University of Vermont

Former President Daniel Mark Fogel

The Budget for Fiscal Year 2010 and UVM's Evolving Response to Financial Challenges

December 2, 2008

From: Daniel Mark Fogel

To: The UVM Community

Re: The Situation Now: The Budget for Fiscal Year 2010
and UVM’s Evolving Response to Financial Challenges

I am writing once again to provide you with an update on next year’s budget and UVM’s evolving response to the financial turmoil that has touched virtually every enterprise around the world, including higher education institutions throughout the United States. Our immediate task, after due consultation with the Board of Trustees at the Board’s quarterly meeting later this week, is to act swiftly to close the $22 million general fund budget gap we are facing next year through the application of strategic measures. Early next week, we expect to release FY 2010 budget reduction targets to units across campus; as I have said before, the financial challenges we must address are significant and real.

I have done a great deal of work over the course of the last two weeks with the Ad Hoc Strategic Budget Advisers, and I have found the recommendations of the group to be exceptionally thoughtful and helpful. I am grateful to each member of the group for work that is fully summarized in the attached PDF file “Recommendations of the Ad Hoc Strategic Budget Advisers.” In short, everyone recognized the seriousness and urgency of the work that we must undertake as an institution to strengthen our financial position, and we collectively reaffirmed the primacy of preserving and enhancing academic value, with emphasis on high quality and diverse enrollment, on the quality of the student experience, and on faculty research, scholarship, and creative activity. We agreed that we must make decisions fully aware of the consequences for members of this community. We further agreed that, though the Provost and I will determine the budget reduction targets and will make the final decisions, the primary responsibility for making recommendations as to what should be cut lies with the unit heads at the level of the deans and vice presidents in open consultation and collaboration with faculty and staff to the full extent that the unit heads deem appropriate and feasible.

I must remind everyone that this is not a temporary belt-tightening exercise but rather a long-term restructuring of the base general fund budget. Multiple strategies will be used, including the permanent elimination of a number of positions. Although we will make every effort to minimize and mitigate the effects of probable reductions in force by relying when possible and appropriate on attrition and on the unfunding of vacant positions, it would not be right or feasible to eliminate only those positions that are now vacant or that happen to become vacant before the beginning of the next fiscal year. To the contrary, the measures we take now must be strategic if they are to create, as we believe they must, opportunities for UVM to emerge from the financial turmoil sooner and stronger than institutions that are less focused, less nimble, and less resourceful.

Once budget targets have been given to the units, the deans and vice presidents will need time for budget planning, analysis, and consultation with faculty and staff. As dearly as we would like to relieve the anxiety and uncertainty felt throughout the community about the effects of budget cuts on departments and individuals, we do not believe that we will be able to determine effects on specific positions and personnel until mid-January at the earliest. There are, however, several determinations we have already made that will inform the setting of the 2010 budget targets and our ongoing work in response to the economic downturn:

  • Operating budgets at the college/school and divisional levels in FY 2010 will be no higher than 2009 levels (except insofar as there are increases that are mandatory, such as in professional development funds for represented faculty).
  • Compensation increases for non-unionized staff at higher compensation levels will be frozen; the deans and vice presidents have already joined me in the determination that we will not receive pay increases for next year, and our current thinking is that salaries from $75,000 up will be held constant. On the other hand, we have every expectation of being able to implement progressive salary increases for individuals paid below the cut-off level, with lower-paid staff receiving higher percentage increases. (We will, of course, follow all existing collective bargaining agreements.)
  • We plan to suspend several searches for key high-level positions. The times create an unfavorable environment for success in these searches, and it makes sense to realize cost savings by closing some or all of our current recruitments. Very fortunately, we have highly qualified and dedicated colleagues who can provide the necessary leadership to keep the University moving forward. I will make strategic decisions on which searches to drop and will announce those decisions promptly.
  • The targets for the 2010 budget will ensure that, through strategic budget reductions and increased enrollment, we reach or modestly exceed the student/faculty ratio of 16/1 upon which our budget planning has been premised since Board approval of the Strategic Financial Plan in 2004 (we are currently at a ratio of 15.2/1, and we are planning an enrollment increase of 300 students).
  • Construction projects at Jeffords Hall and the Given Building will proceed as planned. These critical projects are well under way, and close analysis leads to the compelling conclusion that suspending them in mid-construction would in the long run cost UVM a great deal of money. Borrowing for other projects in the Strategic Capital Plan will be placed on hold until further notice.
  • We will protect all current financial aid commitments to students, will make every effort to target increased aid for students with the greatest need, and will hold tuition increases to the levels long planned in the Strategic Financial Plan (a 6% increase for next year, on which the net to the University, after financial aid, will be a little under 4%).
  • Academic units were not affected by the $2.7 million budget reduction earlier this year; in FY 2010 academic units will have to share in the reductions along with other units across the campus.

Before I close, I want to share some positive news: our application numbers are looking strong at this point in time, with significant increases in applicants in virtually every category, including early action, in-state, out-of-state (all three up 8%), and ALANA applications (up 31%). Academic quality is strong across the applicant pool as well. At the same time, for all cohorts (first-year, sophomores, juniors, etc.) registration for the upcoming spring term is higher as a percentage of each cohort than in either of the last two years. These compelling numbers bear testament to the hard work and commitment of this entire community, indicating that we have a solid foundation for continuing to advance and strengthen our University.

Finally, I want to highlight the importance and enduring nature of the work we have done together in recent years. The values, principles, and priorities set forth in key institutional position statements, including the Vision, Mission, and Goals in the recently revised University Strategic Plan, the affirmations of Our Common Ground, the compensation philosophy summarized in "Parameters for Compensation at The University of Vermont," and the summary in "Continuing UVM's Advance" (April 2008) of the principles and imperatives set forth in "Signatures of Excellence" (October 2006) continue to serve us well. Agreement on the values embodied in these documents might perhaps be taken for granted; I submit, however, that much of the strength and cohesion that our community will bring to the project of turning budget challenges into hard-won opportunities will derive from the deliberative and collaborative processes that over time have built a shared sense of direction, purpose, and commitment to the vision and mission of UVM.

Thanks to all for your good work on behalf of UVM. I have every confidence that we will successfully complete the work that lies ahead of us.

Last modified December 03 2008 07:55 PM

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