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Board approves tough budget for current year
By Dr. David Baker, Interim Senior Vice President and Provost, and Chief Operating Officer
Sept. 9, 2009
Today our Trustees approved a $419 million budget for the current fiscal year that contains a number of strategic investments and reductions.
Significantly, the budget preserves undergraduate tuition rates at current levels through this semester, and it raises rates by 3.5 percent in the spring. In keeping with convention, we will increase scholarship support this year by a similar proportion, or $1.4 million. Fees are flat in most instances, with room and board rates increasing modestly. These actions are consistent with our stated objective of crafting a budget that puts students and academics first, and it preserves as best as possible our commitment to access by keeping tuition increases at minimal levels.
This year, we expect revenue to increase about 6 percent, primarily from the spring tuition increase, an increase in graduate and law tuition, the increase in enrollment and the instructional funding we receive from the state (also known as State Share of Instruction or SSI). There are two points to keep in mind:
- First, the state funding formula is changing, and it will begin to favor universities with strong or strengthening graduation and course-completion rates. As most of you know, our enrollment growth in recent years has outpaced our graduation and course-completion rates, and increasingly this imbalance could affect our state support.
- Second, for a number of reasons, revenue projections in the state budget could prove too optimistic, and the state may be forced to cut higher education funding yet this year. Further, the state is deferring the 12th and final SSI payment to Ohio's universities this year until Fiscal Year 2011; in our budget, we have decided to exclude this $4.6 million from our planning.
We will make additional investments in scholarships (beyond the increase tied to tuition rates), start-up funding for research faculty, facilities support for auxiliaries and the BioInnovation Institute in Akron.
Greater reductions in administrative areas
Expenses will increase by 6 percent, driven in part by personnel costs (in response to rising enrollment), debt obligations, health insurance and reduced state support for higher education line items.
A number of reductions were necessary to balance the budget. Vice presidents cut administrative budgets by an average of 6 percent, and deans reduced academic budgets by an average of 2 percent. The budget for Athletics, an auxiliary unit, was reduced 3 percent. Together, the savings total $6 million.
We are thankful these reductions were achieved without resorting to layoffs or furloughs, though you will notice changes. Overall, 23 vacant positions have been eliminated (7 teaching, 16 nonteaching), and another two will be eliminated via attrition. Twenty-nine vacant positions (11 teaching and 18 nonteaching) have been reduced in scope and title. Salaries have been held steady for most employees, except when otherwise negotiated. And reductions have been made in nonpersonnel areas, such as travel, consultants and service contracts, to name a few.
Going forward
These reductions, of course, come at a time when the demand for our classes and services is increasing. This will require creative thinking on our part, as we reallocate resources and devise ways to create new or enhanced sources of revenue. Already, many of you have submitted cost-saving and revenue-generating ideas via ZipLine and by e-mail (budget_ideas@uakron.edu). Thank you for your submissions -- please keep them coming. We continue to evaluate every submission carefully, and you will see many of these ideas implemented in the months ahead.
The ideas will be needed in the next two budget years. We know that the state will reduce our funding by about 7 percent for FY11, which will start next July 1. Then two years out, we will have to plan a budget presumably without federal stimulus dollars. (This year's budget includes $16.8 million in those one-time funds.) So, in FY12, we are looking at an initial deficit of more than $20 million, even if:
- we hold spending increases to the rate of inflation (difficult to do when enrollment is increasing),
- the state allows us to raise tuition by a modest 3.5 percent in FY11 and FY12; and
- we continue to increase enrollment and credit hour production.
These are challenging times that require all of us to work together to ensure the continued success of the UA community. I look forward to working with all of you to shape a bright future for UA and its students.
Sincerely,
Dr. David Baker
Interim Senior Vice President and Provost, and Chief Operating Officer
Budget update from the Chief Financial Officer
By Dr. F. John Case,
Vice President for Finance and Administration/CFO
Aug. 5, 2009
Tuition for students will be held flat for the fall semester, the University's Board of Trustees decided today. At the same time, the Board made the difficult decision to increase tuition by 3.5 percent for the spring semester. The increase — along with earlier decisions to hold salaries steady and to reduce budgets and other investments — enables us to narrow our budget shortfall to about $7 million for the fiscal year that started July 1.
