Hiring Freeze and Emerging Budget Management Initiatives

J. Bernard Machen, President

In light of a projected budget deficit of between $20 million and $30 million, a campuswide hiring freeze is being implemented effective immediately. The hiring freeze will apply to all faculty and staff positions; however, exceptions will be considered for those positions that are funded from non-state sources such as contracts and grants and clinical revenue. You will receive instructions for exception considerations within the next week.

The projected budget deficit is the result of Several factors. During this year’s Legislative session, lawmakers used a different formula for funding student credit hours, and state universities will receive no tuition increase for the upcoming year. In addition, a slowing economy is creating a slump in sales tax revenue, which state officials say could lead to a shortfall later this year. On Friday the Governor’s Office sent communication to all state agency heads stating that agencies should anticipate a minimum reduction of 4% in recurring General Revenue Fund appropriations during Fiscal Years 2007-2008 and 2008-09. Finally, the future of the property tax situation in Florida remains uncertain.

Within the university we have several unfunded priorities that we are committed to maintaining, including:

•Salary increases for those faculty members who are being promoted.
•Health insurance for our graduate students.
•Funding for the second year of the first class and for a new incoming class of Florida Opportunities Scholars.
•The university will also experience significant increases in utility costs that have to be covered.

In addition to the freeze, the university will implement three other strategies: a cost-reduction and efficiency task force, revenue enhancements, and special budget management initiatives.

Cost Reduction and Efficiency Task Force

The University of Florida will create a cost reduction and efficiency task force, composed of faculty, staff, students and administrators.

I will appoint the task force and charge its members with examining the university’s expenditures, identifying and quantifying cost reductions and efficiency, and making recommendations for short-term and long-term implementation.

Examples of reductions and efficiency gains may include:

•Reducing energy and utility expenditures.
•Implementing additional energy conservation measures.
•Harnessing UF’s buying power to lower costs and obtain better service levels from suppliers.
•Outsourcing specific functions and activities of the university.
•Using electronic delivery for some previously printed and mailed publications.

Revenue Enhancements

In addition to implementing a hiring freeze and exploring ways to reduce costs and operate more efficiently, the university also will evaluate opportunities to increase revenue. If $10 million of the deficit were to be addressed solely with tuition, a 12% increase in tuition would be required this year. Unfortunately, the lack of a tuition increase this year means UF must seek other financial resources for meeting the needs of our faculty and students.

One possible source of additional revenue would be increasing the number of student credit hours undergraduates take each semester. Our extremely bright undergraduates take fewer hours per term than students at our peer institutions around the nation. By taking one more course per semester, students would graduate sooner and move into the work force more quickly. This means that their degree would cost less and their earning potential over their lifetimes would increase. We will explore ways to encourage this practice.

Another source of revenue could be UF’s 26 Direct Support Organizations. These various businesses around campus serve all sorts of communities across the state and the nation. Additional opportunities for financial contributions from the DSOs will be explored. Some of them, such as the University Athletic Association, already make contributions that benefit the students.

The university provides many services to non-students for which we have historically not been compensated. An example of this is when alumni request transcripts. We provide more than 200,000 transcripts per year and yet UF is the only school in the State University System that does not charge for this service. We will evaluate the services that we provide to determine which ones should remain free and which ones should be paid for by those who benefit from them.

Finally, UF will evaluate its use of fees for services provided for our students such as distance learning, computer network access, and laboratory instruction. There may be opportunities to recover the expenses associated with some of these efforts through the implementation of modest charges.

Emerging Budget Management Initiatives

The University anticipates continued budget challenges in the coming fiscal year. As a consequence, it is even more important to maximize the use of all revenue sources, operate as efficiently as possible, and reduce costs.

Within each unit, Deans, Directors and budget officers will need to carefully reexamine the specific uses of state funds (general revenue, E&G, tuition & fees, and trust funds) and the uses of unrestricted monies from non-state sources.

As a general priority, state funds should be applied to cover salary costs associated with the university’s educational programs and essential core mission activities. Flexible, unrestricted, or fungible non-state funds should be used before state funds to cover faculty and staff salary costs for non-sponsored research and service activities (ie, research and service not funded by extramural grants or contracts or specifically funded by county, state, or federal allocations).

Examples would include:

1. Utilizing interest earnings from endowments and other spendable accounts in the University of Florida Foundation, rather than state funds, to fund faculty salaries for unsponsored research,
2. Utilizing unrestricted indirect cost accounts, rather than state funds, to fund faculty salaries for unsponsored research,
3. Utilizing practice plan monies to fund those faculty efforts devoted to clinical service.

Despite our best efforts to plan for the budget shortfall, we still face uncertainty. The full implications of the emerging changes of the property tax assessments on our budget are not yet known. By taking this action now we will be able to address the known deficit and be prepared for potential changes during the year.

As we enter this challenging period we must remain focused on our core missions of teaching, research, and public service and our services to students. These priorities, along with the source of funding for the position, will drive decisions related to exceptions to the hiring freeze.