Budget Q & A

A. The full Board, meeting via conference call, approved the University's proposed 2008-09 operating budget in the amount of $521.8 million, or 1.7 percent less than last year. The new budget was constructed through a collaborative university-wide process undertaken at President Brogan's direction to deal with $9.6 million in state-mandated cuts. Necessary savings were realized through eliminating 134 jobs (100 of which were already unfilled), reducing degree offerings on some campuses, increasing class sizes and closing some centers.

A. In view of continued shortfalls in state revenue collections, Governor Crist has ordered that one percent of the funding allocated to colleges, universities and other state agencies be withheld for the first quarter of the 2008-09 fiscal year, which begins July 1. For FAU, this amounts to $1.8 million. There is a possibility that the state will impose a four percent reduction for the full fiscal year. To prepare for this possibility, FAU has set aside $4.3 million in reserves, which can be used to offset additional cuts.

POSTED: June 11, 2008

Q. How did the June 11 Audit and Finance BOT committee vote on the proposed 2008-09 operating budget?

A. On Wednesday, June 11, the Audit and Finance Committee of the Board of Trustees approved the University’s proposed 2008-09 operating budget. The full Board is expected to vote on the budget at its regularly scheduled meeting on June 25. The budget can be viewed in detail by downloading the report as a PDF.

Here are some of the proposed budget’s key elements:

The operating budget is made up of the following components: Educational and General (E&G), Student Financial Aid, Contracts and Grants, Auxiliary Enterprises, Athletics Local, Student Government, and Concessions. The proposed operating budget for fiscal year 2008-09, which begins on July 1, totals $521, 818, 482, a decrease of 1.7 percent from last year.

The E&G budget is derived from publicly funded sources such as allocations from the Florida Legislature and the Florida Lottery. FAU’s proposed E&G budget for 2008-09 totals $249,374,143, which is 4.3 percent less than last year’s E&G budget. Part of this budget will be funded through the six percent tuition increase that was approved during the 2008 session of the Florida Legislature.

The other segments of the budget, including Student Financial Aid, Contracts and Grants, Auxiliary Enterprises, Athletics Local, Student Government, and Concessions, are reliant on a variety of funding sources including fees, grants and sales. The details for each of these areas are outlined in the presentation available through the link listed above.

The results of the June 25 BOT meeting will be outlined in this Q&A section.

At the May 28, 2008, meeting of the FAU Board of Trustees, the University's proposed budget for the 2008-09 fiscal year was reviewed. The following Q&A answers some questions about what took place at the meeting.

Q. Who made the presentation and how was it made?

A. Vice President for Finance Ken Jessell and Provost John Pritchett made a PowerPoint presentation to the Board that showed President Brogan's proposed University-wide budget in some detail. (The PowerPoint can be viewed by clicking on Download PowerPoint File graphic at the top of this page.) They explained the broadly collaborative process that was followed in deciding where cuts had to be made, noting that the overarching goal of the process was to protect the University's academic core functions. It is critically important for everyone to work together during these challenging times.

Q. How did the BOT respond to the budget presentation and proposed reductions?

A. Speaking on behalf of the Board, Chairwoman Nancy Blosser thanked everyone who worked on the budget, saying it was evident that the process had been handled in a thorough and thoughtful way. She commended FAU for seeking input from a wide variety of sources to guide decisions about where reductions should be made, rather than instituting across-the-board cuts. The collaborative process was judged to be more fair and to yield better results. The Board was especially pleased with the fact that FAU has been able to avoid both mass layoffs and an enrollment cap. The University was commended for its commitment to preserve its enrollment plan, which calls for the admission of about 2,500 freshmen in 2008-09.

Q. What is the next step in the budget process?

A. The May 28 presentation was for informational purposes only, so the Board did not take a vote. On June 11 the operating budget will be presented to the BOT's audit and finance committee, which will review it and submit it for full Board consideration on June 25.

POSTED: May 23, 2008

Download PowerPoint File


To FAU Students, Faculty and Staff:

Above is a link to a PowerPoint presentation on the 2007–08 budget and the proposed 2008–09 operating budget reductions. This PowerPoint will be shared with the FAU Board of Trustees this week; however, President Brogan wanted to ensure that the document was available for the FAU community to view as soon as it was complete in an effort to continue the flow of information on this very important topic.

