Regents Approve $2.1 Billion Fiscal Year 2012 Budget Request

A $2.1 billion Fiscal Year (FY) 2012 budget request approved today (Aug 10) by the University System of Georgia (USG) Board of Regents includes new dollars to meet year over year student enrollment growth of 18,914 students.

“This budget request mirrors the times,” said USG Chancellor Erroll B. Davis Jr. “We are focusing our efforts and our budget request on our core mission of teaching, research and service and the need to serve the continued and significant increase in enrollment at our 35 degree-granting institutions.”

The biggest driver of the regents’ request is a 7.8 percent increase from FY09 to FY10 in the credit hours students took. This increase generated $145 million of the FY12 budget request. Almost 45 percent of this increase occurred at the System’s 16 two-year and state colleges, with the 15 four-year universities accounting for 35 percent of the credit hour increase and the four research universities 20 percent.

“Individuals are continuing to turn to higher education to prepare them for an increasingly competitive workplace,” said Vice Chancellor for Fiscal Affairs Usha Ramachandran. “And our enrollment trends indicate that many of these students are enrolling at our access colleges and four-year universities, where we can serve them with greater efficiency.”

Additional new dollars in the regents’ requested budget include, in addition to the $145 million for student growth:

$8.7 million to maintain and operate new facilities in the system;
$18 million for health benefits premium increases; and
$4.9 million for health insurance for new retirees.
The regents continue to place a strategic priority on the expansion of medical education, with a FY12 budget request of $1.7 million to accommodate the second class of students at the Medical College of Georgia/University of Georgia partnership campus in Athens and to create a clinical campus in Rome. The inaugural class of 40 students at the MCG Athens campus started classes in August 2010.

The regents also approved a FY12 capital budget request of $432.3 million, which includes $1 million in equipment for one new facility, $190 million in new construction, renovation or infrastructure needs for 16 projects, $9 million in design funds for 4 projects, $215.1 million for major repair and renovation funds at all 35 campuses as well as construction to two additional projects, and $17.2 million for Georgia Public Library Service projects.

Following instructions from the Office of Planning and Budget (OPB) to all state agencies, the Board also approved reduction plans of 4, 6 and 8 percent ($77, $115 and $154 million respectively) for the current fiscal year (FY11). Any reduction plans adopted this fiscal year carry forward into FY12. The board also approved, as instructed, a 10 percent reduction plan for FY12, which, if enacted, would bring the USG’s reductions over the combined FY11 and FY12 budgets to a total of $192 million.

“Clearly we continue to be affected by the economic recession and the corresponding decline in state tax revenues,” said Ramachandran. “The instructions from the Governor’s office for additional reduction plans in the current fiscal year and continuing into FY12 dramatize the magnitude of the state’s revenue challenges.”

Ramachandran noted in her board presentation that if the System were to receive the full $2.1 billion requested and then had to implement the full 10 percent reduction in FY12, it would result in a total state appropriation below that of FY07. “But in FY07 we enrolled 259,945 students, while in FY12 we project to enroll 321,000 students – 61,000 more than in FY07.”

Currently, the System already is operating under a 4 percent reduction plan ($77 million) as the state withholds that percentage from all state agencies monthly allotments.

To reach the reduction targets, the USG will employ a range of institutional and system-level actions, Ramachandran said. At the institutional level, these actions include structural changes in operations, workforce reductions, hiring freezes, a decline in maintenance and a reduction in library subscriptions, books and hours. At higher reduction levels, courses and programs will be affected.

At the 10 percent level, Ramachandran said a combination of some of the following actions will be considered: an analysis of enrollment capacity at selected institutions, restrictions on learning support for students, and a review of all institutional fees. In addition, she said, there would be additional reductions at the institutional level.

The board also has approved new employee health plans to further reduce costs. These include the self-funding of the System’s HMO and high deductible plans, a tobacco surcharge, a new, alternative and less expensive PPO network, a requirement for all retirees at age 65 to pay the full premium costs if they do not select Medicare as the primary health care provider, and continued financial incentives for employees to switch to the high deductible plan. Together, these changes could save the System up to $30 million annually in health care costs.

Today’s (Aug 10) actions on the FY12 operating and capital budget requests now go to OPB for incorporation into the overall state budget recommendations the Governor will present to the General Assembly in January 2011. Any action regarding reductions at the 4, 6, 8 and 10 percent levels will depend upon the final decisions by the Governor and General Assembly.