Over the next 30 days, the budget committee will evaluate dozens of options to reduce costs and enhance revenue. The balanced budget proposal that we recommend to the Board will likely include reductions that touch all programs and offices. As we make these tough decisions, we will strive to preserve as best we can the programs and services that directly support student success.
Our current shortfall stems primarily from three areas.
- Line items: Lawmakers in Columbus struck a number of line items from the budget for individual universities, including ours. Because some of these items are critical to our mission, we may recommend to the Board that we fund them ourselves.
- Rising costs: We continue to see health care and other costs rise at rates that significantly exceed inflation.
- State instructional funding: As you know, we receive about one-third of our funding from the state, the largest portion of which is instructional funding or SSI (state share of instruction). Early numbers from Columbus indicated that we could expect an increase in SSI, owing to recent increases in our enrollment, but as state revenue continued to come in far below expectations, the possibility of an increase in SSI vanished. In fact, our SSI funding for year one of the state budget is $4.6 million less than what we received last year.
I should note that our SSI funding will decline in year two of the state budget by about $7.4 million. The increase in tuition for the spring semester will help us prepare for this 2011 reduction.
For students, the decision to hold tuition steady for the fall semester will help make college more affordable for them and their families. UA has held tuition flat since 2006. The increase in spring tuition will help us maintain the quality of our academic core and sustain as many student services as possible.
Enrollment projections remain favorable for the fall; however, the state's large reduction in funding for the Ohio Instructional Opportunity Grant will affect about 4,500 of our students. Often, the recipients of this award are students with the greatest financial need. We have communicated with these students, letting them know about the options available and the financial aid specialists who are here to assist them.
With this state budget behind us, it's tempting to assume that the outlook will be better when the state devises the next budget, for fiscal years 2012 and 2013. Bear in mind that the current state budget makes use of $3.4 billion in one-time federal stimulus funds — dollars that are unlikely to be available two years from now. This translates into a loss of up to $15 million in SSI funding for the biennium that starts July 1, 2011. In short, the campus community should anticipate lean budgets annually through at least 2013.
Ideas requested
I want to encourage you to submit to me your questions or comments about the budget by sending a message to budget_issues@uakron.edu. I will answer questions of general interest in a Q&A on the Web. Also, I encourage you to use the comment box in ZipLine to submit your ideas and innovations that will help us avoid costs or increase revenue.
Despite some reductions, higher education fared better than most other areas in the state budget, yet another sign that Columbus recognizes the important role higher education plays in the state's economic prosperity. Now the onus is on us to continue to deliver results, even as we find fewer resources at our disposal. Tough task, yes — but with the state's funding formula for public colleges and universities shifting to a more results-based (vs. enrollment) orientation, it's critical to our future and our ability to achieve our mission that we prevail.
To our continued success,
John Case
Vice President for Finance and Administration/CFO
Budget update from the Chief Financial Officer
By Dr. F. John Case,
Vice President for Finance and Administration/CFO
July 8, 2009
AS IN PRIOR YEARS, we had hoped to have a budget in place by July 1, the first day of the fiscal year. However, because our budget is partially dependent on the state budget, which remains unsettled, we are unable to finalize a budget proposal at this time.
Instead, we have proposed, and our Board of Trustees has approved, a continuation budget for July and August, which means that college and administrative units will receive two months of funding at current levels. I have encouraged the deans and vice presidents to be cautious in their spending because our overall budget next year will likely be less than the current year's, though how much less remains unknown.
We receive about one-third of our funding from the state. Right now, state leaders are working to close a $3.2 billion gap in the 2010 and 2011 budgets. As this Columbus Dispatch article explains, $3.2 billion amounts to 6 percent of the overall state budget, but after rounds of previous cuts, easy decisions are scarce.
Higher education has been spared from major cuts so far, a sign that Columbus understands the role that higher education plays in economic development. Governor Ted Strickland has proposed a plan to close the deficit that sustains the two-year agreement between the state and its public universities. Under the agreement, the state increases support for instruction, and the universities agree to continue to hold tuition steady in 2010 and limit any increases in 2011 to no more than 3.5 percent.
