office of the president budget update president john d. haeger january 28, 2009

Office of the President

Budget Update

President John D. HaegerJanuary 28, 2009


Arizona State Budget


Arizona Has the Largest % Budget Shortfall of all 50 States

State (top 10) Size of GapPercent of FY2009

General Fund

Arizona $1.4 billion 13.90%

California $13.7 billion 13.60%

Georgia $2.5 billion 11.70%

Rhode Island $372 million 11.40%

Utah $620 million 10.40%

Florida $2.3 billion 9.00%

South Carolina $554 million 8.10%

Tennessee $884 million 7.80%

Colorado $604 million 7.70%

3Source: Center of Budget and Policy Priorities, January 15, 2009


JLBC Projections/Assumptions

• Projected general fund shortfalls:– FY09 up to $1.6B

– FY10 Up to $3.0B

• General Fund revenue will not return to FY08 level until FY12


Arizona’s Budget is Heavily Weighted Toward Education and Human Services

Source: Budget Update and Review of Voter Protection, November 18, 2008

Education


2/3 of State Spending is Mandated, Either Through Statute or Voter Protection (figures in $100M)

Source: Budget Update and Review of Voter Protection, November 18, 2008


University Appropriations as % Total State Budget, FY79-FY09


NAU Budget


Total Revenues: $401,000,000

Debt Svc Alloc, $15M

Other Revenue, $10M


% FY09 State Budget in Activity AreasTotal Budget $214,000,000

11


Salary and ERE are approximately 75% of Divisional Budgets

12


NAU’s Budget Planning


What Those “Tri-U” Cut Numbers for FY09 mean for NAU

Tri-U Number NAU’s Portion (15.25% -- NAU proportion of FY09 General Fund

Allocation)

$50M $7.63M

$100M $15.3M

$150M (best guess for FY09) $22.9M

$170M $25.9M


FY08-FY09 Initial Strategies

Beginning of FY09

A. Mid-year FY08 reduction of approximately $2.6 million was handled through general expenditure reductions, holding positions vacant, and local fund contributions. B. Initial FY09 Budget Plan covered FY09 budget reduction of $7.9 million and put $1.5 million aside for additional mid-year cut. It included: $3 million in state budget cuts and holdbacks $1 million from local and auxiliary fund reallocations to university central $2 million one-time use of funds for developing new health programs $3 million redirected away from being invested into educational needs such as hiring permanent

faculty


$50 Million StrategiesStrategy Approx.

AmtDiscussion

VP Targets $6 M Targets set at approximately 5% for all VP areas except Academic Affairs is 3.6%

•President - $700,000 (includes intercollegiate athletics, capital assets) Original target was $1 million but included utilities•Exec VP - $10,000•VP Research - $100,000•Provost - $3,000,000•VP Admin and Finance - $275,000•VP Enrollment Management - $525,000•VP Advancement - $40,000•CIO ITS - $500,000•VP Distance Learning $775,000•VP Institutional Effectiveness $50,000



AmtDiscussion

VP Targets $6 M Cont.Unfilled lines/vacancies/searches stopped or eliminated

•Over 20 tenure-track searches (some continue as non-tenure track)•Over 10 distance learning faculty positions•Athletics Development Officer•Budget Administrator•Legal Affairs•6 positions Capital Assets•8 positions Admin and Finance•3 positions ITS; other postponed•12 positions EMSA•10 distance learning staff/admin •10 Provost staff positions

Mid-year faculty salary increase postponedClosure and reduction of support for centers and institutes (closure of the High Altitude Training CenterEliminate residence life computer labs and eliminate modem pool



AmtDiscussion

VP Targets $6 M Continued

Rely increasingly on part-time and non-tenured faculty

Administrative offices will have less staff to provide services to students and university departments

Severe reductions in travel, equipment, abandoned planned purchases, program improvements and capital projects

Distance Learning site services reduced

Tuition and Fee Collections

$3 M Diverted tuition revenue planned to be invested in education needs such as hiring permanent faculty

Request tuition and fee increases from ABOR


DRAFT -- $100 M AUS means approx $15M NAUin addition to $50 Million Cut

Strategy Approx. Amt

Discussion

Furlough days(?) $2 M If possible; needs action for FY09; Modeling various scenarios; exploring legal options

Stop health program development

$2 M Occupation Therapy – FlagstaffPhysician Assistant - Phoenix

Increase VP Targets,Increase Revenue, Use Local Sources

$1 M (total $7 M)

Depends on Board action on ability to raise revenue. Would need to use local sources in FY09, but make permanent through targets in FY10

Reduce distance learning site services

Part of VP targets




Discussion

Furlough days(?) Increase $1M; (total $3 M)

Would need to find permanent solution for FY11

Athletics (in addition to VP cut) $300K-$1M Reductions in athletics; looking at when and how savings could occur

Tuition and Fee Increase - Reduction in Scholarship Aid

$1-2 M Depends on Board Action

Health Care Benefits $300K-$1M Increase premiums; decrease richness of benefits

Use Local Balances $1-3 (to tide us over)

Again these are shorter-term strategies; eventually must be permanitized

Increase VP Targets, $2 M (total $9M)

Must be made permanent in FY10; includes distance learning site closures

Reduce public service, community outreach, centers and research

$1 M Reductions




Discussion

Tuition and Fee Increase - Reduction in Scholarship Aid

$2-5 M Depends on Board Action

Athletics (in addition to VP cut)

$1M - $8M Severity depends on level of cut; major savings not recouped until FY11 or later

Increase VP Targets, $2-3 M (total $12 M)

Reductions; including NAU-Yuma; other

Reduce support to locally supported activities (ASNAU, recreation, alumni, development, etc.)

$1 -3M Reductions


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office of the president budget update president john d. haeger january 28, 2009

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