TO: Board of Regents
FROM: Richard A. Crofts
SUBJECT: FY 2001 Operating Budgets
DATE: March 10, 2000
At our November meeting, you reviewed documents from both universities that outlined their budget development process, plan, and priorities. In January, we discussed the attached report showing estimated budget percentage by selected categories. These categories were identified over the course of time as areas of our campus budgets that were experiencing significant difficulties. On February 15th, the Policy Committee had an extensive discussion of these same issues.
Planning for the FY 2001 budgets continues on all of our campuses, with the associated challenges that have been discussed earlier. Despite our relative success during the last legislative session, our continuing expenditures tend to exceed the revenue likely to be available to us. Hence, you read about the budget cuts that our campuses are experiencing.
The reason for the operating budgets to appear again on the March agenda is our ongoing efforts to provide the Regents the opportunity for more input and direction to the building of operating budgets. As a consequence of these activities and discussions, the Regents should be able to see the impact of their guidance when the FY 2001 operating budgets are presented at the September meeting.
In order to facilitate this process I have drafted a set of recommendations for the Regents to consider. Before I provide those recommendations, I would like to offer a few comments to set the context for your continued discussion.
· The budget difficulties in the categories we have identified are largely the result of two factors: the amount of state support available and the commitment to placing the highest priority on the instructional budget and making salaries as competitive as possible for university system employees.
· It is virtually impossible to increase the percentage of our operating budgets in these selected areas without compromising our commitment to preserving the quality of the instructional enterprise.
· Because such a large share of university budgets are in personnel costs, it is very difficult to make significant and rapid changes in dollars allocated to operating budgets. Therefore, recommendations should emphasis the desired direction for the reallocation of resources, and not be too tied to fixed determinations for every campus. It will probably be necessary to measure progress in their directions over the next several years.
· We should continue to honor the principle of flexibility and management freedom for our campus administrators.
Here are recommendations regarding the FY 2001 operating budgets for your consideration.
1. FY 2001 operating budgets should be accompanied by a narrative that describes in specific detail the values or priorities encompassed in the budget. What is the university system getting out of the budget being proposed? Special attention should be given to the degree to which the proposed budget addresses the goals for the university system adopted by the Board of Regents and recommendations #2-6 that follow.
2. Each campus should make progress toward the establishment and maintenance of an account for enrollment reserves of a minimum of 2% of its annual operating budget. The funds in this account would be available to mitigate enrollment/revenue shortfalls below projected levels and would be carried forward and replenished from year to year. We will continue to review this issue to determine the adequacy of a 2% reserve. Our campuses currently do not maintain a separate account for enrollment reserves. However, they do budget an average of 1.04% from current revenues. The amount budgeted ranges from a low of .32% to a high of 3.69%.
3. Each four-year campus should fund the library at a minimum of 6% of its total annual operating budget, in keeping with recommendations from the American Library Association. The Colleges of Technology at Helena and Great Falls should make progress toward funding their libraries at a minimum of 3% of total operating budgets. This recommendation will require some years for full implementation, especially on the smaller campuses.
4. Each campus should make progress toward spending a minimum of 5% of its annual operating budget on technology infrastructure.
5. Each campus should increase its dollars allocated for staff development in the FY 2001 operating budget and develop a plan for long-term improvement in funding for staff development.
6. Each campus should remain cognizant of the legislative admonition to increase expenditures for operations and maintenance to 13% of the annual operating budget while the fiscal officers are working on an alternative means to assess the adequacy of our budgets in this area.