Still, the Governor's deficit plan is not the final word, and the Legislature must now wrestle with resolving the differences between the House and Senate versions, and the proposal from the Governor. While we are hopeful that Ohio's commitment to higher education might yet be sustained, there is a possibility that appropriations to higher education might be reduced and, anticipating this possibility, we have begun to prepare budget models that include a reduction in state support.
Tough choices ahead
As we have stated in prior messages, we are in a stronger position than some other state universities; yet, we have difficult choices ahead. Today, our budget for the next fiscal year is short several million dollars. Any reduction in state funding would be added to that.
Our budget committee has been anticipating a tough budget year for some time. Months ago, the committee asked deans and vice presidents to submit two budget proposals — one assuming a flat budget and one assuming a 10 percent reduction. The budget committee has been reviewing the proposed reductions, placing priority on reductions that have no or minimal effect on student success.
Our challenge of crafting a balanced budget is compounded by this fact: About three-fourths of our budget is invested in personnel. That makes it difficult to isolate areas for reduction that do not directly affect student success or personnel.
On the upside, we are encouraged by our enrollment projections for fall that indicate an increase in credit-hour production is likely. This will help the budget to some degree. The enrollment numbers are another sign that our investments to our academic core, student retention and the campus landscape are yielding desirable results.
How you can help
As we move forward with the budget, we will continue to place priority on the best interests of our students and employees. At the same time, you can help create a brighter future for UA and its students several ways:
- Scrutinize every purchase decision to assure that it is essential to our core goals of student success, research and public service.
- Reach out to other departments and colleges to propose ways to work together to increase efficiency and reduce costs. For instance, perhaps a piece of equipment can be shared between two areas, rather than each area having its own.
- Take advantage of the comment box on ZipLine to submit ideas and innovations that will help us become more effective and efficient. It's all anonymous.
Also, I welcome your questions about the budget. We'll answer questions of general interest on a Web page for all to see. Send your questions to budget_ideas@uakron.edu.
I will have an update in a few weeks. Until then, I look forward to receiving your questions and your ideas.
To our continued success,
John Case
Vice President, Finance and Administration
July 8, 2009
News update sent to campus April 29, 2009
Board approves several budget-related items
along with faculty tenure and promotions
In a busy session earlier today, members of the University's Board of Trustees began to define the contours of the budget for the next fiscal year and approved a number of recommendations, including the holiday schedule and the awarding of promotions and tenure to faculty members.
The Board also approved:
- a proposal to hold undergraduate tuition and fees flat for the next academic year;
- a 5.7 percent increase in room rates and a slight increase in select meal plans; and
- an increase in graduate tuition between 4.5 and 6.6 percent, and law tuition between 6 and 12 percent.
Board members also learned that the budget model for the next fiscal year includes no annual salary increases for faculty, staff and contract professionals, except when otherwise negotiated.
At the same time, the Board approved the holiday schedule for the 2009-10 academic year and President Proenza's recommendation to authorize three additional days of paid leave from Dec. 29-31 to recognize employees' contributions to successes in enrollment and academics. The additional three days means that the University will be closed between Christmas and New Years Day.
The Board also approved recommendations to award promotions or tenure or both to 42 faculty members. Among the promotions are four new distinguished professors:
- Mr. Andrew Borowiec, distinguished professor of art
- Dr. Mukerrem Cakmak, distinguished professor of polymer engineering
- Dr. Walter Hixson, distinguished professor of history
- Dr. Wiley Youngs, distinguished professor of chemistry
Budget uncertainties
The decision to hold salaries level for faculty, staff and contract professionals stems from the tough economy. Dr. F. John Case, vice president of finance and administration, said the administration is working to close a projected budget deficit of $5 million to $10 million for the next fiscal year, which will begin July 1. The budget is complicated by several factors:
- State support to universities for the next biennium will be composed largely of one-time federal stimulus dollars. With no guarantee that those dollars would be available in subsequent budget cycles, the administration is hesitant make commitments that it may be unable to meet later.
- UA has some standalone items in the state budget, the funding for which could be reduced or eliminated by state lawmakers. Should that occur, UA would have to shoulder the cost of those programs alone, a move that would add to the University's projected deficit.
