Memorandum

Proposed General Budget Framework Document-Fiscal Years 2003-04/2004-05
MARCH 3, 2003

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 rounds of budget reductions.


I. Nature and Amount of the Reduction

The State of Nebraska currently faces a very serious shortfall in revenue relative to projected expenses for the 2003-2005 biennium. The Governor has submitted a proposed budget that would provide the University with 10% fewer dollars than it received for 2002-2003. This would result in approximately a loss of $21 million for UNL for the fiscal year 2003-2004 beginning on July 1, 2003. The Governor recommended a steady state budget for the University for the 2004-2005 fiscal year.

For fiscal year 2003-2004, the $21 million reduction does not include funds required for any salary increase nor does it consider fixed costs such as utilities, health care, and insurance that continue to increase.

Because the Legislature is in session, the precise nature and amount of the exact budget cut will not be finally known until early June. However, considering the potential size of the reduction and the time consumed by campus processes, it is essential that the campus initiate the process at this time. Thus initial planning processes are under way focused on the Governor's recommendation.


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 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 in the 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 # 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 University community. The Board of Regent 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 response to earlier reductions imposed in 2002-2003, units were asked to present reductions of 5% and 10% to their Vice Chancellors and conversations with unit heads as well as among the Vice Chancellors and the Chancellor were held last summer. Currently each Vice Chancellor and Dean was asked to review their earlier ideas and to submit reductions based on a 10% reduction. Conversations will be held among the Chancellor and Vice-Chancellors and with the Deans as new sets of proposals are developed.

There is no intention to allocate the reduction evenly across the University or to allocate a particular percentage to each 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

President Smith has asked that the campuses provide him with some proposed reductions by March 1 in order for him to disclose them to the Legislature at the Appropriations Committee hearing on March 10th. He has asked that the full plan for reductions be available by April 1 although not all proposals may be made public at that time. Thus budget reduction proposals may be publicly made in three phases: Phase 1 on or about March 10th; Phase II on or about April 1; and Phase III on or about June 10th when the full nature and amount of the budget reductions will be known.

Any public announcement of reductions will be identified as the Chancellor's proposals subject to the APC hearing process. The APC may agree to hold hearings immediately subsequent to the public disclosure of any proposal.

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. Budget support for administrative programs and personnel will be withdrawn in accordance with the notice provisions for those categories of employees. The earliest possible date for elimination of any academic program will be September, 2004. Most faculty are entitled to a one year's notice before they may be laid off so that academic activities related to programs that are eliminated may continue during that year period until September 2005.

Once base-budget reductions are finalized, efforts will be made to identify ways to cash flow the 2003-2004 budget through temporary savings.

The University will follow its reduction-in-force procedures for staff and will remain sensitive to AAUP recommendations in its efforts to assist any faculty members affected by the reduction. Particular efforts will be made to assist tenured faculty in securing employment at the University.



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