FY18/19 Budget Reallocations and Reductions Process Narrative

Overview

Developed in November, 1992 and revised and reaffirmed in March 2011, the Procedures to Be Invoked for Significant Budget Reallocations and Reductions document serves as a guide to university stakeholders when significant budget reallocations or reductions to the university’s budget are required. The ultimate goal is to balance the university’s budget in an open and transparent method while concurrently providing opportunities for discussion, consultation and negotiation among participants including students, staff, faculty, department chairs and heads, unit directors, college deans, vice chancellors and the chancellor.

The Procedures document provides a detailed narrative regarding consultation, process, and guiding principles and delineates a three-phased approach to implementation. The approved Procedures document is publicly available here. The approved accompanying flowchart for the procedures is publicly available here.

In general, the three phases can be summarized accordingly:

FY18/19 Process

At a September 6, 2017 morning “Town Hall” meeting and subsequently at the September 6th afternoon meeting of the Academic Planning Committee, Chancellor Green outlined the calculated budget shortfall for fiscal years 2018 and 2019. In doing so, he invoked the Procedures and communicated a proposed general framework and timeline for completion as aligned with the Procedures document. Specifically, from the document:

The general budget framework will establish the options, emphases and limitations of the budget reallocation and reduction process. It will include the reduction/reallocation total that must be achieved by the institution. It may also provide reduction/reallocation assignments to various units, or could ask for responses to various reduction scenarios. Time-lines for accomplishing reductions and reallocations should be targeted. The framework may also include certain constraints resulting from legislation or institutional priorities that must be considered.

The chancellor shall also present to the same representative groups the process principles, general issues, general guidelines and criteria detailed in this document. These shall be followed throughout this process. A general time-line for the process shall also be discussed; enough time should be allowed during the process to prepare, analyze and negotiate proposals internally before they are publicly announced.

The proposed timeline communicated was as follows:

  • Phase 1 - Process Initiation and Framework Development (September – October 15)
  • Phase 2 – Identification of Budget Reduction Proposals (October 15-December 6)
  • Phase 3 –APC Proposal Review, Deliberations, and Recommendations to Chancellor. (November 15 / December 6 - March 1)
  • Chancellor Decisions and Campus Announcement. (March 2018)

Budget Shortfall

During his review of the budget situation at the aforementioned September 6th APC meeting and subsequently at the September 20th APC meeting, Chancellor Green described the multiple efforts needed to address the system and campus budget shortfalls. One effort is being coordinated by University of Nebraska Central Administration and named “Budget Response Teams” to address an overall identified budget shortfall of $49 million. The Chancellor also reviewed the campus shortfall of $8.5 million. The invoked Procedures will solely address the $8.5M FY18/19 shortfall identified for the University of Nebraska-Lincoln campus.

As presented to the APC, the decade of previous budget reductions, while shouldered across the campus, have predominately been absorbed by central resources falling under the Office of the Chancellor. These funds have historically been used for strategic purposes including personnel, academic strategic priorities, and facilities but also to be available for unforeseen campus situations and needs. These strategic reserves are no longer sufficient to cover these types of strategic initiatives but, more importantly, to shield the university against unforeseen circumstances. Thus, as part of the budget framework, the Chancellor has proposed a $2.5M Strategic Reserve for APC consideration. This Strategic Reserve is included in the $8.5 million campus shortfall referenced above.

The details were presented as follows:

FY 2018FY 2019Total
NU Assigned Deficit $841,000 $1,827,000 $2,669,000
UNL Internal Reallocations
Employee Benefits $ 1,000,000 $ 1,000,000
New Building O&M $ 144,000 $ 144,000
Summer Tuition Grant $ 195,000 $ 195,000
Grad Health $ 400,000 $ 400,000
International Recruitment $ 1,448,000 $ 1,448,000
SIS Funding $ 92,000 $ 92,000
$ 4,120,000 $ 1,827,000 $ 5,948,000
Strategic Reserve (1% of State Appropriation) $ 2,500,000
Total $ 6,620,000 $ 1,827,000 $ 8,447,000

As shown in the table above, the calculated deficit equals $8.45M or $8.5M rounded. The list of “UNL Internal Reallocations” to cover new expenses, while only appearing in FY18, are ongoing and will become part of the new FY19 base budget, thus are not repeated.

Phases and Requirements

As stated, the Chancellor invoked the Procedures and proposed a general working framework, timeline, and budget framework. The following outlines the Phases and steps within:

Phase 1 - Process Initiation and Framework Development (September – October 15)
There are 7 steps in this phase: 1) Invoking of Procedures, 2) Chancellor proposed general framework and timeline, 3) Chancellor proposed general budget framework, 4) APC consideration of general framework, timeline, and budget framework, 5) APC recommendation of general framework, timeline, and budget framework, 6) discussion of alternative (if necessary) between APC and Chancellor, and 7) public release of framework elements.

Phase 2 – Identification of Budget Reduction Proposals (October 15 - December 6)
There are 7 steps in this phase: 1) Budget reallocation and reduction proposal development by VC’s, Deans, and Directors, 2) Budget reallocation and reduction proposal development at unit level, 3) Budget proposals provided to VC’s, 4) Budget proposals provided to Chancellor, 5) Budget proposal finalization, 6) Consultation with APC and campus leadership about budget proposals, 7) Validated budget proposals provided to APC.

Phase 3 –APC Proposal Review, Deliberations, and Recommendations to Chancellor. (November 15 / December 15 - March 1)
There are 7 steps in this phase: 1) Affected units and individuals provide written responses to proposals, 2) Public hearings, 3) APC deliberation, 4) APC discussion with Chancellor about recommendations, 5) Public announcement of accepted recommendations by Chancellor.

Tentative Working Calendar

(The dates below are estimated and subject to change based on proposal development, APC deliberations, and/or scheduling conflicts.)

Phase 1 - September - October 15, 2017
StepCompletion Date
1) Invoking of Procedures Completed 9/6/17
2) Chancellor proposed general framework and timeline Completed 9/20/17
3) Chancellor proposed general budget framework Completed 9/20/17
4) APC consideration of general framework, timeline, and budget framework Completed October 2017
5) APC recommendation of general framework, timeline, and budget framework Completed 10/18/17
6) Discussion of alternative (if necessary) between APC and Chancellor Completed October 2017
7) Public release of framework elements. Completed 10/16/17
Phase 2 - October 15 - December 6, 2017
StepCompletion Date
1) Budget reallocation and reduction proposal development by VC’s, Deans, and Directors In Process
2) Budget reallocation and reduction proposal development at unit level
3) Budget proposals provided to VC’s
4) Budget proposals provided to Chancellor
5) Budget proposal finalization
6) Consultation with APC and campus leadership about budget proposals
7) Validated budget proposals provided to APC
Phase 3 - November 15 / December 6, 2017 - March 1
StepCompletion Date
1) Affected units and individuals provide written responses to proposals
2) Public hearings
3) APC deliberation
4) APC discussion with Chancellor about recommendations
5) Public announcement of accepted recommendations by Chancellor