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A-2 Faculty Advisory Committee on Budgets

Faculty Members
: Gerard Béhague, Linda Carpenter, Patrick Davis, Clinton Dawson, Diana DiNitto, Marvin Hackert (chair), Daniel Hamermesh, Steven Kachelmeier, Kerry Kinney, Dean Neikirk, Bruce Palka, Linda Reichl, Chandler Stolp, Madeline Sutherland-Meier (vice chair), Gerald Torres.

Administration Representatives: Sheldon Ekland-Olson (provost), Stephen Monti, William Lasher, Kevin Hegarty, Mary Knight, Gail Spillar, Maria Cruz.

The faculty members of the committee initially met to elect a vice chair and to discuss priorities for the coming year. Madeline Sutherland-Meier was elected as vice chair. Chair Marvin Hackert, then presented an overall view of the budget and the budget process using notes from Kevin Hegarty’s remarks presented at the fall 2002 leadership conference. This was followed by a discussion of the annual report from last year’s committee. A solicitation of faculty concerns and questions yielded:

Source of budget/what is “other unidentified” funds listed in the budget;
implications of using the flat tuition;
prospects for 100% return of indirect costs and impact on budget;
review of question concerning cap on summer salary for teaching;
request to hear a status report from Efficiency Task Force.

Henceforth, the committee met with Provost Sheldon Ekland-Olson and/or other members of the administration. The second meeting included an overall assessment of the budget and the role of the committee by Provost Sheldon Ekland-Olson. He emphasized our help to set priorities to identify those areas or targeted programs that should be considered for extra support. This was followed by a presentation by Kevin Hegarty, Vice President and Chief Financial Officer, on a summary of budget and cost-cutting measures either implemented or under consideration.

The essential operating budget of The University of Texas at Austin was broken down into three operational subgroups:

Space. Space was described as “institutional currency” – at a going average rate of about ~$285 / sq. ft. Some research labs are much higher than this average. Future topics for consideration included setting reasonable standards for office space, lecture halls, etc., and looking at more efficient use of space and how space is allocated and scheduled.
Goods and Services. Most of the savings identified by the Efficiency Task Force came from examining this area. A Campus Supply Gateway was presented involving a major office supplier like Office Depot and a highly underutilized business (HUB) working together to deliver ~ 50% discount relative to manufacturers suggested retail price (MSRP) on most common office goods. This could lead to ~$2.5 million in savings through the realization of better prices and smaller inventories to store and manage. Additional savings were proposed from a use fee for paying by credit card (potential savings ~$1.8 million) with the option of using a debit card at no cost. Other ideas presented included consolidating express mail business, print management to cut printing costs, and fleet management in the form of a University Motor Pool.
Faculty and Support Staff. The University is committed to reducing the student/faculty ratio and is planning to go forward with its plans to enlarge the size of the faculty.

Since this was a legislative year, the discussion of budget related items was very dependent on how the University would fare in the current legislative session. The committee was invited to attend two meetings of the University Leadership Council (ULC) to hear briefings on budget related matters. It was obvious from these briefings that due to the State’s reduced financial revenues, the University will be facing a severe budget crisis involving both a one-time return of allocation and the expectation of recurring budget reductions. Without the prospect of increased state revenues, the best prospects for additional revenues are two proposals being considered in the 78th Legislature – 100% return of indirect costs and tuition deregulation. However, in the short term the University faces the likely probability of staff layoffs, reduced summer teaching program, no merit increases in the fall, and curtailed faculty recruitment. The committee met more informally with the provost in February to discuss the “follow-on” issues relating to the previous budget discussions. Provost Ekland-Olson opened the meeting by summarizing the current budget situation and the numbers they had given to the deans for recurring budget reductions. This was followed by a discussion of the process of how the cuts were being delegated (deans/chairs vs. central administration). The discussion also included the best ways for ideas for additional cost savings to be forwarded to the administration. It was concluded that there was a need for comparative information from other institutions to better appreciate our budget situation and to consider other solutions. The Office of Institutional Studies may be a source of such information and the idea of developing a “data warehouse” for easy future reference relating to such issues was presented.