As you are aware, Florida Atlantic University will experience very significant budget reductions in the year ahead. This is true for the other universities in the State University System as well as all state agencies as a result of declining state revenues. During the past several months, University staff has been working diligently in dealing with the budget shortfalls to ensure that FAU will continue to support its students, faculty and staff in the best possible way while fulfilling the University’s key strategic goals and objectives. As you know, the University has a strategic plan to which the budget is tied, and each year, as the budget is constructed, the goals and objectives of the strategic plan are used as a guideline for expenditures. It was essential, therefore, that the strategic plan be followed when dealing with reductions in order to minimize the adverse impact of these reductions.

Last June, as the University was finalizing its 2007-08 operating budget, it received word from the Chancellor of the State University System that it should prepare for significant reductions to the budget that had just been prepared and approved by the Board of Trustees only a few days earlier. At that time, the University implemented a freeze on all non-essential hires and purchases to ensure that it would be possible to accommodate the mandated reductions. During a period of just a few weeks, the University identified reductions totaling approximately $7 million, and these were approved by the Board of Trustees on August 28, 2007. Key objectives in making this first round of reductions were minimizing the impact on instruction and enrollment, ensuring the timely progression of students pursuing degrees, protecting personnel, and maintaining consistency with the strategic plan. It is believed that these objectives were met.

In January, when it became well apparent that the state’s economy was continuing to deteriorate and that more reductions would be necessary, President Brogan established a task force to review comprehensive and strategic concepts to guide these potential reductions. This task force was comprised of FAU faculty, students, staff and administration and met approximately three weeks per month and spent countless hours reviewing the current budget and engaging in an interactive process of fact-finding and research. Using the strategic plan as a guide, goals one and three were identified as key to honoring the University’s mission. In addition, a series of guiding principles helped the task force in their work.

In the following slides, you will be able to view the timeline through which this year’s budget reductions took place. An organized approach to this process began in July and has continued throughout the year. As indicated earlier, the reductions were made with the strategic plan in mind. The mission, vision and values statements are all consistent with the proposed reductions, as are each of the goals.

However, no matter how much planning and thoughtful research is involved in a process such as this, the University will be negatively impacted in many ways. But with crisis comes opportunity, and, even in difficult times, the University is always looking to maximize its efficiency and creativity. There are some positive outcomes from this process, especially fulfilling the University’s commitments to students, faculty and staff and the efficient use of all of our resources.

You will notice in the budget reduction plan that every area of the University participated in the reductions with the exception of police and safety services, which are necessary for the health and safety of the University community. Areas that participated in the reductions include the president’s division, academic affairs, student affairs, financial affairs, and partner campus support services and administration. You will notice, too, that 100 percent of the anticipated tuition revenue — almost $4 million — went to reduce the impact on the academic programs of the University. As such, non-academic units absorbed reductions averaging 40 percent more than their proportional share in order to keep the academic core reductions at a minimum.

There are several funding initiatives that will add funds to the University’s budget; these include a 6 percent tuition increase for in-state graduate students and out-of-state undergraduate students. The elimination of free, online credit card payments for tuition and fees (though online payment via checking accounts is still available at no charge) and a revision of the office supplies contract will achieve additional savings.

These are difficult times for FAU and its faculty, staff and students. These reductions will bring forward numerous challenges we must work together to overcome.

On Wednesday, the BOT will view this presentation. This meeting will be webcast, and you are welcome to view it from your computer. After the meeting, the University will send out a University-wide e-mail summarizing the meeting’s outcome and providing any new information on this site.

Thank you for your attention to this very important matter.

POSTED: May 10, 2008

A Message from President Frank T. Brogan:

As you may be aware, last week the Florida Legislature passed the statewide budget for 2008-09. During the current fiscal year, FAU's educational and general (E&G) operating budget has been cut by $8,775,475; this includes a permanent funding reduction that was taken during the middle of the year. The University's E&G budget for the 2008-09 fiscal year, which starts on July 1, will be cut by an additional $9,849,603, for a total two-year reduction of $18,625,078.

Legislators have approved a 6 percent undergraduate tuition increase, which is expected to add nearly $2 million to FAU's revenue stream next year. Governor Crist has indicated that he will likely sign this measure into law. FAU will be using the same enrollment plan as last year, thus adding approximately 2,500 freshmen during the coming year.

Unfortunately, salary increases were not approved for any state employees. And unlike last year, state employees will not receive a salary bonus this year.

