Hubbard updates PSS on budget

Laura Hubbard, vice president for finance and administration, painted a realistic picture of UB’s budget in the wake of constrained public funding for SUNY campuses during a presentation to the Professional Staff Senate at the group’s meeting on April 17.

While UB is in good financial health, the university’s budget will be impacted in years to come as a result of reductions in state aid for SUNY institutions. “The outlook going forward in terms of state tax support for SUNY is basically flat on the operating side. It’s a bit more challenging on the capital side and we’ll keep working on that,” Hubbard said.

The State Debt Reform Act, which the Legislature passed in 2000, is a key reason why, as it really came into play in the state fiscal year that just ended March 30, Hubbard said, and that’s impacted the budgets for UB as well as SUNY.

The legislation was meant to control the amount of state debt as a percentage of its total revenues. In 2012-13, SUNY received $852 million in capital appropriations, but in 2013-14 that figure dropped to $187 million. “That is because of the state debt cap,” Hubbard said. “It’s phased in, it’s really come into full effect now and it’s limiting how much debt the state can sell and, therefore, how many projects are being approved.”

There are two years remaining in the NYSUNY 2020 rational tuition bill, passed by Gov. Andrew M. Cuomo, which allows UB to raise tuition rates predictably and incrementally over a five-year period and which has provided significant resources for the university.

“We’re in good financial health. In terms of revenues, our enrollments look good, but enrollments are a volatile environment so we have to continue to pay attention to that,” Hubbard said. “We don’t yet know what’s going to happen with tuition after 2015-16 in terms of whether we have flexibility to raise tuition. We still have low tuition relative to our peers, so there is room to grow that and still stay a good deal in terms of being a high-quality, relatively low-cost institution.”

Because of increased unfunded mandates, UB will have to absorb into its operating budget up to approximately $36 million in recurring expenses, including $5.4 million for university-wide programs and $8.9 million in expenses in capital funding.

The largest portion, though, is the $21.5 million in state-negotiated salary increases for all employee groups at UB over the next three years. It breaks down to $3.5 million in expenses this year and $9 million over each of the next two years, Hubbard said. “We would still hope we would get funding for those, but what we tried to plan for based on what was in the Executive Budget is to have contingency plans in case that does not occur. Since the increases were not funded in either 2013-14 or 2014-15, it was a good thing we planned that way,” she added.

SUNY requested approximately $82 million to fund contractually negotiated salary increases, but received $7.6 million in generic funds to be used for personnel services. The SUNY Board of Trustees will determine how to distribute that money.

SUNY also requested $750 million on the capital side for critical maintenance projects. The governor approved $500 million and the Legislature trimmed that to $402 million, of which UB anticipates receiving $49 million.

Given all that, the university has rebalanced its budget model. “In the last few years, it’s been largely a formulaic model in terms of tuition sharing, where academic units received 52.5 percent of the growth in tuition revenue and the support units received 22.5 percent. We reduced the formulaic portion of it so the academic units now get 25 percent of the growth and the support units get nothing going forward in terms of a formulaic basis. We created a larger central fund so that we now can distribute those funds on more of a strategic basis,” she said.

In addition, Hubbard said UB is trying to prepare budgets in July so that units know what to expect by the start of the fall term. “The provost and myself have met with all the decanal units and gone through their three-year plans and talked about impacts of changing the budget model on their respective units,” Hubbard said. Budget review meetings will start in May, at which time units can request those strategic funds. Decisions will be finalized in late May or early June.

“Our goals were to maximize our capacity financially on our strategic priorities and to put additional disciplines into our processes to do that and to better align our resources with our goals as an institution,” Hubbard said.