General Budget Framework Document
NOVEMBER 30, 2001
Office of the Chancellor
NATURE AND AMOUNT OF REDUCTION
A significant shortfall in revenue occurring after the promulgation of the 2002-2003 biennial budget requires a reduction in that budget in both of the fiscal years of the biennium. A special session of the Nebraska Legislature has reduced the University approved budget by $8,312,678 in FY02 and $11,202,919 in FY03. This amounts to 2% in FY02 and 2.5% in FY03.
Because the University has already allocated the FY02 budget and will be 5 months into the fiscal year before reductions can be determined, it is expected that most of the FY02 reductions will come in the form of vacancy savings, unallocated funds, and temporary reductions. However, this means that the base budget of the University will need to be reduced by the full $11,202,929 in FY03.
For FY02 it has been determined that Central Administration will fund on a temporary basis $4,775,000 of the $8,312,678 reduction. This will require that the University of Nebraska-Lincoln reduce its expenditures by $1,813,453.
For FY2003 permanent, base budget reductions will be required. It is estimated that the University of Nebraska-Lincoln's share of this reduction will be approximately $5,540,964. This amounts to UNL's share of the 2.5% reduction in the University's base budget.
PRINCIPLES FOR THE BUDGET REDUCTION PROCESS
The principles governing the development of proposals for budget reductions are set forth in a separate document entitled "Principles Governing Budget Reductions"[hereinafter "Principles Document"]. That document is attached hereto. It previously had been reviewed by the Academic Planning Committee and the Academic Senate Executive Committee and presented to the Academic Senate for comments.
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 University community.
ALLOCATION OF REDUCTION TO DIVISIONS AND UNITS OF THE UNIVERSITY
The budget reduction required here must be accomplished with the goal of leaving the University in as strong a position as circumstances permit. Across-the-board reductions do not reflect thoughtful application of University priorities but rather have the effect of weakening all units of the University. The intention is to effectuate targeted reductions in order to preserve the University's core strength. However, in order to make careful comparisons between alternatives it is essential that each unit surface, in a confidential manner, a percentage of its budget for review.
Although the current targeted amount of reduction is 2.5%, the context requires that we develop a scenario for a deeper reduction. First, there are portions of the University budget that are simply not subject to planned reduction because they are "required expenditures." In this category are items like utilities, insurance, including both casualty and health, operating and maintenance of buildings, and certain assessments for deferred maintenance and administrative support. Moreover, some of these expenditures are projected to increase in the current fiscal year and may increase further in FY 03. For example, we predict that our property and casualty insurance premiums will rise substantially following the events of September 11th.
Second, there are units that, at least in the short run, will not be able to reduce their budgets by the full 2.5% consistent with the stated priorities. Units with little existing flexibility or a high student demand may not be able to achieve this reduction without jeopardizing students' progress toward degrees, a high priority of the University.
Third, the campus administration requires the flexibility to not only achieve the required reduction but to do so with the University priorities in mind.
Accordingly each University unit will be asked to develop scenarios that describe a reduction of up to 5% of its FY 2002 base budget.
IMPLEMENTATION OF REDUCTIONS
Phase in period for reductions: The "Principles Document" refers to those University policies that apply to budget reductions that adversely affect University employees. These policies often provide notice and other procedural requirements that may require a period of time for implementation. Similarly, if academic programs are reduced or eliminated, student reliance may suggest a phase in of any such reduction. In developing reduction scenarios, units may propose a planned phase in of a reduction not to exceed 3 years in length. In such a case, the unit shall also propose a method of bridging the phase in period with other funds. This provides an opportunity, if necessary, to utilize a three-year planning horizon for full implementation of the proposed reductions.
Revenue enhancements: Units may propose revenue enhancements in the form of user fees to offset in whole or in part any proposed reductions. However, significant increases in student fees will by closely examined. If such fees are proposed, an alternative must also be included.
Operating funds and Non-academic personnel: A strong University cannot exist without productive faculty but faculty, regardless of their talent, cannot be productive without adequate support in terms of operating funds and the support of non-academic personnel. Reduction proposals that appear to run counter to this observation will be closely scrutinized.
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
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