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Lawmakers Cut Education Another Year Despite Rising Unemployment and Student Growth

Recovery Act funds alone could not shore up Georgia's education budgets. Lawmakers cut between 13 and 15 percent from K-12, University System, and Georgia's award-winning Technical College System budgets for the upcoming fiscal year compared to fiscal year 2009, before these recessionary cuts began.

Thousands of Georgians currently employed by the state education systems will be joining the ranks of Georgia's record unemployment numbers. These include not only teachers, but nurses, cafeteria supervisors, bus drivers, and custodians.

"These cuts affect students, faculty, and staff, but also local economies across the state," said Sarah Beth Gehl, author of the Georgia Budget & Policy Institute's latest analysis. "K-12 systems are one of the top 10 largest employers in every county in Georgia, and the number one largest in 96 counties."

In addition, 27 counties have a public post-secondary system among their top 10 employers, according to Department of Labor data.

The State Board of Education just eliminated class size limits for the upcoming school year to allow districts to manage state cuts. Additional conseqences will be more adjunct faculty at colleges and universities, salary cuts and furloughs, and reduced supportive services such as tutoring, advising, and professional development, as well as more drastic measures for certain institutions.

A few K-12 school systems have already moved to a four-day school week or shortened the school calendar from 180 days to 160 days.

Recovery Act funds were intended to give state lawmakers time to address their revenue declines from the Great Recession. "Although Georgia's budget deficit has been in the top 10 worst in the nation, lawmakers chose to rely heavily on cuts," said Gehl. "Georgia lawmakers did not take significant steps to shore up the state's revenue system for education."

Recovery Act funds for education run out in FY 2011, causing bigger holes in school funding even as Georgia's population of school age children increases, more displaced workers seek job training, and more young people seek post-secondary education in order to enter the workforce.

The report specifies the four limited options Georgia has for future budgets, as well as policy questions, such as:

How will communities balance these cuts? Will some communities be able to offset the cuts with local resources, while communities with limited means cannot?

One option that exists to give states another year of time to solve their budget problems is for Congress to pass amendments to the war/disaster supplemental bill to add $23 billion in emergency education funding -- effectively an extension of the Recovery Act's state fiscal stabilization fund. These funds would go to state governments and would help prevent education layoffs in Georgia and across the nation.

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Regents Approve 8 Percent Budget Reduction Plan for University System

As state tax collections continue to decline, the University System of Georgia (USG) Board of Regents today (November 17) approved plans to adjust the System’s budget from a six percent reduction ($135 million) to an eight percent reduction level, ($176 million) for the current fiscal year (FY2010). The Board’s actions call for new reductions to the System’s 35 public colleges and universities as well as implementing an additional mandatory student fee.

The increase in the mandatory fee for all USG students, which will be effective for the upcoming spring 2010 semester, has been set at $100 at research universities and six other universities, $75 at most comprehensive universities, and $50 at two-year and state colleges. The increase will be added to the current mandatory fee, which went into effect in January 2009. The total new mandatory fee thus will be $200/$150/$100.

In addition to the fee, the board approved a moratorium on student fee increases for FY 2011 and a sunset date of June 30, 2012 for the total mandatory student fee increase. The lone exception to the moratorium will be fees for public/private venture projects, such as residence halls, student-financed recreation centers and other facilities with a revenue stream or fees required under extraordinary circumstances and with significant student support.

Initially approved in concept and for planning purposes by the regents in August 2009, the eight percent reduction plan is designed to help preserve academic quality while having the least possible negative effect on students, Vice Chancellor for Fiscal Affairs Usha Ramachandran advised the board. “We are striking that delicate balance between maintaining high academic quality and preserving affordability in these very tough economic times.”

While the additional student fee will generate $24 million in FY 2010, an additional $12 million in savings must also be realized in the budgets of the System’s 35 public colleges and universities, either through additional employee furlough days, the elimination of positions, employee layoffs or other program and structural changes. Including continuing cuts from FY2009 of $275 million as well as FY2010 reductions, USG officials are currently managing $410 million in state funding cuts, which were only partially offset by $148 million in formula funding received in FY 2010 as a result of significant increases in student enrollment.

