Though our budget for the coming year is far from what we might like, I believe we’re beginning to turn a corner. Certainly, we have gone through some difficult times with several years of budget reductions. Yet, in the face of what other institutions are suffering, WSU for example, we have gained access to revenue and produced efficiencies that requires us to absorb only a 1.8 percent budget reduction for university units. We’re also restructuring our budget to establish a firm basis for better planning that does not rely upon constant infusions of one-year funding. This will reduce administrative burdens and increase our ability to shape our own destiny.
In part, our success this year comes from an increased responsiveness to our requests and efforts by the State of Idaho and the State Board of Education/Board of Regents. Specifically, the Regents’ approval of our requested fee increase help fill a void left by the legislative budget reduction.
When we talk about budgets, the most common discussion involves the general education budget that affects nearly every aspect of the University. I’d like to share with you some key points about the Fiscal Year 2012 General Education Budget (our “X” accounts). This budget excludes auxiliaries, all self-sustaining programs, research accounts, gift accounts and budgets for our five agencies (ARES, WWAMI, WI, IGS, FUR).
Financial Challenges for FY12
The University faced four significant financial challenges in developing the FY12 General Education budget:
First, the legislature approved a 4.06% reduction in state funding for the General Education portion of the university, cutting the general education budget by $2,985,300 for the coming fiscal year.
This is the third year in a row that we have experienced permanent base reductions to the General Education budget and these reductions now total over $24 million. In nominal dollars, our state funding is now less than we received in FY99.
Financial Solutions – The FY12 Budget Base
Second, the university has had to deal with important cost increases of $1,876,000 for the coming year. (This includes utility cost increases; the cost of funding faculty promotions in rank; inflationary costs for library serials and periodicals; base funding for IT support; and some critical staff positions.)
Third, the FY11 (like the FY10) budget was balanced on the basis of $2.5 million in one-time funds from university reserves. In addition, actual non-resident tuition revenue was $1.5 million less than the amount budgeted for FY11 and this shortfall was also covered by one-time funds from university reserves. It is our intent that these two uses of reserve funds will be resolved or covered by on-going funds for FY12.
Finally, there are unfunded state obligations of $4,834,800 that reflect the state’s failure to fund occupancy costs for new space on campus; no funding for capital replacement and a failure to fund the inflationary cost increases they call maintenance of operations costs. (Many of these unfunded obligations are accumulated amounts representing numerous years of a failure by the state to provide the necessary state support.)
As you well know inflation (see the HEPI index) and related other factors meant that we could not maintain the same level of operations with the same budget. This was compounded by the reduced budget support from the state which has meant we needed to find alternative budget solutions.
Like most public universities nationally our revenues over the past decade have not covered inflationary cost increases and so we are becoming a more “efficient” institution – accomplishing our core responsibilities with fewer real dollars. We will continue to make these accommodations as we work through a long-term process of stabilizing our overall General Education budget. This will help make it easier for us to plan and operate over the coming years.
With welcome support from the State Board of Education and most of our student body, the university took the following actions to resolve these FY12 financial challenges:
Increased the basic tuition and fee package that every student pays by $454 per academic year with an eye on balancing access for our students and financial needs of the institution.
This is an increase of about $50 per each month for the students enrolled at our university. This 8.4% increase generates about $4.4 million in additional revenue for the General Education budget. About $3 million of this revenue is from resident students and the remaining $1.4 million comes from nonresident students paying the basic tuition and fees.
This means we remain a very economical education option for our students, especially in light of double-digit increases by many higher education institutions this year. The University of Idaho currently ranks 47th in the nation among flagship institutions in terms of its resident tuition and fees.
Idaho ranks 33rd in the nation in terms of median household income. For resident undergraduate students, full-time tuition and fees for FY12 will be $5,856. This compares (at 75% of peer average) to the average FY11 resident tuition and fees at our peer institutions of $7,816. For nonresident undergraduates, full time tuition and fees will total $18,376 compared to our peer average for FY11 at $19,915. Thus, we’re doing our best to make the University accessible while dealing with budget challenges.
There were no increases to the Technology Fee or Facility Fee components of this fee package. ASUI, through its student activity fee hearing process, increased the student activity fee by only $5.26 per year – 0.5% increase (this increase is included in the overall increase of $454). This enabled the vast majority of the overall fee increase to be directed to a tuition increase (the old “matriculation fee”), which, in turn, gives the university the maximum financial flexibility to address its key fiscal issues.
Increased nonresident tuition by $928 per year.
This is an 8% increase and will generate about $2.1 million in additional revenue. There was also a 15% increase in the graduate fee - $108 per year – and this will generate about $200,000 in additional revenue.
Developed a plan for base budget reductions at an average of 1.8%.
These reductions will eliminate about $1.8 million in on-going expenditures. However, it will also help produce a more stable budget in the future.
How the Fiscal Challenges will be Met
The state budget reductions of about $3.0 million will be covered by increased tuition revenue from resident students at about $3.0 million. Nonresident students will generate an additional $3.5 million in revenue ($1.4 million from the basic fee package and another $2.1 million from the nonresident fee) and this will cover the required cost increases of about $1.9 million as well as covering the $1.5 million shortfall in nonresident tuition in FY11. Finally, the budget reductions ($1.8 million) and the increase in graduate fees ($0.2 million) will partially cover the $2.5 million in university reserve funds that were used to balance the FY11 budget. The remaining portion of the $2.5 million in institutional reserve funds used in FY11 will be covered by other sources of funds outside of the immediate General Education budget.
We are turning a corner and by increasing efficiency, improving budgeting practices, and gaining support from our oversight bodies, we should see overall improvements. I’m committed to working tirelessly for our university to meet our budget needs and to find the resources to reward our productive faculty and staff while being mindful of maintaining the best possible student access.