AUSTIN, Texas—In response to announced and expected state budget reductions, The University of Texas at Austin has begun planning to address a $19 million reduction in its current year state funding and an anticipated operating budget shortfall of $25-$30 million next fiscal year.
The university will submit to the University of Texas System on Friday, Jan. 31, its plans for addressing the $19 million budget gap in the university’s $271 million state funding in the current fiscal year.
Texas Gov. Rick Perry announced last week a 7 percent reduction in operating budgets for the current fiscal year for state agencies and organizations, including higher education institutions.
Members of the university community, including administrative and academic leadership, will engage in a six-to-eight-week process to develop a plan to address next year’s budgetary shortfalls estimated to be between $25 million and $30 million.
“The university is facing a recurring shortfall next year, notwithstanding any possible reduction in state funding that might come as a result of the state’s financial situation,” President Larry R. Faulkner said.
“We should try, above all, to best preserve the most critical things that we provide for the people of Texas,” Faulkner said in a memorandum to university faculty and staff. “To me, that means especially preserving the quality of the educational environment. A consequence is that we must reduce the scale of what we do.”
Faulkner said all university units should expect some reduction in their budgets. He said the university “cannot, right now, abandon as part of its budget planning the assumption of a modest compensation program, because we work in a market for talent that has moved at a consistent percentage rate in recent years.
“We definitely will not be able to keep up with the recent (salary increase) rate,” he said, “but we also cannot afford to lose the talent we have. As the spring unfolds, it may be necessary to sacrifice even the modest program, but for now we have to keep it among the many considerations before us.”
Among initiatives aimed at managing a portion of the budgetary shortfall are efforts resulting from the president’s Task Force on Efficiency, which has identified to date about $5 million in savings through programs soon to be implemented.
“Given the state’s constrained financial picture and limitations on the ability to increase tuition and fees,” Faulkner said, “we must look first to actions we can take ourselves to meet our financial challenges.”
The Task Force on Efficiency, formed by Faulkner last spring, will continue to find cost-savings options, he said.
University’s plans for addressing this year’s state budget reductions
February 7, 2003
The University of Texas at Austin delivered to the University of Texas System a plan that delivered $12.7 million of one-time reductions in state appropriations spending by the university. These reductions are of a one-time nature rather than of a recurring nature.
The university will not know whether it must take recurring reductions to its budget until the conclusion of the legislative session. Over the next 6-8 weeks the university will prepare a budget strategy that considers the possibility of a recurring reduction.
The one-time reductions were accomplished through the following actions:
Freezing a portion of fund balance that was dedicated for the purpose of funding maintenance needs and certain capital project planning. This is a balance of cash monies that had accumulated. Freezing it will not reduce the monies already dedicated in the university’s current budget toward maintenance and capital planning. The university will continue to spend about $13 million annually on maintenance, which is $15 million to $20 million less than experts say the university should be spending toward the maintenance of the campus, given its size and age. However, returning this balance could have a direct impact on the university’s ability to deliver services should it have an unexpected significant maintenance need because it leaves the university with a much lessened financial capability to deal with maintenance emergencies. This action accomplished nearly 50 percent of the one-time reductions.
Instituting a flexible hiring freeze on open positions and positions that may come open between now and year-end. There are exceptions, principally for those positions funded fully by external grants. The decision to hire or replace faculty has been delegated to each college or school dean with the guidance that the university expects no class disruption as a result of this policy. The university does believe this action may generally hurt its longer-term ability to attract new faculty members, and therefore, may have some long-term consequences on instructional services. This freeze will principally affect staff and administrative positions. The university also froze some monies available for new faculty recruiting, an action that could have longer-term consequences on the ability to compete for the best and the brightest faculty members. This action accomplished about 40 percent of the needed on-time reductions.
The remaining 10 percent was accomplished by taking various other actions, including freezing out-of-state and international travel.