To move from the six percent to the eight percent reduction level, the original August budget reduction plan called for no additional cuts to institutional budgets and a somewhat higher student fee, of $150 at the research universities and six comprehensive universities, $100 at most comprehensive universities, and $75 at two-year and state colleges.

“When the board approved the initial concept, we were working from data we had at the time on the economy and the state budget,” said Chancellor Erroll B. Davis Jr. “Since August, the situation has evolved. While the state’s budget situation has continued to decline, we were able to revise our eight percent reductions in a way that minimizes the financial burden on students as much as possible.”

Ramachandran noted that the overall Fiscal Year 2010 reductions spread the impact among faculty and staff, campus operations and students in a very balanced manner. “Approximately 86 percent, or $152 million of the reductions are being borne by our institutions and employees,” she said. “The student share of the cuts with the additional fee is 14 percent, or $24 million.”

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Regents Approve FY11 Budget Request, FY10 Reduction Plans

The Board of Regents yesterday approved the Fiscal Year (FY) 2011 budget request for the University System of Georgia (USG) that includes dollars to support new students as well as the regents’ strategic thrust to expand medical education. The budget request totals $2.2 billion, a 6.8 percent increase, or $140.7 million, over the original FY 2010 base budget of $2.08 billion. Separately from the request for new dollars, the board also took action to approve measures to meet ongoing budget reductions, including employee furloughs and changes to employee health benefit plans.

The regents also approved a FY11 capital budget request of $275.6 million, which includes $19.7 million in equipment for six new facilities, $6.5 million in infrastructure needs for two facilities, $157.9 million in new construction or renovation for 10 projects designed and ready to be built, $68.9 million in both design and construction funds for seven projects, and $22.6 million for the design only of 11 projects.

The capital request also includes $75 million in funds for major repair and rehabilitation of existing System facilities.

“We are working to serve a significant and ongoing increase in student enrollment with a financial resource base that is certainly not keeping up with the growth in our student population,” said Chancellor Erroll B. Davis Jr. “Our challenge is premised on the fact that Georgia will need all of the college graduates we can produce – and more. Georgia will need everyone it can find with the education to move this state forward and continue its economic vitality and growth.”

The board’s approval of changes in employee health benefit programs and mandatory employee furloughs were necessary, according to USG officials, to help meet a five percent withholding by the Governor’s Office of Planning and Budget (OPB) of the System’s FY10 state cash allotments, which totals $115 million.

Along with all other state agencies, the USG was instructed by OPB to include with its budget request three reduction plans of four, six and eight percent. The three reduction plans, which include the three mandatory furlough days, total $94 million at the four percent level, $134 million at the six percent level and $176 million at the eight percent level.

Looking in detail at the FY11 budget request, the regents approved a request for $140.7 million in new dollars. This includes $107.8 million for student enrollment increases in fall 2008, $5.7 million in funds for the operation of new building space in the system, $21.3 million for increases in the employer share of health insurance premiums, $4.4 million in benefit costs for USG retirees, $900,000 to continue the Regents’ continued two-year-old effort to expand medical education, and $625,000 in new dollars for the Georgia Public Library Service.

Vice Chancellor for Fiscal Affairs Usha Ramachandran said that the increase of $107.8 million in the request is a function of the System’s funding formula, a mathematical formula that factors in student credit hours to arrive at needed state funding to support student instruction. “For the new budget request, the formula increase is based upon an enrollment increase of 5.6 percent, which generated an increase of 398,000 in the number of credit hours students took,” she said.

The new dollars, if recommended by the Governor and approved by the General Assembly, would provide critical state support for these new students. However the new funds are based on fall 2008 enrollment, not the students enrolled in fall 2010, when the funds will be available. “We appreciate the support of the Governor and the General Assembly for the formula funding, and recognize how important it is for us as stewards to be extremely efficient in the use of these dollars,” Ramachandran said.

The System-level reduction plans approved today by the regents spell out how reductions will be accomplished at each of the percentage levels requested by the Governor. While these three plans were approved in concept, the reality of the current five percent withholding of state funds required the board to approve today actions that will take place in the coming months to meet what is a new $115 million reduction in the USG’s FY10 state appropriation.

