captured in the current planning process. These differential effects are no more obvious than the apparent ease of some units with significant outside resources, as exemplified by Athletics and Advancement, to handle the impact of budget reductions.  Consideration should be given to reducing or eliminating General Fund support for such units, until such time that the University can afford to resume the funding.

3. Are there particular recommendations that are especially useful or creative?

     A number of proposals described plans to consolidate administrative functions of departments and programs.  Such plans are to be commended.  It should be further noted that schools/colleges would do well to emulate the planning process utilized by the Craig School of Business.  The degree of consultation and cooperation achieved by that school is evident in the completeness and clarity of the plan submitted.

     The Kremen School of Education and Human Development proposed a reduction in paper and printing costs by moving course materials to Blackboard.  The Committee considered this innovative, though the savings appeared to be difficult to estimate and there was some question as to whether there would be problems encountered upon implementation and/or enforcement.  A second suggestion to use electronic communication with students (applications, notifications), to save on printing and mail costs, was also considered noteworthy.  This latter suggestion may appeal to those divisions who engage in a large volume of written communication with current and prospective students.

4.  Are there particular budgetary issues that may not have been considered?

     The reduction/elimination of programs within departments and schools, with or without consolidation, should have been given more serious consideration, as is expressed in response to questions 6 and 7.

     Some proposals did not account for new positions that are to be filled in AY 2003-04 or AY 2004-05.  Such hires will require further reductions in order to offset increases in baseline expenditures for salaries.

     It was expected that schools/colleges would describe significant savings through the reduction of assigned time or the release of part-time instructors.  Further analysis will be required, however, to determine whether such reductions will impact faculty research and creative activities.

     Schools/colleges also described savings through reductions in course offerings, with accompanying increases in class size for remaining courses.  However, it is not clear as to whether available resources (rooms, supplies) will accommodate the planned increases in course enrollments.

     The use of carry-forwards to protect existing operations within schools/colleges and divisions is commendable. However, such use of carry-forwards just delays the implementation of reductions that will eventually become inevitable.  While it is a reasonable expectation to meet reductions through attrition of faculty and staff, such planning is not proactive and may not be sufficient given current and future budget expectations.  All plans should identify those reductions that will be implemented when carry-forward is depleted.

     Some proposed actions require a lead-time of a year or more before cost-savings will be realized.  It may be reasonable to begin planning for budget reductions in AY 2005-06 by affecting selected policies or procedures in AY 2004-05, so as to help realize and expedite such savings.

5. Are some areas one college might be recommending that would have some unforeseen effect on another college, or the university in general?

     Plans to merge or eliminate functions within divisions should be examined for possible impact on the functions/services within other divisions, particularly when it is known that others will have to assume the eliminated functions/services.

     The Committee questions the assumption that costs can be covered by increasing existing student fees or through the implementation of new student fees.  This seems particularly onerous as undergraduate student fees are already slated to increase by 10%.

     It is unclear whether planned reductions in Public Safety may impact campus safety, a plan in conflict with the guiding Principles for Budget Plans.  There is also some concern about the long-term effect of eliminating the Internal Auditor position.  If such reductions are made, it is suggested that resumption of these activities be given priority.  The Committee would prefer that those forwarding such plans be asked to provide alternative cuts.

6. Are there particular areas you as a committee would want the Provost to consider before making a recommendation to the President?

     There are many recommendations to release part-time instructors, which represent the greatest efficiencies in instruction within schools/colleges.  Also, some schools/colleges are proceeding with searches which, when filled, could offset and possibly surpass the planned savings.

     The loss of FTES that will result from faculty reassignments (i.e. faculty replacing lecturers) may not have been considered, or at least may have been underestimated.

     When an application for an extramural grant or contract seeks backfill to replace an employee’s salary, the Provost should insist that the backfill be funded at the full cost of the employee’s salary and benefits.

     A number of administrative consolidations have been outlined which will provide some savings.  Expanding this concept may prove fruitful.  For example, the consolidation of schools to reduce their number should be considered.  Consolidations within and between schools should also be examined, particularly with the intent to reduce the number and breadth of programs.  We suggest a special task force be convened to examine the issue and make more specific recommendations.

7.  Based on the guiding principles that I outlined, the suggestions for consideration submitted by the university community, and those suggestions considered at the Budget Summit and Student's Budget Summit, are there areas that are not addressed in the reports received from the colleges? Or areas that have been addressed that conflict with information coming out of the summits?

     A fair number of issues raised in the budget summits were implemented by the schools/colleges and divisions.

     The decentralized budget model has led to a decentralization of budget reduction planning.  Across-the-board reductions within this decentralized process have created disparate results.  Thus, any expectation of deriving a single cohesive or unifying plan has been seriously compromised.  It is evident from the plans submitted, however, that the University may be at a point where across-the-board cuts may not be the best or only solution to current and future budget reductions.  It is anticipated that the University may yet face further reductions in the 2004-05 budget, prior to implementation, mid-year reductions, and even further reductions in 2005-06.  The Committee recommends serious consideration of more significant steps to reduce or even eliminate programs, departments, or schools.  Where appropriate, such steps should accompany program, department, or school consolidations.  These vertical cuts should not be viewed as replacements for horizontal (across-the-board) cuts.  Rather, the two processes should be viewed as synergistic to each other - selected vertical cuts softening the impact of horizontal cuts and vice versa.