State funding determined for ASU, budgeting process focuses on priorities

April 21, 2005 -- Now that the Arkansas Legislature has determined state funding allocations for the next two years, the budget development process at Arkansas State University will get underway in earnest this week, according to Dr. Les Wyatt, president. In a special edition of his monthly e-mailed report to faculty and staff Friday, Wyatt reported the good news . . . the University is grateful for the Legislature's support for higher education and an increase in state funding. Earlier, Wyatt had commended Governor Huckabee for proposing higher education to be one of his legislative priorities during the General Assembly. 

"All of us at ASU are grateful for the hard and effective work of the elected officials who addressed the needs of ASU campuses in the session," Dr. Wyatt said in his report to the Jonesboro campus. "ASU-Jonesboro was especially well-served by our local delegation." 

However, the increase is far short of meeting the university's demonstrated needs and priorities. "Legislators had to address the court-mandated needs for public education," Wyatt said. 

Although one of the significant developments of the Legislative session was adoption of a formula for distribution of state funds to higher education, there was not enough state revenue to fully fund the formula. If ASU had received its appropriation based on demonstrated needs under the formula, the university would have realized an additional $11 million. 

Instead, ASU-Jonesboro's appropriation through the Revenue Stabilization Act for the 2006 fiscal year that begins on July 1 will include an increase of $1,786,830. Included in that number is $893,072 designated for Educational and General Budget employee raises and $893,758 for Educational and General Budget operating funds. Comparable increases are also scheduled for the second year of the budget biennium, 2006-07. 

With more than 1,300 faculty and staff at the Jonesboro campus and a total annual payroll of approximately $80 million, $2.4 million will be needed to provide: a three percent cost of living raise; raises for faculty who earn a promotion in academic rank; and related increases in benefits for all employees. Thus, the university will need to find an additional $1.5 million from other sources to give these raises. 

Several other budget priorities in addition to salary increases have already been identified, such as the teacher education program and the health professions programs. In anticipation that budget needs would far exceed the institution's financial capacity, the university's budget managers have been developing a "re-allocation" plan through which all budgets are reduced by four percent. The roughly $1.74 million that is "put on the table" through this process will be re-allocated to the greatest priorities of the university. 

The university planning committee (UPC), which includes student representatives, faculty representatives and administrators, heard a presentation today (Thursday, April 21) on the 2005- 06 budget. The university's goal will be to have a budget to recommend to the Board of Trustees at its meeting scheduled for Thursday, June 9.  (The Board also will meet May 6, probably by telephone conference call, to approve promotion and tenure decisions.) At the center of the budgeting process will be an emphasis on directing the re-allocated funds and the limited new money toward the institution's mission and priorities as adopted through a strategic planning process, according to President Wyatt. (see UPC charts on institutional priorities, budget priorities, and revenue sources).

"We want to invest the people's money most effectively for our students and for the economic future of the state," he commented. Faculty, students, and staff recently reached the conclusion of the strategic planning process that extended over a year in campus-wide discussions. At the end, the planning resulted in eight major goals that will drive the institution's spending priorities over the next few years.

One result already acknowledged through the re-allocation process is that some of the university's programs and operations will be curtailed or in isolated cases eliminated, where continued funding at the same level cannot be justified under the strategic plan. In an educational institution, where the largest operational expense is personnel (instead of materials or equipment), even a relatively small re-allocation can result in the elimination of some positions. At the same time, some new faculty positions will be created in response to educational needs as determined by the strategic plan and university mission. 

Across all divisions of the university, including athletics, the vice presidents and vice chancellors have identified 35 positions that were budgeted for the current year that will not be recommended for continuation into the new budget year. Sixteen of these positions are currently vacant, either because individuals have resigned or because the positions have been not filled during the current fiscal year. However, 19 of the positions are currently filled and the affected individuals have been notified that the university will not continue their employment past June 30. 

Of all the positions that will be eliminated, three are faculty positions, 16 are support positions, and 16 are administrative positions. Within the group of newly budgeted positions for the coming year, 14 are faculty, 3 are staff, and none are administrative in responsibility. Some individuals to be appointed to these positions have worked for ASU previously. 

"Lay-offs are always very difficult, as everyone who has ever been affected by a lay-off will attest," Dr. Wyatt said. "However, in order to align the available funding with institutional priorities, some personnel changes are regrettably necessary. We are grateful for the work these employees have performed over the years and we will support them through this difficult time of transition in every way possible." Dr. Wyatt added that "we do not anticipate additional layoffs in the foreseeable future." 

The university's Department of Human Resources has begun the task of working with affected employees to help them in the transition. The Career Services Center, Human Resources, and other university units will make their services available to assist employees.

Dr. Wyatt also reported to UPC that the fringe benefits to employees, including the faculty and staff tuition discount, would be continued without change.  The next UPC meeting will be Thursday, April 28, at 8 a.m.

In addition to the increase in the university's "base" funding for annual operations, three appropriations were approved from the General Improvement Fund (GIF). GIF funds support special one-time expenditures. The GIF funding for ASU includes $750,000 upon executive recommendation for the purposes of critical maintenance, equipment, and library resources; $513,701 upon legislative recommendation for the purposes of the university library and for other institutional and facility improvements; and $100,000 for ASU's instructional site at Paragould. 

Wyatt also pointed out in his "First Friday" newsletter that the Legislature did not provide funding for higher education building projects, due in large part to the court-mandated demand for funding for public school facilities. However, the lawmakers proposed a ballot initiative through which the people may vote to extend the state funding for the College Saving Bond Program. If continuation of this program finds favor with the electorate, the currently funded stream of $25 million annually could produce a new facilities bond issue of $150 million for higher education, without additional cost to the people of the state. This mechanism may permit funding for building priorities on the campuses. 

Several buildings were erected during the 1990s with proceeds from the College Savings Bond program, including the eight-story addition to the Dean B. Ellis Library at ASU. Wyatt said the university will review all bills signed into law that might affect any aspect of university operations so that policies and procedures may be created or modified accordingly.

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