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.


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.


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.



FOOTNOTES

1) After a significant budget reduction in 1992, Chancellor Graham Spanier charged a broadly representative committee to develop a process that was flexible and yet permitted broad participation. The Committee developed a proposal during the summer of 1992 which was ultimately adopted by the Academic Planning Committee in November, 1992 and the Academic Senate in December, 1992. ASUN approved it in February, 1993 and shortly thereafter the Academic Planning Committee promulgated the procedures. These procedures are referenced in the UNL Bylaws.


APPENDIX A: BUDGET REDUCTION PROCESS TIME FRAME

APPENDIX B: PRINCIPLES GOVERNING BUDGET REDUCTIONS

APPENDIX C: BOARD OF REGENTS BY-LAWS RELATING TO PROGRAM ELIMINATION



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