Update on 5% Reduction Plans

• On February 12th UT System advised that the proposal to mitigate the 5% reduction with TRB appropriations (debt savings) was not an optimal strategy.– Would have relieved campuses of $41.4M

• UT System recommended the entire reduction be shown (to LBB) in FY2011 – LBB intends to lapse amounts shown in FY 2010

Update on 5% Reduction Plans

• Does not mean we can’t save FY 2010 funds towards our potential reduction.

• Plans published to UT System Website:http://www.utsystem.edu/cont/Reports_Publications/UT_5-Percent-Reduction-Plan.html

Update on 5% Reduction Plans• Legislature must pass a bill to reduce our budget.– They will not convene until January 2011– Any FY 2010 money lapsed for potential reduction will

no longer earn interest for the campus/agency

• On March 15th LBB emailed agencies to notify all that the next process would be to set aside FY 2010 reduction amounts by August 2010.

– Only 1 UT Campus allocated FY10 funds:UT PB $32,603

Other Texas Universities’ Plans for FY11 MeritCAMPUS % Comments

University of North Texas 0%

Texas A&M 0%

UT HSC-SA 0%

UT Pan American 0% Selected equity adjustments & reclassification

Univ of Houston – Clear Lake 1.75%

UT Austin 2% Awarded 0% in FY 2010

Univ of Houston 2%

UT San Antonio 2.3% Will be pd lump sum – no base salary adjstmts

Univ of Houston - Victoria 2.5%

UT Southwestern 3% Awarded 0% in FY 2010

UT Dallas ??

UT El Paso ?? May set a pool for ‘partial’ year merit.

Texas Tech University ??

Texas State University ??

FY 2011 Resources & Requirements

• Review Handout• Projections of Semester Credit Hours • Discussion re: Award of $1.6M• April 21 Meeting:– Finalize awards of $1.6M – Review of how each area spent funds allocated in

FY 2010 (both base budget and one time funding)• Template will be provided

FY 2011 Operating Budget Instructions

• Each President is required to: – “examine the resources used at the institution

and, where possible, redirect resources towards high priority mission activities, strategic competitive investments and reserves in preparation for potential future financial shortfalls.”

FY 2011 Operating Budget Instructions

• “Use of prior year balances should be limited to critical items, unique opportunities, or projects funded from prior year income committed for that purpose. Generally, balance usage should be reserved for nonrecurring activities.”– No balance usage can be recommended in the

budget to the BoR without the consent of the Chancellor, EVC and AVC-Controller / Budget Officer.

FY 2011 Operating Budget Instructions

• Requested that each campus maintain and preserve 2 to 3 months of operating reserves.– FY 2009 AFR Operating Expense Coverage Ratio

= 4.2– Coverage continues to decrease as balances

are spent, e.g Multifunction Office Building; Parking Garage, etc.

FY 2011 Operating Budget Instructions

• Chancellor and Board Chair strongly urge cost containment and reductions in academic and administrative overhead

FY 2011 Budget Hearing

• April 8th with UT System • Questions/assignments sent to each VP

with responses due March 31st

• Draft Budget due to UT System May 10th

• Final Budget due June 1st

• Board of Regents consider/approve Annual Operating Budgets August 12th