- Because of the economy, UA is cautious with projections regarding enrollment and residence hall occupancy rates, both of which contribute meaningfully to the University's budget.
UA is taking a number of actions to close the budget gap. For instance, the administration has asked departments to draw up two budget scenarios, one with no increase in funding and one with a 10 percent reduction. If budget reductions are necessary, they will be made strategically rather than across-the-board.
The suspension of annual raises will not apply to employees who are promoted during the coming year or to those who have negotiated raises through collective bargaining or other means for the 2010 fiscal year, which will begin July 1.
Most universities in Ohio and elsewhere are facing challenging budget scenarios for the coming fiscal year; some have taken much more drastic budget-reduction actions than what UA is announcing today. UA is in a stronger position because of recent enrollment gains and because of other actions taken within the last five years to position itself as favorably as possible in the current economy.
Last week, the University announced that its comprehensive campaign exceeded the campaign goal of $500 million and has raised $606.5 million to date. But UA's successes in development do not immediately help with budget issues primarily because about 95 percent of gifts to the University, including all those counted in the campaign, are restricted to donor-specified areas, such as scholarships. By law, restricted funds cannot be spent on general operating expenses such as salaries, unless specified by the donor.
Undergraduate tuition held flat
In keeping with the governor's proposed budget, which proposes a continuation of the arrangement in which universities hold undergraduate tuition flat in exchange for state support, there will be no increases in undergraduate tuition or mandatory fees for the next academic year.
In addition, course fees for undergraduates will be held flat and some may be reduced. The administration has asked the deans to submit potential course-fee reductions and eliminations in the coming weeks.
Room rates will increase 5.7 percent, owing to the need to make capital improvements to the residence halls so that they remain comfortable and conducive to student learning and development. There will be no increase for students living in Garson Hall, one of UA's older halls.
As for meal plans, the cost of the most popular option — the Gold Plan — will not change next year. Lesser-used plans will increase between 2.1 and 2.9 percent, an amount considerably less than the 5.5 percent increase seen in the food-only Consumer Price Index in 2007-08.
In addition, new meal plans are being introduced for commuter students, faculty, staff and contract professionals only. They can purchase plans that provide three meals a week or five meals a week at either the newly remodeled Rob's Café or Trackside Grill in Quaker Square. There's also a plan for 50 meals over a semester. Pricing is considerably less than the door rate.
Changes for graduate students and law students
Graduate tuition and fees will increase between 4.5 and 6.6 percent, based on the program. Specifically, tuition for:
- CBA graduate courses will increase 5.8 percent;
- nursing anesthesia graduate program will increase 4.5 percent; and
- all other graduate courses will increase 6.6 percent.
The graduate service fee will increase 7.1 percent, and the facilities fee will be adjusted to bring it in line with the undergraduate rate.
Generally, tuition at the School of Law will increase 6 percent for continuing students and 12 percent for new students. The general service fee will increase 6.1 percent for law students.
Even with these increases, the cost of UA's graduate and law programs will remain at or below the market average.
UA will reduce the out-of-state surcharge to $1 per credit hour for degree and certificate programs that will be offered online only. The first two programs, which have yet to launch, are:
- a master of science in postsecondary technical education, College of Education, and
- a certificate in the essentials of gerontological nursing, College of Nursing.
Holiday schedule for the 2009-10 academic year
The Board approved the following holiday schedule for the 2009-10 academic year.
- Friday, July 3, 2009, Independence Day
- Monday, Sept. 7, 2009, Labor Day
- Wednesday, Nov. 11, 2009, Veterans' Day (staff holiday – classes held)
- Thursday, Nov. 26, 2009, Thanksgiving Day
- Friday, Nov. 27, 2009, In lieu of Columbus Day (Monday, Oct. 12, 2009)
- Friday, Dec. 25, 2009, Christmas Day
- Monday, Dec. 28, 2009, Christmas holiday In lieu of Presidents' Day (Monday, February 15, 2010)
- Friday, January 1, 2010, New Year's Day
- Monday, January 18, 2010, Martin Luther King, Jr. Day
- Monday, May 31, 2010, Memorial Day
Also, additional paid leave will be granted Tuesday, Dec. 28 through Thursday, Dec. 30, 2009.
