FY 2012 Budget Update, March 15, 2011

From: Daniel Mark Fogel, President
           Jane E. Knodell, Provost and Senior Vice President

To:      University of Vermont Community

Date:   March 15, 2011

RE:      FY 2012 Budget Update

We are writing to update you on the status of the FY 2012 budget and the progress made since early February, when we last communicated on the subject. We have developed recommendations to bring to the Board of Trustees on many of our budget challenges and, while every proposed solution requires difficult choices, we believe that the recommendations outlined below would, if approved, allow us to maintain UVM’s strong position while moderating the impact on the campus community. Our commitment to sustaining, enhancing, and improving the academic experience—our core mission—has been central to the decision-making process to date.

Before reviewing the specific steps recommended to balance the budget, we do want to reflect on the relatively strong position UVM has maintained over the last several years during the international budget crisis. To be sure, the budget measures we have had to take have not been easy—some have been very hard indeed—but they have been leavened by holding tuition increases to an average of 5.3% over the last three years, by continued hiring of faculty and staff, by raises for all personnel except non-represented staff making more than $75,000 annually, and by continued investment in programs and facilities. In contrast, many other colleges and universities have had recourse to such stringent measures as double-digit tuition increases for consecutive years, extensive layoffs of faculty and staff, academic and non-academic program elimination, blanket salary and hiring freezes, and salary reductions and furloughs. Our intent throughout has been to minimize negative impacts on our core mission to the greatest extent possible. Despite a negative outlook for the entire higher education sector, Moody’s Investors Service has just informed us it has revised the outlook for UVM from negative to stable.

Over the last several weeks, we have been engaged in budget hearings with deans, vice presidents, and other senior leaders. They were tasked with two scenarios to address the budget gap: the first focused on identifying $3 million in potential expense reductions and revenue enhancements, and the second on identifying $6 million in reductions and enhancements. As we deliberated over the proposed reductions, we were guided by the following objectives:  

• To  continue to recruit outstanding and diverse students;
• To assure a high-quality, affordable education for our students with appropriate levels of financial aid to provide access to the largest numbers of students;
• To minimize the impact on faculty and staff;
• To consider budget reductions within the context of each unit and not simply implement across-the-board reductions; and
• To identify resources to reinvest in mission-critical initiatives to continue the advance of the University. 
  

The following summarizes the broad strategic decisions made to address the FY 2012 budget gap. We believe the most difficult of these decisions were simply unavoidable, and we are grateful that others reflect our ability to maintain our footing in critical areas.  

• Make targeted reductions in administrative and academic units totaling $2.9 million;
• Budget for 0% salary increases for all employees for FY 2012;
• Move forward with plans for changes to post-retirement medical benefits (details to be communicated later this week). Although these changes will not affect the FY 2012 budget, they are necessary to address longer term budget challenges.
• Recommend a tuition increase of 5.8% to the Board of Trustees;
• Invest up to an additional $1.5 million in student financial aid beyond the $10.8 million increase reflected in the original FY 2012 budget projection;
• Hold undergraduate enrollment constant;
• Continue all current tenure-track faculty searches in progress and move ahead with plans for faculty recruitments for FY 2013; and
• Maintain benefits without an increase in employees’ percentage share of the cost of health and dental insurance. 
  

Notwithstanding our constrained budget, it is imperative that we invest in our future. Toward that end, we have also identified resources for targeted strategic investments in mission-critical areas, including resources to support the general education initiative currently under consideration by the Faculty Senate; resources to support the Transdisciplinary Research Initiative (updates on this year’s progress, can be found on the TRI website); and unit-specific academic needs. Information about the overall University budget as well as unit-specific budget reductions is available at the UVM Budget Planning website.

The FY 2012 budget plan will require revision if the planning assumptions upon which it is based are not realized, including factors such as the legislative appropriation, enrollment and tuition revenue net of financial aid, and the rate of tuition increase that will win Board approval. We are doing everything in our power to bring them to fruition, but we must be prepared for further budget challenges.

Throughout this process we have been engaged with the leadership and key committees of University governance groups, including the Faculty Senate, Staff Council, the Student Government Association, and the Graduate Student Senate. Their advice and counsel have been invaluable and greatly appreciated. Further, we received over 200 creative cost reduction and revenue suggestions from across the University. Those ideas are also available at the UVM Budget Planning website and have been shared with deans and vice presidents for consideration.

We are grateful for the efforts of everyone involved in this process and believe that the difficult but necessary decisions we make now will allow us to continue on our path to realizing our vision of being among the nation’s premier small research universities. The decisions we have made so far will shape the FY 2012 budget recommendations we will bring to the Board of Trustees in May—recommendations that will almost certainly evolve further through continuing dialogue with campus and board leadership in the intervening period. That dialogue will increasingly turn to measures we must set afoot as soon as possible in order to strengthen our management of institutional costs and of student cost-of-attendance in FY 2013 (beginning July 1, 2012) and beyond. Thank you.

cc:        Board of Trustees

Last modified March 15 2011 01:43 PM