Principles and Guidelines Campus Supplemental Budget Reallocations

Paula:

On first reading of the document, I found two areas that may need clarification or change:

a. Page 3, point 4 (lines 27 -32): I do not understand how the net reduction of 12% is arrived at if tuition is increased by 7%.  My understanding from point 3 (lines 19 - 25) is that the 20% of state appropriated portion of budget will amount to 12% reduction in operating budget since state appropriation is 60% and tuition is 40%.  Here is whate I find difficult to understand: Suppose operating budget is $100 with appropriation being $60 and tuition $40. Now the state appropriation is reduced by $12.  Without any tuition increase the shortfall is $12.  If we increase tuition by 7%, total tuition revenue would be $42.8, and the shortfall would be only $9.2 or 9.2% of the pre-reduction budget ( expenditure = $100, and revenue = $48 state + 42.8 tuition = $90.8).  Yet the statement in point 4 says that after the tuition increase the shortfall will be 12%. I think a clarification would be helpful.

b. Page 4, point 9 (line 33). I do not understand this statement. In particular, how is fully funded defined? Does that mean that if the current funding is at $7000 we would take additional students only if the state appropriates $7000 additional but not if the state appropriates $5,600 ( $7,000 x .80) additional? If that is the intent, does that mean that the marginal cost of the additional enrollment exceeds $5,600 + tuition? Also, does "full funding" vary by discipline? (in the past additional enrolments in different fields - high demand- were funded at different levels).  I think the statement needs clarification.

Thanks.

Dean Ghali,

Thank you for your inquiry. In reference to "Page 3, point 4 (lines 27 -32)," the paragraph is intended to outline the amount of state support reduction that could be offset by a 7% increase in tuition. What you have outlined I believe is the percent of total budget shortfall.
 

With regards to "Page 4, point 9 (line 33)," you are correct in your example that the implied marginal cost (assumed to be  $7,000 in this case) would represent fully funded in terms of state support. The "fully funded" term as used in this document is part of the broader "carry forward" that would incorporate all current and past funding amounts.
 

I hope this addresses your questions

I hope you revise the draft so that the reader can understand what you mean. I am still not clear about what is meant by the two statements I referenced. I do not need an answer posted, I would like to see a revision.

On Page 4, lines 21 and 22:

"6.  Reduction targets may not be met by passing the cuts on to other units – e.g., charge backs, dropping support for service courses critical to other units"

I wonder if a more nuanced statement would be more appropriate. I agree that passing on the full cost of a cut to another unit is not what we are trying to achieve. But, what if a large cut in one office results in a small increase in another office? Might we want to establsih a mechanism to allow that to happen? Or, at least to allow discussions on how this might happen?

One example that I am thinking of is the reduction of travel by making greater use of our video conferencing facilities on campus. Many costs to support video conferencing come through central IT. So, a department might be able to eliminate some substantial travel costs, but central IT would be assuming a small increase in costs. Seems that we should still advocate this change.

Thanks,

jf

 Section 7 a. b. & c.

As a new administrator who must find cost savings, I have begun to review the literature and have been interested to find that layoffs typically decrease productivity while strategic downsizing often improves it. Downsizing can be "strategic" in terms of both an organization's mission and its personnel. When downsizing, for instance, managers can meet with staff to find out what is most important to them. Is it most important for an employee to stay where he or she is, or is it most important to preserve salary? Attempting to follow this advice, I am meeting with the staff in my departments. These discussions have been remarkably useful. I've had some staff tell me they would rather move to another division than lose salary and I've had other staff tell me they would rather have a 10 or 11 month contract and stay where they are. With this information in mind I should be better able to preserve what is most important to each of the employees in my division while also finding the savings we require. Ideall (the literature suggests) strategic downsizing can facilitate changes that make employees more satisfied and productive than they were previously. 

My cursory review of the business literature on these topics has been so helpful that I can't help but think of the resources we have in our CBE. What better time could there be for colloquia on what the literature of Decision Sciences and Management has to say about what to do and not to do in such circumstances?

Steve VanderStaay

Vice Provost for Undergraduate Education