Therefore, the board approved six mandatory furlough days for faculty and staff. This will affect all 40,000 USG employees, except the lowest paid (annual salary of $23,660 or lower), and is the equivalent of up to a three percent pay cut. These six furlough days will be implemented over the remainder of the FY10 fiscal year, but will, according to Davis, not affect classes or employee retirement plans.

The board also approved changes in health insurance programs affecting almost 5,000 employees enrolled in the USG’s indemnity plan, which will be eliminated. Other changes will encourage retirees to move to Medicare Plan B, seed the high deductible PPO plan to encourage more employees to switch to this plan and make other structural changes in the System’s health insurance plans. These will go into effect this fiscal year.

These two changes – furloughs and health care plans – will generate $43.5 million of the $115 million currently being withheld and are part of the four, six and eight percent reduction plans that will be submitted to OPB. The remaining $71 million of the current $115 million being withheld from the USG will be generated at the institutional level and could include layoffs and new employee furloughs, internal reorganizations, an increased focus on energy conservation and the elimination of low-enrollment programs.

These actions at the system and institutional level will meet the $94 million four percent reduction plan amount.

To reach a six percent reduction level ($134 million) the System will:
Look to institutions to impose additional furloughs, new layoffs of employees, the elimination of positions and other actions institutions can identify to generate savings.

To reach the eight percent reduction level ($175 million) the System will:
In the spring semester of 2010 increase the institutional mandatory fee first implemented in January 2009 by $150 at the four research universities and some comprehensive institutions; by $100 at all other comprehensive four-year institutions; and by $75 at the state and two-year colleges. The changes to the mandatory fees will result in a cumulative total of $250, $175, and $125.
Place a moratorium on other institutional mandatory student fee increases with the exception of public-private venture projects for FY11.

“These are difficult reductions for all,” said Davis. “We are spreading the pain among our employees and withholding the direct financial pain to our students as an absolute, last resort. But we are committed to serving our students – all of our students – with continued high academic quality.”

Ramachandran was joined in presenting the budget recommendations by Linda Daniels, vice chancellor for Facilities, Wayne Guthrie, vice chancellor for Human Resources and Tom Scheer, associate vice chancellor for Life and Health Benefits.

Yesterday’s actions on the FY11 operating and capital budget requests now go to OPB for incorporation into the overall state budget recommendations the Governor will present to the General Assembly in January 2010. Any action regarding reductions at the four, six and eight percent levels will depend upon the final decisions by the Governor and General Assembly.

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President Becker lays out goals for Georgia State University

Georgia State University President Mark Becker addressed hundreds of students, faculty and staff members on Thursday, highlighting how far GSU has come in its 96-year history and laying out goals for its future as a premier urban research university.

In what was believed to be Georgia State’s first State of the University address, Becker said GSU is now attracting brighter, more talented students while maintaining its diversity. He also touted that respected scholars and researchers are joining the faculty, securing more external research funding and increasing the quality of the university’s academic programs.

But Georgia State needs to pick of the pace in order to reach its desired status as one of the nation’s preeminent research universities, Becker said.

“We have a heritage of educating people who have gone on to be leaders,” Becker said. “It is a proud heritage, and from here we go forward recommitting ourselves to the never-ending goal of building a university in which our alumni and friends can forever be increasingly proud. For them, for us, it is time to pick up the pace and start running.”

Becker laid out goals for the university such striving for the highest level of academic quality, launching new areas of research, securing more philanthropic support and grants, increasing communication and becoming more “green.”

The president also acknowledged the challenging economic times facing the university, saying budget cuts would have to be made.

GSU will close for two weeks at the end of the current calendar year, Dec. 21, 2009 to Jan. 3, 2010, to help reduce costs, Becker said. Details of the closure and other cost-saving measures would be announced in coming weeks.

Becker, who became Georgia State’s seventh president in January, said the university would recover from the anticipated budget shortfall.

“Demand for a Georgia State education has never been higher, the students we are recruiting are the best in our history and the faculty is the strongest ever,” Becker said. “We will emerge from the storm, headed in the right direction and with wind in our sails.”

