1 Faculty Council September 15, 2003. 2 Today’s Agenda Today’s Agenda Recent History & Legislative Session Outcome Outcomes from Legislative Session that.

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Faculty CouncilFaculty CouncilSeptember 15, 2003September 15, 2003

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Today’s AgendaToday’s Agenda

Recent History & Legislative Session Outcome

Outcomes from Legislative Session Outcomes from Legislative Session that Impact Benefitsthat Impact Benefits

University Finances & Budget Overview

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Recent History & Legislative Session Outcome

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New LeadershipNew Leadership

2002 Elections2002 Elections

Lt. Governor David Dewhurst Lt. Governor David Dewhurst

7 State Senators7 State Senators

31 State Representatives31 State Representatives

House Speaker Tom CraddickHouse Speaker Tom Craddick

Chairmanships and Committee Chairmanships and Committee AssignmentsAssignments

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State of the StateState of the State

State faced $10 billion shortfallState faced $10 billion shortfall

7% reduction for 2003 fiscal year requested of all state 7% reduction for 2003 fiscal year requested of all state agenciesagencies

State agencies and institutions asked to reduce State agencies and institutions asked to reduce 2004-2005 budget request by 12.5%2004-2005 budget request by 12.5%

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State Budget OutcomeState Budget Outcome

All FundsAll Funds

$117.4 billion ----- up 1.4%$117.4 billion ----- up 1.4%

General RevenueGeneral Revenue

$58.2 billion ----- down 4.3%$58.2 billion ----- down 4.3%

Higher Education, General RevenueHigher Education, General Revenue

down by 1.7%down by 1.7%

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140 days = 1,383 New Laws140 days = 1,383 New Laws

Over 5,700 bills/resolutions consideredOver 5,700 bills/resolutions considered

1,383 passed (24%)1,383 passed (24%)

UT Austin tracked over 1,400 bills UT Austin tracked over 1,400 bills

23% passed23% passed

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Significant Legislation Significant Legislation for Higher Educationfor Higher Education

Tuition FlexibilityTuition FlexibilityHB 3015 (Rep. Morrison/Sen. Shapiro)HB 3015 (Rep. Morrison/Sen. Shapiro)

100% Indirect Cost Return100% Indirect Cost ReturnHB 1887 (Rep. Morrison/Sen. Ratliff)HB 1887 (Rep. Morrison/Sen. Ratliff)

Administrative EfficienciesAdministrative Efficiencies SB 1652 (Sen. Shapiro/Rep. MorrisonSB 1652 (Sen. Shapiro/Rep. Morrison))

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Tuition FlexibilityTuition Flexibility

Authorizes Board of Regents to set Authorizes Board of Regents to set designated tuition charged to studentsdesignated tuition charged to students

12-member legislative oversight 12-member legislative oversight committeecommittee

Tuition set asides for financial aid:Tuition set asides for financial aid:

20% for undergraduates20% for undergraduates

15% for graduates15% for graduates

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Indirect CostIndirect Cost

Allows institutions to retain full 100% of Allows institutions to retain full 100% of indirect cost return on researchindirect cost return on research

Represents additional $39 million for Represents additional $39 million for

UT AustinUT Austin

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Administrative EfficienciesAdministrative Efficiencies

Financial ManagementFinancial Management

Human ResourcesHuman Resources

Information TechnologyInformation Technology

RegulatoryRegulatory

ReportingReporting

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Top 10%Top 10%

Preliminary Fall 2003 enrollment: Preliminary Fall 2003 enrollment: 75% of incoming 75% of incoming freshman Texas freshman Texas

residents would be automatically admittedresidents would be automatically admitted

An amendment to SB 86 would have capped the An amendment to SB 86 would have capped the automatic admissions at 60% of entering automatic admissions at 60% of entering freshmen classfreshmen class

SB 86 filibustered on last night of session ....... SB 86 filibustered on last night of session ....... and diedand died

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Other Legislation of InterestOther Legislation of Interest