Despite this grim scenario, there is some good news to report. FAU received funding for several important programs, including the FAU/University of Miami medical school partnership, the Center for Autism and Related Disabilities and the Center of Excellence in Ocean Energy Technology. Also, FAU is slated to receive additional lottery funding of almost $5.3 million, providing that the Florida Lottery meets sales expectations in the coming year.

FAU allocations in the appropriations bill include the following:

Educational and General (E&G) Budget:
• $3.3 million for the FAU/University of Miami Miller School of Medicine partnership

• $8.75 million for the Center of Excellence in Ocean Energy Technology

• $1.04 million to cover health insurance increase

Capital Improvement Trust Fund (CITF):
Note: CITF money is generated by student fees, is non-recurring and cannot be used to cover operating expenses.

• $4 million for phase I of the Recreation and Wellness Facility, Boca Raton campus

• $4.43 million for phase II of the Recreation and Wellness Facility, Boca Raton campus

• $1.03 million for renovation of the Student Life Center, Treasure Coast campus

Public Education Capital Outlay Fund (PECO):
Note: PECO money is non-recurring and cannot be used to cover operating expenses.

• $17.9 million for the Engineering Building, Boca Raton campus

• $17.4 million for the FAU/University of Florida Joint-Use Facility, Davie campus

• $7.5 million for infrastructure

Governor Crist has 15 days from receipt of the final legislative budget to veto line items or approve the budget in its entirety. The 2008-09 budget goes into effect July 1.

FAU's strategic plan was used, and will continue to be used, as the foundation of the very difficult budget-cutting process. While it is never easy to make funding decisions of this kind, our focus must be on preserving the University's academic core functions. The reality is that almost $10 million in reductions must be made after tuition and lottery funding are factored in, and we are making the reductions with the best interests of our students in mind.

This process has taken longer at FAU than it has at some other universities around the state because we decided to take a collaborative approach to the difficult decisions that had to be made, seeking input from many constituencies. We feel confident that this high level of inclusiveness will ultimately yield a final product that will serve the University well even in the face of severe financial constraints.

Sincere thanks to the many faculty, staff and students who have helped develop strategies that will enable us to reduce the University's operating expenses while protecting its academic core. This work will continue in the weeks ahead. In the very near future we will share our budget reduction recommendations with the University community and the Board of Trustees.

The State of Florida is facing a budget crisis that will affect all state services including higher education. In addition to a budget reduction last October, FAU is facing another round of cuts this spring as well as extensive cuts anticipated for the 2008-09 budget year. The following Q&A addresses some common questions about the University's current and future financial situation.

1. Additional budget reductions are coming. When will they arrive? And by how much will the budget be cut?

According to the latest numbers, the State of Florida has approximately 8 percent less revenue in its general revenue fund than anticipated when the 2007-08 budget was enacted — that's a more than $2 billion decrease.

You will recall that FAU experienced a $6.3 million General Revenue reduction to its 2007-08 budget in October as part of the Special Legislative Session called to deal with declining state revenues. This represented a 3.6 percent reduction to FAU's $175 million General Revenue budget, the largest component of our Educational and General operating budget which supports the academic mission of the University through expenditures for instruction, research, public service, library resources, student services and University support.

In addition, due to continued deterioration in current year state revenues, the House and Senate, as part of the 2008 Legislative Session, have passed an additional $3.3 million reduction to FAU's 2007-08 budget. In total, the permanent, recurring reductions for the 2007-08 budget year are $9.6 million.

Because the state revenue forecast for 2008-09 is also bleak, we are anticipating additional reductions to our budget for the upcoming year. The exact amount of the reductions will not be known until the conclusion of the Legislative Session in May, but we believe these cuts may range from 5-10 percent of our beginning General Revenue budget for 2007-08. In dollars, this would translate to an additional reduction between $8.7 million and $17.4 million, on top of the original $9.6 million reduction experienced to handle the 2007-08 downturn.

2. What happened to cause the state's budget shortfall?

The largest components of State General Revenue are sales tax collections, documentary stamp and intangibles tax collections, and corporate income taxes. Due to the ongoing deterioration of the housing market in Florida, rising unemployment, increasing gasoline and energy prices, turmoil in the credit market caused by increases in mortgage foreclosures and defaults stemming from sub-prime lending practices, and other adverse economic factors, these revenues have declined. Sales of many items, such as furniture and appliances, are tied to the reductions in new housing construction, creating additional downward pressure on revenues. These factors are anticipated to affect the state's funds through at least the next two budget years (2008-09 and 2009-10).