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Sallie Mae Issues Statement Following Release of President's Budget

(BUSINESS WIRE)--Sallie Mae (NYSE:SLM), the nation’s leading saving- and paying-for-college company, yesterday issued the following statement in response to the President’s budget:

We commend President Obama’s call to invest savings from low-cost federal funding sources to help students achieve their education goals. We also note that the budget proposal looks to obtain “high-quality services for students by using competitive, private providers to service loans.” Sallie Mae is the largest and lowest-cost provider of student loan services, and we deliver the highest quality for students, schools and families.

In 2008, we worked closely with Congress and the Administration to ensure continued access to federal student loans at no increase in cost to taxpayers. Through our loan delivery systems and financial resources, we committed to make federal loans to every eligible student at every school in the country.

“We are proud that in this economic crisis, we provided more loans to more students than ever before, and we did it using lower-cost federal funding similar to what is being proposed today,” said Al Lord, Vice Chairman and Chief Executive Officer. “We look forward to bringing these same resources to the table to help the Administration and Congress achieve their objectives.”

As more details emerge in the weeks and months ahead, we will continue to work with the Administration and Congress to implement the best solution for students, schools and taxpayers. We stand ready to continue to deliver student loans that best meet families’ needs. We are committed to delivering and servicing federal student loans, regardless of their funding source.

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UGA President Testifies before Subcommittee

University of Georgia President Michael F. Adams
Testimony before the House Higher Education Appropriations Subcommittee
Tuesday, February 10, 2009
Georgia State Capitol

Thank you, Chairman Smith and the members of this committee for the opportunity to talk with you about the University of Georgia, the capital projects priorities, our goals and objectives and the budget struggle we share with you.

First, I want to thank Chairman Smith and the members of this committee for your support of the university system and the University of Georgia through the years. We have enjoyed strong support from you and for that we are grateful.

Our top capital project is the Special Collections Library. UGA has been entrusted with some of this state’s greatest historical treasures, and in our current library facility we are unable to display them as we should and incapable of caring for them in the manner that they deserve.

The proposed Special Collections Libraries building at UGA will house a vast array of materials including rare books, manuscripts, political papers, historic radio and television programs, and other original materials that illuminate history and culture. It will store these materials in the best possible environmental conditions to ensure their survival for future generations while also providing space for scholars and the public to view and use them.

At present,UGA provides only 70% of the library space specified by the Regents guidelines while peers provide up to 150%. This building will bring us to about 90%.

And in keeping with how we do most projects at UGA these days, this is a public-private partnership—the University will raise $15 million and the state will contribute $30 million. We have raised $13.2 million, placing us within two million dollars of our goal, and I think that is a good deal for the taxpayers to get such a great facility for two-thirds of the cost.

There is also a need for a Central Utility Plant for the Northwest Precinct of the campus, which will be a focus of development over the next 10 years. It will be the site of the Special Collections Library, the proposed new Terry College of Business complex and the proposed new facility for the College of Family and Consumer Sciences, as well as other academic facilities.

The Central Utility Plant—a $6 million project—will help answer the Governor’s challenge to reduce energy consumption on a unit basis by 15% over the next 12 years. By the year 2020, this project will realize $5.4 million in energy cost avoidance.

Both of these projects are fully ready to go as soon as the bonds are sold. We appreciate your support of these important capital projects, and we appreciate your service to this state.

I also want to express my appreciation for your continuing support of the MCG/UGA Medical Partnership. In the past two years Georgia dropped from 37th to 40th in the nation in physician-to-population ratios. However, we are now on track to serve the first class of students in fall of 2010, and we are ready for the medical accrediting team that will be visiting in April. This has only been possible with support from this body. The $7.8 million in the current budget will help us achieve increased medical care for a state in need of doctors.

These are difficult times for all of us in state government; difficult times call for leadership, and all of us have been placed in important leadership positions. We at UGA accept our responsibility to you and to the people of this state to work with you through these difficult times. I have told our campus that we will not whine; we will not point fingers; we will not place blame. The University of Georgia will strive to maintain the quality of the education we provide, the quality of the research we conduct and the quality of the service we provide to the people of this state. That is our mission, and we are committed to it.

But I need to tell you that it is harder and harder for us to do this. We have fewer people and fewer resources than we need, but I realize every state entity can say that these days.

We will continue to cooperate with you and to work to provide an excellent education to our students. I can assure you that we have felt the pain of the economic downtown and the resulting budget cuts—our faculty, students and staff have all been impacted.