Texas Enterprise Fund (SB 1771)Texas Enterprise Fund (SB 1771)$295 million/Governor’s Office$295 million/Governor’s Office

Texas Higher Education Coordinating Board Texas Higher Education Coordinating Board Sunset legislation (SB 286)Sunset legislation (SB 286)

CB membership: 18-9CB membership: 18-9““Success Initiative” ( replaced TASP)Success Initiative” ( replaced TASP)Doctoral Incentive Loan ProgramDoctoral Incentive Loan ProgramPilot program for 3 community colleges to Pilot program for 3 community colleges to

offer bachelor’s degrees (selected offer bachelor’s degrees (selected programs)programs)

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Major Studies Relating Major Studies Relating to Higher Educationto Higher Education

Legislative Oversight Committee on Legislative Oversight Committee on Higher EducationHigher Education

((HB 3015 Tuition FlexibilityHB 3015 Tuition Flexibility))

Study of Student Financial Aid Programs Study of Student Financial Aid Programs

((Coordinating BoardCoordinating Board))

Select Committee on Higher Education Select Committee on Higher Education ((SB 1652 Administrative EfficiencySB 1652 Administrative Efficiency))

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Legislative Standing CommitteesLegislative Standing CommitteesInterim Study ChargesInterim Study Charges

House Higher Education CommitteeHouse Higher Education Committee

Senate Education CommitteeSenate Education Committee

Senate Subcommittee on Higher Senate Subcommittee on Higher EducationEducation

House Appropriations CommitteeHouse Appropriations Committee

Senate Finance CommitteeSenate Finance Committee

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Other Interim ActivitiesOther Interim Activities

General Studies (General Studies (various legislation enacted by Legislature)various legislation enacted by Legislature)

Interagency Work Group on Rural IssuesInteragency Work Group on Rural Issues

Study and Implementation of Seawater DesalinationStudy and Implementation of Seawater Desalination

Texas Traumatic Brain Injury Advisory CouncilTexas Traumatic Brain Injury Advisory Council

Nutrition and Health in Public SchoolsNutrition and Health in Public Schools

Water and Health Issues Along the BorderWater and Health Issues Along the Border

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Outcomes from Legislative Outcomes from Legislative Session that Impact BenefitsSession that Impact Benefits

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Outcomes from Legislative Outcomes from Legislative Session that Impact BenefitsSession that Impact Benefits

Reduction in State Premium Sharing for Reduction in State Premium Sharing for Part Time Employees: Impacts both Part Time Employees: Impacts both individual and dependant coverage.individual and dependant coverage.

90-day wait period related to eligibility for 90-day wait period related to eligibility for medical benefits.medical benefits.

Carve out for Graduate Student Workers.Carve out for Graduate Student Workers.

90-day wait period for Retirement Plan 90-day wait period for Retirement Plan Participation.Participation.

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How is UT Austin addressing How is UT Austin addressing the changes and options?the changes and options?

Full time: University Salary Supplement Full time: University Salary Supplement

Part time: University Salary SupplementPart time: University Salary Supplement

Changes during the year: Supplement Changes during the year: Supplement Adjusted Dynamically.Adjusted Dynamically.

90-day wait period for medical benefits will 90-day wait period for medical benefits will be transparent to the UT Austin workforce. be transparent to the UT Austin workforce. Legislation provides the ability to fund Legislation provides the ability to fund from non-general revenue sources.from non-general revenue sources.

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How is UT Austin addressing How is UT Austin addressing the changes and options?the changes and options?

Retirement:Retirement:– 90-day wait period for new hires for 90-day wait period for new hires for

participation in either TRS or ORP.participation in either TRS or ORP.– Will consider the entire month where the 91Will consider the entire month where the 91stst

day falls.day falls.– If services begin before the actual If services begin before the actual

appointment date, the 90-day wait does not appointment date, the 90-day wait does not apply.apply.

– New Hires can participate in the supplemental New Hires can participate in the supplemental plans on day 1.plans on day 1.

