Memo To: President Wharton
From: The Campus Budget Committee (CBC)
Date:April 30, 2002
RE: Budget and Other Recommendations for FY 2003 And Beyond
The CBC’s (Campus Budget Committee) mission is to recognize the values and goals of the university Strategic Plan and link them to the budget. This year, all areas of the university have participated in the planning process and have contributed to the 2003 Strategic Plan goals. Based on the CPC’s (College Planning Committee) recommendations, the CBC has developed strategies to address the critical financial condition of the college. Both committees ascertained that the current budget situation is rooted in a number of chronic issues coupled with immediate health care cost escalation. The traditional incremental method of solving budget shortfalls is no longer a viable solution. This method leads away from the Strategic Plan goals and away from a rational use of resources. Using the value-centered process, all constituencies of the college are now sharing in a planning and budgeting process that is linked to the goals of the university Strategic Plan.
The FY2003 budget has had to deal with a number of problems that caused the budget process to start with a deficit of $607,000 (attachment 1, line 37D). This deficit was primarily the result of the impact of health care cost increases forcing the benefit rate to jump from 35% of budgeted salary to 37%. Other increases outside of the normal internal incrementally driven costs were in financial aid, which has been part of our historic planning efforts to improve quality, and in USNH System costs. A more detailed explanation of the original budget issues are explained in attachment 1a. In addition to the internal incremental increases, the CPC forwarded to the CBC a list of prioritized budget needs called for in the strategic planning process. The total of these requests is $852,500 (attachment 2). This, coupled with the original deficit, resulted in a total budget shortfall of $1,459,500.
The following is a series of concepts and recommendations from the CBC that will balance the budget and provide funding for the CPC’s prioritized items.
- Curricular Reform and Renovation – The Strategic Plan articulates the themes of student achievement, success and satisfaction, the nurturing of academic vitality and community, and the application of value-centered resource allocation. In an analysis of all the various factors that impact our ability to move towards these goals, the FBRC (Faculty Budget Resource Committee) has identified the curriculum as a key factor underlying our fiscal health. The evolution of our curriculum over the past decade has driven the university into serious financial stress. Reform and renovation of the curriculum by the faculty, as set out in the Strategic Plan, will have both immediate and far-reaching impact and will influence all aspects of the college’s fiscal condition. The curriculum must provide for quality education delivered by a well paid full-time faculty in an efficient and effective way. Student-centered teaching and learning in a context of quality facilities and support systems will be prioritized. The curriculum must provide for student support, retention and ease of transfer in order to stabilize enrollments over the four-year time-to-degree period. These considerations, as framed in the Strategic Plan, are the underpinning for the CBC recommendations that follow. The CBC recognizes the need for improving productivity in the delivery of our curriculum. The FBRC, as a constituency of the CBC, has crystallized actions to guide such renovation. Some funding will be made available from VPAA development funds to help with these issues These are:
- Reduce the prescriptive nature of the curriculum to allow for a minimum of 15 free electives in every major or required option. (Note: Students will “spend” electives when choosing an elective option such as teaching certification).
- Increase the campus wide average class size to 25 from the current level of 20.
- Carefully manage upper division electives based on student demand to achieve higher population per section for more effective utilization of resources.
- Modify general education requirements to attract and encourage transfer students from other institutions to come to PSU to complete their degree requirements.
- Manage scheduling and curricula to reduce dependency on part-time lecturers in order to increase student contact with full-time faculty. Achieving this goal will reduce our dependency on part-time faculty by $50,000 per year for the next three years.
- The Faculty Resource and Budget Committee, the VPAA, the President, and the CPC will work together over the next year to create a new element of the Strategic Plan for developing a new pay schedule for faculty that rewards our faculty for the resulting improvement in productivity. Funding of this new plan must be developed by the CBC and incorporated into the biennial FY04 and 05 budgets.
- Reduce the number of curricular options at the university to encourage students to choose free electives in more interdisciplinary ways.
- Eliminate required courses, in all majors, for which enrollment consistently falls below justifiable levels.
- Reconsider the conversion to a 4-credit system and 128 credits for all degrees, or reconsider a limit of 120 credits in all majors or major options for all Bachelor degrees.
- USNH services – The cost of System-wide services have grown in recent years at a rate that is greater than the PSU operating budget. The CBC asks the President to work with the Chancellor to minimize future increases in System services costs.
- MBA Program – The CBC believes it is necessary for the AVP for Graduate and Continuing Education and Outreach to continue the effort to get the MBA program to operate on a break-even basis as measured by the contribution margin analysis. Therefore, we recommend that the MBA program become self supporting through reductions in budgeted expenses and\or increases in net budgeted revenue over the next three years ending with FY05. If we achieve this goal the budget impact will be $220,000 by FY05.
- Continuing Education – The CBC recommends that the AVP for Graduate and Continuing Education and Outreach, which operates Summer School, Winterim, and CE activities during the fall and spring terms, be encouraged to expand offerings and that the net new revenue generated by these improvements be invested to support the general fund budget. If we achieve this goal the CBC believes that these improvements should generate $25,000 in FY04 and an additional increase of $25,000 in FY05.
- Summer Operations – The CBC recommends that the administration review the summer operations of the university and institute a plan that will maximize the use of the campus when we are not in session. The new net revenue from these operations would be used to support the general fund budget. If we achieve this goal the CBC believes that these improvements should generate $35,000 in FY04 and an additional increase of $35,000 in FY05.
- Hourly Personnel – The CBC recommends that the administration review the use of non-teaching, non-student hourly personnel and attempt to cut that budget. In addition we ask that 30% of the savings be invested in increased hourly rates for student labor and the balance to be used to support the general fund budget. The CBC did not set specific budget goals for this area since there were too many variables and we anticipate that the administration would need to do a significant amount of review and analysis. The CBC has recommended that $125,000 of the incremental increases recommended in the original budget be reduced to help balance the budget.
- Utilities – The CBC asks that the administration find ways to reduce utility consumption by 5% by the end of FY04. The CBC understands that the university does not have a great deal of control over the cost of energy, but we should have processes in place to control our consumption. When such a plan is put in place we anticipate budget savings of $130,000 by the end of FY05.
- Purchasing Practices – The CBC asks the administration to investigate possible savings by expanding our purchasing practices and initiatives. The CBC anticipates that a .5% saving by FY04 and .5% in FY05 will yield total savings of $50,000.
- Repair and Renovation – The CBC requests that the administration obtain a waiver for FY03 from the Chancellor to reduce the FY03 and FY04 increase for repairs and renovation (R&R) from $200,000 to $100,000 in FY03 and from $200,000 to $150,000 in FY04. The CBC is committed to increasing support for R&R so that the university deals with the deferred maintenance problems that we have across the campus; however, the problems of managing other priorities must come first.
- Supplies and Services – The CBC recommends that $140,000 of the FY03 internal incremental increase for supplies and services be used to balance the budget.
- Mandatory Transfers - – The CBC recommends that $11,000 of the FY03 internal incremental increase for mandatory transfers be used to balance the budget.
The CBC has created this three-year budget model that fully funds all of the recommendations from the CPC. We intend to continue to work on these models next fall and we look forward to continued communication with the administration and the CPC to effect the proposed changes. The budgets for FY04 and 05 represent models only and do not reflect a final approved budget.