3. What about the current freeze?

President Brogan, with the concurrence of Board of Trustees Chairman Norman Tripp, instituted a freeze to restrict travel, equipment purchases from operating capital or expense funds, and filling of line and OPS positions effective Friday, Jan. 11, 2008. The freeze applies to all fund categories, including educational and general, auxiliary accounts and activity and service accounts, but does not apply to contract and grant expenditures directly related to the performance of the grant. This freeze remains in effect although some exceptions have been authorized by the Provost and/or Vice Presidents.

4. Will the University be able to meet current payroll?

The University plans to fulfill the basic academic and business mission and functions of the University to the best of its ability. It is anticipated that payroll functions will continue as normally scheduled.

5. Although spending is frozen, there are a number of activities still ongoing throughout the University, including construction projects on FAU campuses, student activities, fundraising events, research expenditures and athletic events. Why aren't these projects affected?

As with all public universities, different functions/activities are funded from differing sources and many of those sources restrict how their allocation of funds can be used by the University. For an example, by Florida Statute, construction projects at FAU are funded by Public Education Capital Outlay (PECO) dollars, generated from a levy on electric, gas and communications. PECO funds are used to build, repair and renovate buildings and, by law, PECO funds cannot be used to pay for University operations. Further, federally sponsored programs (i.e., research funded through National Science Foundations and other federal agencies) prohibit use of their funds to support education and general operating expenses. Other activity that the University engages in: athletics, student financial aid, auxiliary enterprises, student government and concessions are all funded outside of the State of Florida's general revenue collections and many have restrictions on the use of the funds.

The Florida Atlantic University Foundation, Inc., also has continued with many of its program operations in support of FAU, particularly those that were established with specific, restricted gifts in accordance with the donor's gift agreement.

FAU's Educational and General (E&G) operating budget is funded primarily through the state's General Revenue dollars and these are the only funds that are affected by the state's difficulties at this time. The freeze imposed by the President covers all of the operating components to ensure optimal flexibility in addressing current and future budget reductions. Throughout all of these discussions, essential services such as campus police and environmental health and safety will continue at optimal levels in order to protect the health and safety of students, faculty and staff.

6. Are there any areas of the University that will not be affected?

The health, safety and welfare of our faculty, staff, students and University visitors are of utmost importance to FAU. Be assured that law enforcement and public safety will remain a top priority during this financial downturn. The University has recently expanded the safety communications tools at its disposal including:

• A reverse 911 alert system through which students, staff and faculty
will be sent a phone message in case of an emergency.
• A siren and audio alert system that is currently being installed.
• A pilot program in which thumb latch locks (locks that can be used
inside the classroom to keep an intruder out) have been installed and
tested in certain classrooms. This program will now be expanded.
• A text-messaging alert system that will be operational this spring.

These programs are in addition to a number of campus safety strategies and options that include regular police car and bike patrols, video surveillance, restricted card access, code blue phones, the Night Owls service and victim's advocate services (additional information about some of these services is available at www.fau.edu/police).

7. What are the guiding principles established for determining reductions?

FAU's budget process is tied to its strategic plan. During the past few years, the University benefited from a growing budget and new funds were allocated according to the goals of the strategic plan. Now that the University is faced with budget shortfalls, the same strategic plan will assist the University's leadership in making the difficult cuts and changes needed to function in a limited funding structure.

8. Is the University considering closing or consolidating campuses, departments or centers?

The University has established priorities to guide the budget reduction process: First, FAU will look at innovative ways to maintain services at reduced costs and other operating efficiencies, but these types of initiatives will not cover the full amount of the reductions necessary. Next, the University will look at ways to reduce the budget while doing everything possible to fulfill our key mission of educating students while protecting the University's human, financial and physical resources. This job will not be easy, as each proposed reduction must be evaluated not only in terms of immediate savings but also in long-term benefits and costs. In tackling these difficult budget reductions, assume that all actions will be considered.

9. Who will be deciding on the reductions?

Earlier this year, President Brogan put together a task force comprised of a spectrum of University leaders, students, staff and faculty to identify comprehensive and strategic potential budget reductions that will enable FAU to fulfill its key mission while minimizing the adverse impacts these reductions will have on the University community. While the ultimate responsibility for managing the University's budget rests with the President and the FAU Board of Trustees, the process that is followed in dealing with these shortfalls will be thorough, open and transparent. The job will not be easy, but the members have been charged with developing quality solutions and opportunities for change, not only in terms of immediate savings to ensure a balanced budget for this year but also in long-term benefits and cost savings.