To give you some idea of that impact, UGA is currently operating under a 9% budget reduction scenario, which means that we will lose more than $36 million in state support for our Resident Instruction budget. That hurts in a variety of ways.

As of the end of January, we have 153 vacant faculty positions and 173 vacant staff positions. We have eliminated 47 graduate assistants and 52 student workers. This has a direct impact on our ability to teach our students and keep them on track to graduation.

In the “B” budget, we will be losing more than $8 million, affecting the Agricultural Experiment Stations, the Cooperative Extension Service, the Veterinary Teaching Hospital and the Poultry Diagnostic and Research Center.

UGA students this semester paid an additional $100 fee and student costs are likely to go up given that Georgia ranks near the bottom in the Southeast for tuition rates.

While we should not be the most expensive higher education option, we should also not rank so low that flagships in Alabama and South Carolina and many other states have significantly higher tuition rates than we. I will say more about tuition in a minute.

The budget reductions have already been felt, and felt quite severely, by our employees. In addition to the annual increase in their health insurance premiums, they also participated directly in the budget cut when the Regents reduced the employer contribution to the premium from 75 percent to 70 percent. The savings to the state were used to cover part of the System’s budget cut.

And while I agree with this action, I just want to make sure that those of you who have college and university employees in your district understand that they are participating in the budget cuts, and feeling the pain of them, each time they are paid because their paychecks are smaller.

Consider a UGA employee at the lowest end of our wage scale. Over the past several years, we have made a concerted effort to raise those salaries from about $13,000 to $21,000 this year. But with the change in premium, the $1,000 raise we had designated for those workers this year was wiped out.

If they were on the PPO family plan, which is the most popular plan, their annual health insurance premium went up $1,061—an increase of almost 30% in one year—more than consuming their raise. In fact, the break-even point at which the salary increase covered the health insurance increase is $42,400.

Again, we understand why these reductions have to be made. We are working hard to minimize the impact of these cuts on our classrooms, labs, and service projects. We feel it is our responsibility to you and to the state to continue to offer the highest possible service even as our resources have shrunk significantly.

Such effort places strain on everyone at UGA, from the custodians to the faculty and yes to top administrators as everyone absorbs more duties and works longer hours to cover unmet needs. And I believe this is what we should do. I just want this body to know that we are indeed sharing in the state’s budget reductions and that these are having a very direct impact on the UGA family. Institutionally and individually, we feel the pain of the economic downturn.

We are committed to cooperating with the General Assembly and the Governor to work through this downturn. But please don’t take UGA’s careful and effective management of this crisis as reason to believe we have not been hurt or that we can handle additional cuts without serious damage to the core mission of the institution.

I also want you to know that I believe we at UGA should do everything we can to produce ourselves out of the budget crisis, as I told the campus a few weeks ago.

There are five areas of revenue generation where we will focus our efforts:

1) Fundraising. Even following the success of the Archway to Excellence campaign, UGA’s colleges, schools and units must reach out to their constituencies for the level of private support, which characterizes great public universities. Private support provides a level of flexibility that helps the institution address funding needs as they arise.

2) Research grants. The faculty must become even more aggressive in pursuing federal, corporate and foundation grants for research. We have done very well the last five years, and we have strengths in many of the areas that are receiving funding. We should be competitive to receive more research grants.

3) Tuition. As I mentioned earlier, UGA’s tuition needs to be in the mid-range of the SREB flagships; it is currently 15th out of 16. The University of Georgia is a top-20 public university, but tuition here is $300 below Tennessee, $2,700 below South Carolina and $1,500 below Kentucky. In recent months, the governor of Florida and that state’s higher education leadership have approved tuition increases that will float to the national norm. I don’t want to be behind Florida in anything.

4) The university’s auxiliary units—parking, dining, housing, athletics—all depend upon the academic mission of the university for their very existence. I will propose that we look at ways to increase the overhead that we currently recover from these auxiliaries for the purpose of supporting the core academic mission of the institution.

5) Credit hour production. We simply must produce more credit hours. Ideally, we would enroll more students, but our enrollment is capped. Ideally, the formula would more accurately reflect current conditions on campus, but it lags two years behind. Ideally, a credit hour at a research university would be worth more than a credit hour at a regional university or two-year school, but the formula treats them as equals. Our only option is to teach more classes and encourage students to take more hours.

