Statement from provost, senior vice president regarding UB's 1999-2000 budget

In recent days, several accounts about UB's current budget situation have appeared in the news media. The following statement is an effort to provide a more comprehensive review of our current budget situation, its origins and its outcomes.

The SUNY financial plan for 1999-2000, which was approved Tuesday by the SUNY trustees, provides UB with a base budget for 1999-2000 of $234.5 million, up $5.4 from $229 million in 1998-99. This plan, however, leaves UB with $5.4 million less than is required to maintain planned campus operations. The sources of this shortfall are the following:

- $3.1 million in negotiated salary increase costs beyond the increase provided in this year's proposed financial plan. The current-year cost to UB of the salary agreements total $8.4 million: $5.1 million to annualize the 1998-99 agreement and $3.3 million for the 1999-2000 agreement.

- $1.1M for inflationary-cost increases, including annual increases for the costs of instruction, research and other operations

- $.9 million, approximately, for special-program improvements in the Law and Pharmacy sch ols that were to have been covered by approved tuition increases

- $.4 million in tuition revenue associated with planned enrollment increases, which SUNY used to balance the UB financial plan

Thus, while our base budget increased by $5.4 million, base campus costs increased by double this amount-$10.8 million-requiring the campus to reduce unit budgets by $4.3 million and not provide funds to cover inflationary costs of $1.1 million.

With the $4.3 million budget reduction and with the university obligated by historical decisions to meet $7.9 million of campus commitments, UB's Budget Committee faced the need to manage $12.2 million in costs beyond identified funding sources in fiscal year 1999/2000. Fortunately, current-year growth in university enrollment and research activity has produced $6.1 million of new revenues. The Budget Committee decided to retain these marginal revenues to meet campus obligations, while at the same time, implement new incentive programs designed to induce revenue performance in the academic units. This is the complex challenge the fiscal year 1999/2000 UB financial plan seeks to address.

Over the past several years, the Budget Committee has assigned expenditure limits or "savings targets" to units to create some of the funds necessary to honor our central campus obligations. Last fiscal year, $5.1 million in savings targets were assigned to campus units and the remainder of the campus obligations were funded by one-time sources. For fiscal year 1999/2000, the Budget Committee decided to increase those assignments by $1 million to $6.1 million and use all of the $6.1 million in marginal income from enrollment and research growth to fund our $12.2 million obligations.

However, the Budget Committee's decision to implement the revenue incentive programs complicated this plan. The incentive programs developed by the provost and senior vice president for fiscal year 1999/2000 would return 90 cents of every dollar above planned unit revenue targets to the earning academic units and 10 cents of that dollar to the non-academic units. The committee decided to allocate marginal revenue to the academic and non-academic units according to the 90/10 formula and asked that these units return those funds dollar for dollar through expanded savings/reduction assignments. Essentially, the units were given $6.1 million in marginal revenues they earned and were asked to pay $12.2 million back to the university to meet campus financial obligations. The academic unit share of this $12.2 million was $9.7 million and the nonacademic unit share was $2.5 million.

In developing the plan to identify $9.7 million, Provost Triggle was committed to recognizing the performance of those units increasing their enrollment and research revenues, despite these fiscal issues. He therefore decided to return the full 90 percent share of marginal revenues to units earning these revenues. The elements of his assessment plan are provided below.