Update on the Budget Process
Dear Faculty, Staff and Students:
In my last communication on the budget process for the State of Tennessee, I said that I would give you additional updates. Late Monday afternoon, we received the budget guidance document from Dale Sims, Vice Chancellor for Business and Finance for the Tennessee Board of Regents. The information you will read below indicates sizable cuts to our State base appropriations, but some assistance is available to ameliorate the effects through the federal stimulus dollars, ARRA – the American Recovery and Reinvestment Act.
It will be necessary for us to use a variety of means to reach the reduced appropriations targets. We will use the nonrecurring ARRA funds over the next 2 ½ years to assist in phasing in the base reductions. For planning purposes, we are assuming modest tuition increases of around 5%, but we recognize that TBR sets tuition, so this number is for planning purposes. We also will restructure and reorganize operations throughout the University.
For the specifics, the TBR budget guidance documents include the State appropriations for the University of Memphis of $96,900,500, which represents a $19,886,300 reduction. Already, we have made reductions of 3% or $5,490,600 university-wide, leaving a difference of $14,396,700 needed to offset the State reduction. After adjusting for revenue and cost increase assumptions, our projections show that the University will need to reduce the base budgets by an estimated $7 million.
Where will these funds come from? In the short term, to address the reductions, the University will use the ARRA, the federal stimulus dollars to “assist” in the budget reductions. However, there are severe restrictions on their use and those funds will not completely offset the remaining estimated needs. ARRA funds cannot be used for recurring costs. Therefore, our plan must include a combination of reductions in expenses, ARRA funds directed at nonrecurring costs, tuition dollars and other funds that we can raise through auxiliaries, grants and contracts and fundraising.
To prepare for a May 8th deadline for the budget submission, the Provost, Vice Presidents and Athletic Director are examining their division’s recurring costs and considering uses of the ARRA funds to ameliorate the effects on our students and programs. Priority for the use of ARRA funds will be given to recruiting and retaining students, while keeping them in programs and on-track for a timely graduation. Additional emphasis will be placed on support for revenue generation through research grants and contracts, as well as expenditure reductions in our operations. Facilities expenditures must meet our criteria of directly benefitting students and meeting the ARRA requirements.
In regards to personnel, as a University, we will continue to hold the funds generated from the Voluntary Buyout Plan, until we can determine there are sufficient funds for the positions to be reinstated. Every year we have attrition from people who leave the University for other jobs or who retire. We will delay filling those positions with exceptions made through a strict review of the positions.
Representatives from the Faculty Senate, the Staff Senate and the Student Government Association will meet with the President’s Council for their input, and we will facilitate their involvement, even though this is a quick turn-around time for TBR’s May 8th deadline. We are scheduling some forums around campus for questions and answers. Please expect an announcement of the schedule and directions for these events next week.
Shirley C. Raines, President