I believe these are proactive steps we at UGA can take to contribute to the state’s efforts to work its way out of the current economic decline.

I also want you to know that even in these tight times, UGA continues to excel and continues to make its mark nationally and internationally. For the ninth consecutive year, U.S. News & World Report has ranked UGA among the nation’s very best public research universities. UGA was the only public university to have two students in the 2008 class of Rhodes Scholars. In addition, we had students receive Truman, Marshall and Goldwater scholarships. Only three other schools in the country had students win all of those honors—Columbia, Stanford and Yale. The Center for Tropical and Emerging Diseases received the largest medical grant—and the third-largest grant overall—in UGA history. Two UGA faculty recently were among only 68 from across the country honored at the White House with the Presidential Early Career Award for Scientists and Engineers. These are just a few examples of the many outstanding accomplishments continuing to be achieved by our students and faculty.

In summary, we have felt real pain. We are willing to do our part. We are looking very hard at both sides of our ledger. But we continue to see high achievement on the part of our students, faculty and staff. And we will be stronger coming out of this difficult time.

Thank you for your attention.

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University of Georgia Budget Update

University of Georgia Budget Update
President Michael F. Adams

I would like to begin my comments on the budget situation with words of praise for the people who have spent countless hours working to ensure the long-term financial stability of the University of Georgia. The credit for our careful management of the budget crisis to date goes to the many faculty and staff who have taken on extra responsibility in areas where there are unfilled positions. The credit also goes to the leadership team in the budget area: Arnett Mace; Tom Landrum; and Tim Burgess, with the help of the many dedicated staff in Finance and Administration; and of course the deans, vice presidents, directors, and department heads who face the greatest challenge of managing these budget reductions at the school, college, and departmental levels.

We are facing an economic crisis of a magnitude unprecedented since WWII. My belief has been that we must manage very conservatively during these times, doing all that we can to preserve faculty and staff jobs—which remains my top priority—so that we can continue to carry out our missions of teaching, research and service. To date, we have been able to avoid the worst of this economic recession because of the planning by our budget team that began about this time last year. But we do not yet know how much the fiscal year 2009 budget ultimately will be cut and what the funding levels will look like for 2010.

As you will recall, at their October meeting the Board of Regents directed that we reduce our FY 09 budget by 6%. This action led to a reduction to UGA's state-appropriated funds of over $29.7 million, with $24 million being reduced from our Resident Instruction budget and $5.7 million from our B Units, the experiment station and extension units that extend our research and outreach missions throughout the state.

Although the University System has not received specific budget instructions from the state regarding further budget reductions, the Board of Regents yesterday took prudent action to prepare for a likely budget reduction of 8%. Increasing the FY 2009 budget reduction to 8% would increase the reduction to UGA's state-appropriated funds from $29.7 million to about $39.7 million, with $32.1 million being reduced from our Resident Instruction budget and $7.6 million from our B Units.

Given the budget challenges facing all public colleges and universities in Georgia, the Board of Regents took the following three actions yesterday in a special called meeting.

First, the Regents voted to reduce the employer contribution rate for the PPO and HMO health insurance plans from 75% to 70%. This action increases the employee cost for these and the Indemnity health plans, if the employee does not opt to move to a lower-cost plan. Importantly, the open enrollment period has been reopened until December 15th to allow faculty, staff, and retirees to make different choices should they wish to do so, in light of the change in premiums.

Second, the Regents voted to waive BOR policy 704.021 on mandatory student fee. This is the policy that outlines the standard timetable and procedures by which mandatory fees are typically set by the Board of Regents, usually in April.

Third, they voted to institute a mandatory fee of $100 per semester at research universities and the largest comprehensive universities, $75 at the other comprehensive universities, and $50 at access institutions.

Each of these actions is part of a tiered approach that has been followed over several months by the System to address the changing budget situation. I would like to speak to these items in more detail.

