April 10, 2020
TO: James R. Johnsen, President
FROM: Daniel M. White, Chancellor
RE: Addendum to Budget Planning Activities Between Now and FY22 Memo
This is an addendum to my earlier memorandum dated March 23, 2020 detailing budget planning activities between now and FY22.
Administrative Review Status
In early April, I received the Administrative Review report and recommendations for consideration as part of ²ÝÁñÉçÇø’s budget plans. The public comment period for feedback on this report is extended through April 12, 2020; therefore, I am still openly collecting input on recommendations. The major theme proposed is an expanded shared services center or centers, which could take several forms. To date, we are focusing plans on business transactional services (e.g. HR processing/PPA activities, purchasing, and travel services and support) across ²ÝÁñÉçÇø.
I am proceeding with implementation planning for a transition to a Core Campus service center and a West Ridge service center model for support of the Fairbanks Campus. This will take some planning to implement successfully, but I expect transition to occur beginning in FY21 through FY22. This is likely to produce some savings, however, is also intended to increase reliability of services with backups for positions in thin areas, increase career ladders and development for employees, and will allow ²ÝÁñÉçÇø to streamline and adopt best practices for high volume work. In addition, several position mergers were recommended by the administrative review committee that I am considering. As I receive additional feedback, I will continue to consider plans for additional actions.
COVID-19 Planning
We continue to learn about the impacts of COVID-19, both in terms of revenue losses and possible increases for student support. ²ÝÁñÉçÇø is actively tracking these expenditures and revenue losses as part of a weekly submission process to the state OMB office and will seek any opportunity for appropriate reimbursement to offset COVID-19 costs. I have also recently issued a memorandum to ²ÝÁñÉçÇø leadership to curtail any non-essential spending during this time of crisis, to ensure we can work toward increasing our unreserved fund balance (UFB) for use as bridge in an increasing time of uncertainty.
The State Epidemiologist has also recently suggested scenario planning for fall – whether it be fully online or whether learning and research can be conducted in person in ways to mitigate the spread of the virus in the event there is not progress in this regard over the summer months remains unknown. ²ÝÁñÉçÇø will actively plan for regular offerings as well prepare a plan for transition to online modes of delivery, similar to this spring, and is proactive in this planning as opposed to reactive after the initial outbreak. We prefer to continue planning for fall residential student enrollment and/or in person delivery (heeding CDC and state and national guidance) until it may become impossible to do so.
FY21 Planning
With respect to FY21 additional detail, the ²ÝÁñÉçÇø planning target to date ($15.8M) includes compensation increases for market and a general across the board 1% adjustment, which may be something to consider delaying until a future time in the increasingly constricted climate. The VCASs and CHRO Steve Patin are currently working through a series of workforce related options which will be presented to you and the Chancellors for decision. Without these added costs, ²ÝÁñÉçÇø’s planning target would be reflective of the $12.3M state UGF reduction and any unmet gap from FY20. Additional one-time actions, such as furloughs, may also be a necessary tool for consideration in FY21 or FY22.
Above all, increasing enrollment and packaging multi-year financial aid to ensure ²ÝÁñÉçÇø’s commitment to students is strong and the value in a ²ÝÁñÉçÇø education is clear, is the priority. Enrollment has the greatest opportunity for impact on our revenue streams and therefore remains a primary focus. Tuition strategy, including possible differentiation, will likely be proposed for FY22 as part of ²ÝÁñÉçÇø budget plans. The Planning and Budget Committee is meeting next week with the Tuition and Fee Committee and will receive some guidance and support from Ruffalo Noel Levitz (consultants already engaged for ²ÝÁñÉçÇø Strategic Enrollment Planning) to inform the basis of their recommendations with information from peer and other institutions. I look forward to recommendations in this area as this work progresses.
To date, ²ÝÁñÉçÇø has shared a worst case planning scenario with the UA Board of Regents Audit Committee using broad summary categories that are a combination of management areas listed below. Numbers vary slightly based on the different categorization.
Anticipated reductions by management area include:
| ²ÝÁñÉçÇø Estimates by Area | FY21 Estimated Reduction Impact* |
|---|---|
| Chancellor's Offices -$451,200 | -$451,200 |
| Provost | -$4,449,800 |
| Rural, Community & Native Education | -$1,509,200 |
| Administrative Services | -$1,934,900 |
| ²ÝÁñÉçÇø OIT | -$320,000 |
| Research | -$1,285,200 |
| Student Affairs | -$849,700 |
| Facilities Maintenance | -$1,500,000 |
| Total UGF State Reduction Target | -$12,300,000 |
| *UA compensation increase is under discussion, may result in greater impact per area. |
Plans are subject to change as enrollment or other revenue streams are developed. Additionally, where facility sales or other revenue sources emerge, including COVID-19 reimbursement, this will aid in ²ÝÁñÉçÇø’s ability to work through base operating reductions, leveraging revenues to ensure business continuity over time. ²ÝÁñÉçÇø will utilize one-time and reserves where necessary to cover reduction targets on a year-to-year basis.
These reductions encompass recommendations put forward as part of the Expedited Academic Review and the Administrative Review. These reductions do not include additional actions that may be needed to cover unmet base reductions from prior years, and will be impacted by the timing of any teach out plans.
FY22 Planning
FY22 planning will be further developed as FY21 plans progress. Another round of Expedited Academic Reviews will begin in the fall for the second half of the ²ÝÁñÉçÇø programs not reviewed in the first phase. Review of administration will continue on an ongoing basis. ²ÝÁñÉçÇø is monitoring areas where cuts can no longer be taken, and will continue discussions in this regard in collaboration with the System Office and sister universities where reductions actions may impact other dependency areas.
DMW:jdp
cc: Julie Queen, Vice Chancellor for Administrative Services