News about next fiscal year’s budget continues to evolve, and we shared the latest information with the Budget Advisory Committee yesterday.
As we continue to work on this issue, our primary objectives are to serve students, protect our core mission, preserve dollars for the academic units, and optimize efficiency of operations through restructuring and process improvements.
At the committee meeting, we reviewed Tech’s 2017-2018 fiscal year budget in light of the governor’s recently released state budget and discussed the following points:
- The governor’s budget placed limitations on the way we can use its funding of the Tennessee Higher Education Commission’s (THEC) proposed outcomes formula budget.
- This resulted in $1 million less than expected to address current operations needs.
- The governor’s budget includes partial funding for a 3 percent mandatory salary pool for Tech employees.
- Tech is seeking flexibility in using the 3 percent salary pool and keeping discussions going about possible new funding.
- The THEC-recommended $700,000 due to Tech’s Carnegie reclassification was not funded in the governor’s proposed budget.
- We received an additional $500,000 to support our cybersecurity efforts.
- We remain optimistic that no academic unit will ultimately realize any budget reductions for FY18.
After our previous Budget Advisory Committee meeting, we faced a budget reduction of $2.6 million due to anticipated lost revenue from tuition dollars and unanticipated increases in scholarship awards.
We will fix the issue related to scholarship awards. We are taking action now to put the awarding process under thorough review. We are putting controls in place and making it a priority to create a new award strategy that maximizes the benefits of scholarship award dollars. An ad hoc scholarship committee of faculty, staff and administrators will review processes, evaluate effectiveness and suggest changes.
For now, the increased costs for the 3 percent salary increase and the lack of flexibility to use these funds means the university has to make an additional $1 million in budget reductions for FY18. The previous $2.6 million budget reductions were evenly split between instructional and non-instructional units. Only non-instructional units will absorb the additional $1 million.
This means we cannot avoid a reduction in force for administrative operations, but every unit is working hard to minimize the impact.
Division leaders have been asked to propose budget reductions based on the current information we have. Each division is reviewing its operational budget and functions to reduce expenses and protect Tech’s critical mission of serving students.
Priority is being given to setting priorities and restructuring within each division, and divisions are expected to look at how functions fulfill current university needs. All administrative divisions are proposing cuts, but not all are submitting plans for a reduction in force.
The impact on budgets and positions will be evaluated and shared in early March.
This places us in a situation where the university will have a reduction in force while at the same time awarding raises from the 3 percent salary pool. Until the legislature passes a final budget, I will continue to ask for flexibility with the appropriated dollars and ask for additional funding as originally recommended by THEC.
Although I had hoped to share better news with you at this point, this is where we are today. The events that will ultimately determine our FY18 budget will be the first Board of Trustees meeting on March 23, the end of the legislative session in April and final state appropriations for next year, THEC’s final recommendations on tuition and mandatory fees in May, and then our Board meeting in June to approve our final FY18 budget.
I’m reminded of the tremendous progress we’ve made in our many recent student success initiatives, including improved retention, graduation rates and enhanced career opportunities. As we face our budget challenges, I see the same spirit of service in the division leaders who are working to protect and enhance our focus on students.