Summer hours are scheduled for Monday, May 11 through Aug. 21, 2009. This schedule includes a work day from 8 a.m. to 4:30 p.m. with a 30-minute lunch.
Message to campus from President Luis Proenza on April 20, 2009
As you know, Dear Colleague . . .
. . . these are difficult economic times for our nation and the world. The recession is severe, with many industries shaken. The health care and education sectors, which have tended to stabilize past recessions, have not been spared, and many of our sister institutions across the country are deeply affected. On a more personal level, many families are experiencing unemployment, foreclosures and bankruptcies at record levels.
Yet, our circumstances at The University of Akron reflect Charles Dickens' opening words from A Tale of Two Cities, "It was the best of times, it was the worst of times."
It is the best of times for The University of Akron because, thanks to your hard work, we have a solid academic core, outstanding student success, a very inviting New Landscape for Learning and promising joint efforts to achieve operational excellence. It is the best of times for The University of Akron because our investments and achievements during the past ten years have translated into solid enrollment increases and research strengths that position us better in this difficult economy. It is the best of times for The University of Akron because we currently do not anticipate having to take any of the severe actions such as the layoffs, furloughs, salary cuts or similar actions that other institutions have implemented.
Still, along with the rest of our nation, we are experiencing some of the worst of times. The widespread fiscal turmoil will not leave us unscathed, and we must do whatever we can to ensure the continued success of our students and our university.
As we now look to ensuring our future success, I think we must accept the fact that the global economy will continue to evolve in ways that will have a profound impact on everything we do and dramatically alter the environment in which public higher education operates. In this context, Ohio State University President E. Gordon Gee said in a recent speech to the annual meeting of the American Council on Education:
"At this defining moment -- when our communities and our nation need us more than ever -- we must fundamentally reinvent our institutions. We must become more agile, more responsive, less insular and less bureaucratic. In so doing, we will save ourselves from slouching into irrelevance.
"To accomplish the wholesale change that is needed for our students, our nation and our world, universities must break out of the silo structures -- of departments and budgets and mind sets -- that have calcified over time."
Accordingly, I see the opportunity for all of us to consider how we might adjust our practices and our organization so that The University of Akron can continue on its promising path. Indeed, I believe it is obvious that doing business as usual will not enable us to enjoy the gains we have made.
To that end, two years ago we began to align our university's goals and objectives with those of the University System of Ohio. This year, we have begun a strategic thinking process in which many of you already are participating. Today, we are hosting the first in a series of campus discussions led by guests who bring valuable perspectives and expertise that will help stimulate our creativity and ingenuity. Today's session is being conducted by the Disney Institute, with other notable and thought-provoking guests to follow, including Tuition Rising author Ron Ehrenberg and Arizona State University President Michael Crowe, a renowned innovator in U.S. public higher education.
We also are convening various groups to study how we might become more effective and efficient throughout the institution, and already some exciting recommendations are emerging even in these early stages of our process. The members of our Board of Trustees also are engaging strategically in policy and operational issues as their role in the University System of Ohio continues to unfold.
Of course, as we communicated earlier, we soon will have the suggestions that will come from every unit through the budget planning and budget hearings that are underway. We are developing a conservative 2009-2010 budget, one that will balance an anticipated $5- to 10-million shortfall and address budgetary constraints while keeping our students uppermost in mind and being sensitive to our faculty, staff and contract professionals. Additional details on the 2009-2010 budget assumptions will be forthcoming in the next few weeks.
Our challenges and opportunities extend beyond the coming year's budget, and I encourage you to share any ideas you may have about enhancing the quality of the student experience here while helping us operate more effectively and efficiently. Please also review our planning materials online at http://www.uakron.edu/strategic-plan/ and participate in the vital deliberations about our future and how we might best achieve yet greater success.
More than ever, we need the combined creativity and ingenuity of everyone in the University community so we might respond to today's exceptional challenges and opportunities by bringing about the innovations that will sustain our momentum and ensure the long-term prosperity of the University and those we serve.
With every good wish for our continued success,
Sincerely,
Dr. Luis M. Proenza
President, The University of Akron
April 20, 2009