10. FAU has experienced budget reductions in the past. Is this situation different?

Since 1991-92, Florida Atlantic University has experienced approximately $31 million in reductions, excluding the current year reductions. In the downturn associated with September 11, 2001, FAU experienced a $10 million reduction over a two-year period. These most recent reductions are different for several reasons. First, we will reduce our current year budget by $9.6 million. Second, we will likely face additional reductions in 2008-09 that could be over $17 million if the legislature reduces our General Revenue budget by 10 percent. Third, the total reduction over a two-year period (2007-08 and 2008-09) could approach what the University absorbed over a 15-year period. Finally, these current reductions are impacting a budget that has already been stretched well beyond reasonable limits.

11. What is the University doing to make sure the Legislature is aware of its concerns and needs?

Earlier this month, a group of 17 trustees, students, alumni and staff including BOT Chairman Tripp, President Brogan and Alumni Association President Anthony Barber spent time with our state's legislators discussing the priorities of the University and the budget issues surrounding the state's educational system. Though considerably pared back from last year's presence in Tallahassee, the legislators indicated that our visit was important and appreciated. In addition to the visits made during FAU Days, University staff regularly communicates with legislators during the legislative session and throughout the year.

12. Are layoffs one of the options being talked about to ease the budget issue?

FAU values each and every employee, and that is why all operating budgets have been impacted by the freeze in expenditures in order to provide the greatest opportunity to avoid layoffs. While we will address the reductions strategically, it is impossible at this time to rule out layoffs. The magnitude of the reduction in 2008-09 will determine what actions are taken to meet budgetary requirements.

13. What about pay raises for faculty and staff?

The Legislature provides the funding for annual faculty and staff increases. For the current year, only funds for non-recurring bonuses were provided. These bonuses were issued in October.

14. Will there be a tuition increase?

FAU's tuition, as with all Florida universities, is set by the state. Currently, the Board of Governors, the Legislature and the Governor have not agreed on what is expected to be a tuition increase — numbers in the range of 5 to 8 percent have been discussed. Any increase is subject to the state's budget process, which is not expected to be complete until May. The University does have some flexibility in setting out-of-state and graduate tuition. These determinations have not yet been made.

15. Will classes be cut? What about summer programs and courses?

Despite the looming budget cuts, FAU will make every effort to provide robust academic offerings this summer. A key goal of any educational institution is to prepare and graduate well-trained, students to fulfill a productive destiny in the workplace and in society.

Summer A classes and the first half of Summer C classes are funded from the current-year budget. Because the University received some non-recurring funding during the September legislative session, these funds may be used to support summer 2008 courses. Many students will be able to fulfill their degree requirements this summer, and to eliminate summer school would adversely affect these students. Additionally, since these summer enrollments apply to 2008-09 funded targets, they will help ensure that the University does not face additional budgetary shortfalls due to lower student fee revenues associated with insufficient enrollments. Remember, the legislative reductions are targeted to General Revenue. If the University experiences reduced enrollments, there will be additional revenue shortfalls.

Finally, our key mission is the education of students, and to do this we must offer academic programs, classes and services.

16. Will student services be cut? Will there be fewer events and activities for students to participate in?

There may be some indirect effects of the budget cuts on student activities and programs at FAU. The University's goal is to continue to offer high-quality, campus life programs that both complement and supplement our students' educational experiences. However, the student Activity and Service (A&S) fee, which support these events, are impacted by any increase or decrease in enrollment.

The A&S fee is established as a $10-per-credit-hour fee paid by every FAU student each semester. The allocation and expenditure of A&S funds is determined by the Student Government. The fee funds student programs, activities, organizations and services. In addition, it funds operational costs for non-academic student facilities such as student unions and recreation centers.

17. How do we envision the make-up of the University after the impacts of the 2007-08 and 2008-09 budget reductions?

There is no doubt that the University's budget will be significantly smaller after these reductions take place; however, we believe that by approaching all reductions in a strategic fashion, we will continue to achieve our primary goals and objectives. Though the University has made its budget as efficient as possible over the past several years, these new reductions will result in an even more targeted approach to education and streamlined programs and services.

18. How do FAU’s spending patterns compare with those of the 10 other SUS universities?

FAU spending levels (highlighted in yellow) are ranked in 16 different areas in a comparison spreadsheet available here. You must have the ability to view Microsoft Excel files to view this file.