First, the health care action. As UGA faculty and staff will receive the merit salary increases approved for January 1, 2009, these raises will help mitigate the health insurance cost increases that System employees are being asked to bear. At UGA, we have made concerted attempts to address salary concerns in specific targeted areas over the past months and years. As of January 1, 2009, we will have been able to move the minimum salary to $21,000 after steady steps in that direction over several years. Along with raising the minimum salary, we also allocated funds to mitigate staff salary compression issues that are associated with raising the minimum hiring rate. Likewise, we have allocated over $1.8 million additional funds in this fiscal year alone to help bring faculty salaries more in line with our competitors, with $1.3 million of this funding being targeted at the associate professor level. This is the fourth year that we have allocated funds to supplement the merit salary increase pool. In addition to these targeted salary increase allocations, we also provided funds to add an additional ½% to the 2.5% merit pool provided by the state to ensure that all faculty and staff are receiving a minimum ½% salary increase to help mitigate the impact of the growing cost and inflationary pressures that are confronting all of us.

Such efforts would not have been possible without a shared commitment to these efforts among the senior leadership team, and the belief that such actions were important to the future of the institution. It is not easy to watch progress in salaries diluted by the very real pressures of this economic recession, but the Chancellor and the Board of Regents have been clear in indicating that at this stage of budget reductions, all employees have a role to play in helping address the budget crisis.

While other state agencies and other universities outside of Georgia are taking steps to furlough employees, furloughs are not being considered for University System employees at this time. We are also not yet taking steps towards hard layoffs across the University for full-time positions. However, the pain of the current level of cuts has already had a direct effect on positions. Vacancies are not being filled, and some part-time contracts have not been renewed that would otherwise have been renewed in better times. This is real pain, and real function being lost at this institution.

In total, the budget reductions are forcing UGA to defer filling 167 faculty positions, 183 staff positions, 47 graduate assistant positions, and 52 student worker positions across the institution. These vacancies translate to class sections that are not offered, student course needs that go unmet, and programs that are canceled.

Second, the issue of the Special Spring Semester ‘09 fee. The action taken by the board places a mandatory fee of $100 at the research universities, $75 at the comprehensive universities, and $50 at the access institutions for Spring 2009 in order to sustain academic quality. The Board will, in the normal course of business, set fees for the next fiscal year in April. The Board of Regents will make decisions about tuition and fees for fiscal year 2010 at that time.

Just as employees are being asked to help significantly in these challenging budget times, students are being asked to step up and help to ensure that the academic quality of this institution remains strong. We will continue to do everything possible to achieve greater efficiency in our operations so that we retain as much flexibility as possible in meeting our academic mission.

I have said before that I believe UGA’s tuition is too low; one has only to look at tuition at the other states in the Southern region to see this underscored. The $4,395 in tuition that UGA is assessing to in-state undergraduates (Fall 2008 and Spring 2009 semesters) is $1,033 below the median of $5,428 and $1,412 below the average of $5,807 for tuition being assessed by UGA's peers in the Southern region. The national discrepancies are even larger. As recently as last week, the governor of Florida, one state whose tuition has historically been lower than ours, announced his support for tuition increases of up to 15% to help struggling public colleges and universities.

In taking this action to implement a mandatory fee midyear, the Chancellor and the Regents have acknowledged that maintenance of academic programs depends upon such funds. Georgia’s students receive an excellent education at UGA, and as much as I regret increases, I do believe that they are justified to ensure that we can continue to provide appropriate academic offerings to our students that are of the quality that our students demand and deserve and that the state expects from its flagship institution.

Please understand that this is December 4th, and there is still a possibility that the budget reduction will go higher than 8%. This is a fluid, ever-changing situation, and we do not yet know how Georgia will fare in the coming months. I also want to be forthright in saying that we do not yet know the prospects for a pay raise in 2010, but I believe it to be slim. We will continue to work closely with the System officials and with our legislative leadership in our planning as we move through these challenging times.

Like almost every higher education institution in the nation, we are facing the challenges of a national economic downturn. Our neighboring states have these same issues. For my part, I remain grateful that UGA is located in Athens, with its strong sense of community and its good quality of life, for I think in difficult economic times such factors become increasingly important.

While we do not know the economic course of the next several months, we will continue to keep the campus informed of additional actions that impact our budget. I remain confident that the day-to-day work that we do to serve students as well as the citizens of Georgia is the best means to provide a bright future for this state. This institution has faced many difficult times in its 223-year history and has survived, each time to grow to a stronger and more expansive level of service. I am confident we will do so again and that there will be improvement in the next 12-18 months. I am truly grateful to all of our faculty, staff, and students for their shared sense of commitment to the University and its academic programs.

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