home

Office of the President

Budget Related Questions and Answers When I last addressed the Board of Trustees at its December 5 meeting, I made a commitment to confront our financial challenges through an open and collaborative process. It is in that spirit that we have been communicating regularly with the campus, and in that spirit we have been meeting with campus constituencies to address their concerns. It is also in that spirit that we proposed to post answers to the most pressing questions from the entire community. What follows gets that process rolling with an amalgam of many of the questions we have received thus far, to which we will add as new questions come in. Please feel free to address questions to me at daniel.fogel@uvm.edu.

Q How many people will lose their jobs, and how do I know if I am among them?

A This is certainly the most difficult question to answer. We would dearly love to be able to say that every job at UVM is safe, but I cannot say that in good conscience. We will nonetheless seek to limit the number of persons who lose employment at the University, consistent with strategic priorities and resource constraints, and we will actively assist employees who are adversely affected, including working to find alternative employment at UVM when possible. Decisions about individual job cuts will be made at the department and unit level after budget targets are distributed and budget plans are finalized. We won’t announce how many employees will be affected until late February. We do know that the order of magnitude is most likely in the dozens, not hundreds based on current budget assumptions.

Q I have seen different numbers used to describe UVM’s budget problem. What is the accurate number?

A My Dec. 2 communication to the campus described a $22 million budget gap between projected revenues and expenditures. Due to new information about projected reductions to our state appropriation, that number could become as high as $28 million. Our current plan, which is subject to change if there are further substantive changes in budget projections, is to close the gap through 1) reductions in expenditures through cuts in the base General Fund budget, 2) revenue enhancements, and 3) draws on one-time funds from reserves. Although we now think that the 2010 budget gap is likely to be about $28 million, the cut to the General Fund in 2010 will be a little more than half that amount, about $15 million, followed by another projected base budget cut in 2011 of $6 million.

Q How much of UVM’s budget problem is due to internal versus external factors?

A For many years UVM, along with many other institutions, was funding ongoing budget commitments with one-time funds. We were able to cover these ongoing commitments – the great majority of which support people and programs in academic areas – when financial markets were at their height, producing robust earnings on short-term cash, and when a period of unprecedented enrollment growth regularly produced tuition income beyond what we had built into the budget. That is no longer the case. We now have to ensure that all ongoing expenditures are aligned with actual revenues. Out of the $28 million gap, $12.8 million is due to this practice. The rest is due to other factors beyond our control.

Q Why can’t you fix the entire budget problem by eliminating senior administrative positions?

A Our senior leadership team has produced great results at UVM. I believe it would be neither wise nor strategic to contemplate such a move. Some senior administrative positions will be eliminated, but even eliminating virtually all senior level positions would only address a small fraction of the problem. That would still leave the university with a large budget gap to fill, and no leadership to deal with it or to manage the institution.

Q How much of the budget gap is due to PeopleSoft implementation and Huron consulting services?

A PeopleSoft was implemented in the summer of 2006 to replace an outdated financial management system that was on the verge of ceasing to function. The cost of the project was funded over the preceding two years. The work of the Huron consultants over the past year ($10 million), was focused not on PeopleSoft implementation, but on dealing with the operations of the Grants and Contracts Accounting unit (GCA). Over the course of the past decade, the dollar value of university research has tripled with no increase in staffing in GCA. This resulted in significant work backlogs and an array of other operational issues. The consultants helped GCA staff to address these issues and build systems to improve the efficiency of the unit. Six additional staff were hired to ensure that the GCA unit can adequately support our researchers and, as a result, the Huron consultants are no longer on campus. The vast majority of the Huron consultant costs was one-time only and was addressed in the 2009 amended budget as one-time charges. The only component of these costs in the base budget is a $230,000 annual payment (for the next five years) for the PeopleSoft enhancements that were implemented to improve the operations in GCA.

Q How did you determine the percentage of budget reductions for each of the academic and administrative units?

A The General Fund budget allocations for the College of Medicine and for UVM Extension are determined by a set formula that includes a percentage of the state appropriation. Therefore, their budget targets are directly proportional to state rescissions. After calculating their reductions, we calculated the total remaining budget reduction necessary to balance the budget. We then assigned overall targets to the combined academic units and the combined administrative units. The percentage of the target assigned to the administrative units is slightly higher than that assigned to the academic units (6.5% for administrative units and 4.7% for academic units). Those academic units that have not yet met their student-faculty ratio targets were assigned higher percentage targets than those that have already achieved the target ratios.

Q Are you contemplating cutting entire academic programs?

A The only central management decision, as you see in the answer above, is how to allocate the budget targets strategically. The deans and the vice presidents will be making their own decisions on how to accomplish the cuts. In all cases, they will be looking at the issues of maintaining or even enhancing academic quality and of serving the needs of students. Academic programs cannot be cut without due process through the Faculty Senate and the Board of Trustees.

Q Couldn’t you lessen the impact on UVM faculty and staff by phasing the budget reductions?

A That is indeed the case, and it is part of our strategy. In fact, we will implement base budget reductions in the current fiscal year, in fiscal year 2010, and in fiscal year 2011, using revenue enhancements and one-time reserves to keep the base cuts in each year as low as possible.

Q Are you cutting the amount of money available to students who need financial aid?

A Some financial aid dollars for Vermont students are derived from state funds and those may decline in proportion to state rescissions. The University, however, is committed to supporting students with financial need, and the budget model we are using to address the budget gap over three fiscal years does not include any reductions in the amount of institutional need-based financial aid. In fact, we expect need-based aid to increase proportionately to accommodate the planned increases in student enrollment that are part of the budget model. The university has made a strong commitment to providing need-based financial aid, increasing those budget commitments from $16.5 million eight years ago to $40.4 million today.

Q When the university talks about job cuts, are tenured faculty in that mix? Under what conditions can the University lay off tenured faculty?

A Current tenured and tenure-track faculty will not have their positions cut, though the deans may choose to unfund vacant tenure-track positions in order to help meet expenditure reduction targets. As a general rule, tenured faculty would only be discharged if the institution declared "financial exigency" (the rough equivalent of bankruptcy). Today, UVM is very far from a state of exigency. We have sound fiscal foundations, with significant reserves, good credit, and an endowment, even after recent market declines, of several hundred million dollars. If programs are closed down (for instance, because a lack of student interest has led to low or no enrollment), tenured faculty in them would be assigned to other programs and duties. Barring what we believe is an extremely remote possibility of financial exigency, they would not be terminated.

Last modified December 18 2008 10:36 AM

Contact UVM © 2014 The University of Vermont - Burlington, VT 05405 - (802) 656-3131