Over the past year, I have communicated regularly concerning changes impacting the Financial and Administrative Services (FAS) portfolio. Adding to President Greg Fenves’ earlier announcement, I want to keep you informed and increase staff awareness that the recent budget approved and adopted by the Texas Legislature reduces the university’s base funding by about $32 million per year ($64 million for the biennium). Even with the one-time “hold harmless” money provided by the Legislature, this budget is essentially a flat budget that does not account for inflation or other increased operational costs.
The university will need to take tactical and measured actions to ensure that we can continue to deliver on our promise to Texans to be a “university of the first class” and maintain our mission as a pre-eminent institution of higher education. As a portfolio, we are going to have to make some tough choices about what we continue to do and what we will discontinue, but these choices need be made so we can focus on what is important and what needs to be improved. Here is an overview of our focus:
- During the next two years, all colleges, schools, and units (CSUs) will be required to proceed with cuts that reduce our recurring budget by $20 million annually. The president, provost and senior vice president/chief financial officer will strategically determine the method and amount of the cuts across the CSUs.
- Historically, a large percentage of budget cuts have been borne by the administrative units. Operationally, across-the-board cuts are no longer feasible or sustainable. These university-wide budget cuts will have to be strategic.
- As we get more clarity, we will have an engaged process with each unit to meet our yet-to-be determined targeted reduction.
- The university is mandating a merit pool for classified and administrative and professional (A&P) employees. It is crucial that we commit to recognizing excellence. Merit increases, coupled with UT System’s recent announcement of no change in insurance premiums, will help us with retention during this challenging process, as well as address current salary inequities.
Our university’s executive leadership is focused on collaborating closely to strategically determine the method and amount of the cuts across the CSUs. I understand the desire to want to know all of the budget reduction details immediately and specifically what this all means. What I can tell you is that we are approaching this situation in a thoughtful manner with as much flexibility as circumstances permit, and we appreciate your support and patience. Together, we will closely monitor the effects of these changes and constantly evaluate our ability to reconcile ongoing financial pressures with our mission.
Managing our resources while keeping an eye toward efficiency and transformation is the kind of discipline all of us will be asked to embrace. This will allow us to meet our commitments to the campus community we serve, which I know is an integral part of the pride all of you feel as a member of our university’s staff.
The principles that guide our decisions are and will be clear and consistent. Students, faculty, visitors, and customers are best served by staff like you who can excel at sustaining quality, safety, and excellent customer service, while at the same time staying focused on responsible stewardship and reducing costs.
While I realize that any changes of this magnitude can be unsettling, I have confidence that we can meet these challenges as a team. We will need the best thinking and creative suggestions of every staff member so that we will be well-positioned to face them. I believe that we will emerge stronger and better able to support and enhance our core mission to be more effective, efficient, and achieve operational excellence.
Senior Vice President and CFO