In addition to the discussions held by the committee, the following ideas came from the joint meeting of Texas A&M University (TAMU) Faculty Senate and UT Faculty Council meeting that considered the topic: Striving for Excellence during Frugal Times:

1. Greater institutional synergy between UT and TAMU on the level of individual programs.
Institutional mechanisms for increasing number of joint UT and TAMU research projects.
Better facilitation of UT/TAMU interactions — Role of VPs for research in this effort.
2. Improving hours of registration per semester (flat rate plan).
Strive towards full-year operation (trimester).
3. Seek reduction of state educational requirements in state history and government.
4. Pool benefits to a greater extent to benefit from larger scale (combine UT and TAMU).
5. Savings of maintenance and operation for telephone, duplicating services, supplies, etc.
Other: Different ways of increasing revenue — new or increased fees; distance learning initiatives; explore ways athletics can shoulder some of the load; program consolidation; retirement incentives; incentives for increased teaching loads of senior faculty less involved in research.

As a post mortem on these discussions, the following is a summary of key actions taken by the University and the 78th Legislature that impact the budget. New legislation covers a broad array of issues from tuition deregulation and allowing institutions to retain 100% of the indirect cost reimbursements for research, to providing zero-interest loans to students who maintain a B average and graduate from college within four years.

78th Legislative Actions

Tuition deregulation — (see below).
100% indirect costs return ~ $39 million over biennium to UT Austin.
50% reduction of medical benefits to part-time employees (impacts all graduate students plus numerous other faculty and staff part-time employees).
Increases from three to ten years the length of minimum UT service needed by staff and faculty to be eligible to receive state paid insurance premium sharing during retirement if they do not meet the “Rule of 80.”
90-day delay in health insurance for new employees.

Actions taken by UT Austin Administration

March 2003 – “Supplies Gateway” with Office Depot expected to save $2.5 million.
April 2003 – 1.75% convenience charge on credit/debit card payments for tuition and mandatory fees; estimated savings of $2 million.
No raise or merit pool for fall 2003 — estimated savings of $15 million.
Delay in faculty hiring — concern about high student/faculty ratio
Deferred maintenance on infrastructure.
Staff layoffs — working estimate of 300-350 positions. May/June – $16,000 retirement incentive offered to 487 staff eligible for retirement by end of August (77 staff had elected this option as of the June 5 report in The Daily Texan).

House Bill 3015 — Tuition Deregulation (*taken from a summary by Patricia K. Hicks, coordinating board liaison to the Council of Public University Presidents and Chancellors).
*Provides that a governing board may charge any student an amount designated as tuition that the governing board considers necessary for the effective operation of the institution in addition to amounts that an institution is authorized to charge as tuition under other provisions of the Education Code.
*Allows a governing board to set a different tuition rate for each program and course level offered by each institution of higher education and to set a different tuition rate as the board considers appropriate to increase graduation rates, encourage efficient use of facilities, or enhance employee performance.
*Expresses legislative intent that each institution of higher education shall make satisfactory progress towards the goals of Closing the Gaps and that each institution shall meet acceptable performance criteria, including measures such as graduation rates, retention rates, enrollment growth, educational quality, minority participation, financial aid, and affordability.
*Provides for a twelve member Legislative Oversight Committee on Tuition Deregulation (six senators, six representatives) to make recommendation for any legislative action necessary to meet the criteria listed above and any other criteria to improve higher education affordability and access.
*Requires the governing board to set aside not less than 20% of any amount of tuition charged to a resident undergraduate student in excess of $46 per semester credit hour to be used for financial aid for undergraduate students.
*Requires the governing board to set aside 15% of any amount of tuition charged to a resident student enrolled in a graduate or professional degree program in excess of $46 per semester credit hour for use in providing financial aid for such students.
*The bill authorizes changes in tuition to be made beginning with the fall 2003 semester. However, the bill did not receive the two-thirds vote necessary to make it effective immediately, so it doesn't become effective until September 1. As a practical matter, the institutions will not be able to increase tuition until spring 2004.

Marvin L. Hackert, chair

This document was posted on the Faculty Council Web site, on August 20, 2003. Paper copies are available on request from the Office of the General Faculty, FAC 22, F9500.