You may see some media reports about budget cuts at UT. These cuts are largely confined to administrative units. The Office of the President, for example, has reduced its budget by 8 percent. Here is a message that I shared with faculty, staff, and students earlier today describing the budget reduction plan.
Faced with a forecast of declining operating budgets, UT has initiated a plan to make budget cuts of $14.6 million in annual recurring expenditures.
Before I share the details, I want to say that I know this has been a difficult year for the campus. Many people have made sacrifices, and it hasn’t been easy. The faculty, staff, and students have all contributed to these efforts. Much work remains, but I am proud of the way we have worked together to confront these challenges.
Given the financial realities UT faces during the next few years, these budget cuts are prudent and necessary. We have done our best to protect the academic enterprise—teaching, research, and the student experience. More than 90 percent of the cuts come from administrative units. These cuts in the administrative portfolios ranged from 1-8 percent. Only about one-half of 1 percent came from academic colleges and schools.
While we have worked to minimize the loss of jobs, when the budget reduction plan is fully implemented, about 200 positions in the administrative units could be affected. Included in the 200 are about 125 positions campus-wide that have already been eliminated in the past year. More positions in academic units will be affected in the future, when deans implement their own re-allocation plans.
We believe the majority of these changes will be implemented through retirements and attrition, but not all. I deeply regret that these budget cuts will cost some jobs. We will do everything we can to help the employees affected.
To achieve the budget cuts we are announcing today, administrative units have also reduced or eliminated expenditures such as travel, equipment, supplies, services, printing, and mail costs.
The operating units have been permitted to phase in budget reductions between August 31, 2010 and August 31, 2011. However, some units will choose to move forward immediately.
Our situation is compounded by many factors, two of which are decreased investment returns from our endowments and the need to maintain competitive compensation levels for our employees. As you know, all staff and most faculty did not receive raises in fiscal year 2009-10. We are re-allocating resources in the operating units to fund a 2% merit raise pool for faculty and staff. All employees are eligible, but I want to emphasize that the raise program is merit-based, so not all employees will receive raises.
It is essential that we set aside funds to reward excellence in our faculty and staff. If we don’t do that, we won’t remain competitive and retain the best talent available. We remain committed to pursuing our goal of becoming the leading public university in the nation.
We continue to reduce expenditures and increase efficiencies throughout the campus. Programs implemented since 2003 to centralize business transactions, conserve energy, and restructure information technology services, among others, now save more than $50 million annually. Our administrative costs as a percentage of our total budget are among the lowest in higher education. I want to thank our hard-working staff for making this possible.
In the long term, university leaders, elected state officials, alumni, students and their families, the business community, and our citizenry must develop a new funding model for public higher education. The current model of replacing decreased state support with budget cuts is not sustainable. We must find a way to fund and preserve the public research universities that nurture economic growth, address the challenges of society, and promote individual advancement. The future of higher education is at stake.
What we accomplish here every day is important to our students and their families, and to the people of Texas. It is crucial that we work together to manage these difficult times and move forward. Thank you for your help and for all you do for the University.