General Budget Framework Document - Round 3
SEPTEMBER 4, 2002
Office of the Chancellor
The formulation and promulgation of this "General
Budget Framework" initiates the process for permanent budget reductions
contained in the document entitled "Procedures to be Invoked for Significant
Budget Reallocations and Reductions" [hereinafter "Procedures Document"]1,
approved by the Academic Planning Committee on 2/20/93, accepted by the Chancellor,
and referred to in the
UNL Bylaws. These
procedures were followed in the most recent round of budget reductions.
I. Nature and Amount of the Reduction
This is the third round of budget reductions imposed on the University since
July 1, 2001. The earlier reductions were for FY 2002 and FY 2003 budgets. In
two earlier rounds, UNL has reduced its base budget for FY 2003 by $9.8 million.
In this round in response to a special session of the Legislature, UNL must
further reduce its base budget by approximately $7,513,953. Because these reductions
are for the fiscal year that began on July 1, 2002, it is likely that two sets
of reductions will need to be identified: those reductions that will be permanent
reductions to the base budget and those reductions that will be temporary one-time
reductions in order to have sufficient cash to fund the 2002-2003 budget.
This reduction must be placed in a context of continuing expected revenue shortfalls
in at least the next biennium and perhaps beyond. With fixed expenses, such
as health insurance premiums and utilities continuing to rise, the University
must prepare for future budget reductions or reallocations in order to balance
its budgets in the years ahead. The most recent projection by the Legislature's
Appropriations Committee shows a cash shortfall for the next biennium of $470
million.
II. Principles for the Budget Reduction Process
The Procedures Document contains general issues, general guidelines, and criteria
to be applied in making significant reductions and program eliminations. In
addition, the campus administration proposes in Appendix B a set of supplemental
principles to guide the current reduction. These principles were utilized in
the two preceding rounds of reductions.
Because this reduction follows reductions already
implemented, it may be necessary to engage University procedures related to program
eliminations. The consequences of program eliminations are set forth by Regents
By-laws 4.4.1, 4.7.1, 4.9, 4.11 and 4.12 (attached as Appendix C). Both the
Procedures Document and the Principles Document are applicable to program eliminations.
In addition, President L. Dennis Smith has issued Executive Order No. 24 which
defines "program" for program
elimination purposes. This definition is identical to the definition found
in the Procedures Document.
The Principles Document requires that budget reductions be the product of considered
judgments and relate to the priorities of the University and the goal of positioning
the University to continue its upward momentum. Such judgments must be informed
by relevant data but cannot be exclusively data-driven. Ultimately, these decisions,
like those relating to budget enhancements, require judgments, formed after broad
consultation and discussion with the Unviersity community. The Board of Regents
By-laws also require that any action be sensitive to the principles of AAUP.
III. Allocation of Reduction to Divisions and Units of the University
In earlier reductions, each unit had been asked to develop cuts of up to 5 percent
of its budget. Thus there already had been considerable preparation for this
latest round. The likelihood of a future reduction of unspecified amount became
evident in the early summer of 2002. Thus, prior to the precise amount being
known, units were asked to present additional reductions of 5 percent and 10
percent to their Vice Chancellors and conversations with unit heads as well
as among the Vice Chancellors and the Chancellor have continued throughout the
summer.
There is no intention to allocate the reduction evenly across the University
or to allocate a particular percentage to a division or unit. Specific budget
reductions and program eliminations have been examined and the choice among possible
candidates will be made on the basis of judgments about what is best for the future
of the University. An effort will be made to continue to give priority to the
academic units; current expenditures in administrative divisions will be closely
examined to find efficiencies and possible reductions.
Sources of potential revenue increases available to the campus will also be examined.
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IV. Implementation of Reductions
Once reductions are finalized, they will be implemented as expeditiously as
possible without unduly disrupting the ongoing activities of the University
and the lives of students and faculty. The earliest possible date for elimination
of any academic program will be September, 2003.
Once base-budget reductions are finalized efforts will be made to identify ways
to cash flow the 2002-2003 budget through temporary savings.
The University will follow its reduction-in-force procedures for faculty and staff
and will remain sensitive to AAUP recommendations in its efforts to assist any
faculty members affected by the reduction.
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V. Time Frame for Making Budget Reduction Decisions
The ''Procedures Document' establishes a process for the University of Nebraska-Lincoln
for arriving at decisions relating to final budget reductions. It provides that
the Chancellor shall establish a time frame within which the procedures are
to be implemented. The time frame for these reductions is attached as Appendix
A.
APPENDIX A: BUDGET REDUCTION
PROCESS TIME FRAME
APPENDIX B: PRINCIPLES GOVERNING BUDGET REDUCTIONS
APPENDIX C: BOARD OF REGENTS BY-LAWS RELATING TO PROGRAM ELIMINATION
CHANCELLOR | UNL
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