Since my last budget update on June 11, a great deal of work has been done to formulate and begin implementing a budget reduction plan for the new fiscal year that began July 1.
As explained in my June 11 update, Southeastern received a significant reduction in state funds as a result of the state budget crafted during the recent legislative session, and as a result of the continued implementation of the Board of Regents funding formula. Now that detailed budget information has been finalized, our reduction in initial state appropriation is $9.1 million. Our increase in retirement fund contributions and Office of Risk Management premiums that are passed through to the university amount to nearly $750,000. In addition, as we raise our tuition for next year under the GRAD Act, the cost of certain scholarships and waivers also increase, further widening the budget gap by another $600,000.
In addition to these factors, we are anticipating a slight enrollment decline next year resulting in a reduction in self-generated revenues of about $2.5 million. As you know, we have increased admission standards multiple times in recent years with an additional modest increase this fall. We believe higher standards, in conjunction with the significant increases in tuition rates over the last several years, are responsible for the anticipated enrollment decrease.
In any case, after all of these factors are taken into account, we must budget about $13 million less in expenditures in the new fiscal year than when we started the 2011-12 fiscal year. While this is obviously a significant budget reduction, the true magnitude is even more apparent when the cumulative amount of reduction in our state funds is considered. Since the beginning of the 2008-09 fiscal year, our state funds have been reduced by almost $40 million - essentially cut in half.
The 2012 - 13 budget reduction plan includes the following elements:
Eliminating funds from the operating budget for approximately 80 faculty and staff positions, including vacant positions and a modest number of filled positions transferred to other funding sources - $4.4 million.
Reduction of utilities and related costs in the operating budget, including additional energy efficiencies, additional costs recovered through the utility surcharge student fee, and operating fund savings in the annual payment of an energy services lease - $2.4 million.
Recovery of grant indirect dollars from restricted funds to the operating fund - $1.3 million.
Operating/restricted fund swaps supporting instruction-related activities in academic departments, library acquisitions, student-related software maintenance, etc.; reductions in operating/restricted funds transfers, including athletics; and offsetting a reduction in operating funds for student scholarships with additional Southeastern Foundation funds - $3 million.
Instructional workload adjustments resulting in the elimination of 13 instructor positions and various part-time faculty positions with reassignment of course sections to other faculty - $700,000.
Staff (classified and unclassified) layoffs affecting 23 employees - $1.2 million.
There is no doubt that this has been the most complicated and difficult budget reduction with which I have been involved in my 26-year career in higher education. Certainly, a significant part of the difficulty is due to the cumulative amount of multiple reductions we have experienced in the last few years.
This budget reduction plan is also different and more problematic than others due to the necessity of more extensive operating fund/restricted fund swaps which represent a budgetary tactic that presents financial and management challenges, including the very limited balances, sources and acceptable uses of such funds.
I am also very disappointed that we must resort to layoffs and workload increases. I especially regret the negative impact layoffs have on the lives of our colleagues, but unfortunately, the cumulative magnitude of reductions in state support and the reality that it is unlikely state support will increase in the foreseeable future leave us no choice. I am firmly convinced the prudent course is to right-size our operational footprint to be more consistent with our reduced resources.
As we move forward, we will continue to work toward additional strategic decisions that allow us to sustain support for our most productive and critical programs given a more modest financial base. As always, I will seek input and participation from on-campus and off-campus constituents about these issues of strategic importance where the future of our institution is concerned.
Clearly, it is a testament to the dedication of our faculty and staff that our institution has managed dramatic budget reductions in recent years and yet continues to provide viable educational opportunities to students in our region.
As always, I ask that you stay focused on serving the interest of our students. I appreciate your work as colleagues and commit that along with the other members of this administration, I will continue to work tirelessly to advocate for Southeastern and our students.