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Benefits UpdateBenefits Update

Continuing Employees:Continuing Employees:– Will receive salary supplement based upon Will receive salary supplement based upon

their 8/31 or 5/31 relationship with the their 8/31 or 5/31 relationship with the University and their FTE status and benefit University and their FTE status and benefit status on 9/1/03.status on 9/1/03.

– Will have salary supplement adjusted Will have salary supplement adjusted dynamically based upon FTE status and dynamically based upon FTE status and benefit status each month.benefit status each month.

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Benefits UpdateBenefits Update

Graduate Student Workers (GRAs, TAs):Graduate Student Workers (GRAs, TAs):– All continuing Graduate Student Workers will receive All continuing Graduate Student Workers will receive

both a salary supplement (for dependant coverage) both a salary supplement (for dependant coverage) and the traditional benefit supplement.and the traditional benefit supplement.

– All incoming Graduate Student Workers for 9/1/03 All incoming Graduate Student Workers for 9/1/03 and 1/1/04 will receive both a salary supplement (for and 1/1/04 will receive both a salary supplement (for dependant coverage) and the traditional benefit dependant coverage) and the traditional benefit supplement.supplement.

– A Graduate Student Benefit Committee will be put A Graduate Student Benefit Committee will be put together immediately to identify options for 9/1/04.together immediately to identify options for 9/1/04.

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Benefits UpdateBenefits Update

New Hires (9/1/03):New Hires (9/1/03):– Will be immediately eligible for health benefits.Will be immediately eligible for health benefits.– Will be subjected to new premium structure. Will be subjected to new premium structure.

Are not eligible for salary supplement.Are not eligible for salary supplement.

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CommunicationCommunicationAnnual Enrollment:Annual Enrollment:– Mass electronic communication; hard copy to those without emailMass electronic communication; hard copy to those without email– DispatchDispatch– Benefit Information Sessions:Benefit Information Sessions:

Morning/Afternoon/EveningMorning/Afternoon/EveningEnglish/SpanishEnglish/SpanishBenefit Fairs: Main Campus and PickleBenefit Fairs: Main Campus and Pickle

– Targeted Communication:Targeted Communication:Potential RetireesPotential RetireesGraduate Student WorkersGraduate Student WorkersPart Time EmployeesPart Time Employees

– HRS Web Site: University Home PageHRS Web Site: University Home Page– HR ForumHR Forum– Town Hall MeetingTown Hall Meeting

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University Finances & Budget Overview

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Legislative Session Financial Legislative Session Financial OutcomeOutcome

PositivesPositives NegativesNegatives• 100% IDC Retention 100% IDC Retention

+$20M+$20M

• Tuition FlexibilityTuition Flexibility

• Continued downward Continued downward trend in State financial trend in State financial supportsupport

GR reduction GR reduction ($22M)($22M)

P/T Benefits P/T Benefits ($6M)($6M)

90 Day Wait 90 Day Wait ($2M)($2M)

TX Tomorrow TX Tomorrow ($3M)($3M)

B-on-Time B-on-Time ($?M)($?M)

Higher tuition set Higher tuition set asidesasides

$20M

-$33M

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Total University Total University BudgetBudget

Educational Educational & General & General ComponentComponent

59%59%

Endowment Endowment ComponentComponent

9%9%

Research Research ComponentComponent

20%20%

Auxiliary Auxiliary ComponentComponent

12%12%

$846.7M$846.7M+ 6.8%+ 6.8%

University FinancesUniversity Finances

FY03/04 Total University Budget $1.44BFY03/04 Total University Budget $1.44B

$176.6M $176.6M + 2.2%+ 2.2%

$129.1M $129.1M – 1.0%– 1.0%

$292.2M $292.2M + 12.6%+ 12.6%

$1.44B $1.44B + 4.7% + 4.7%

or $63Mor $63M

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University FinancesUniversity Finances

What percentage of What percentage of UniversityUniversity Budget is funded by Budget is funded by State General Revenue?State General Revenue?

30 Years 20 Years 10 Years Today

(in millions) 1972/73 1982/83 1992/93 2003/04

State GR Funding 57.9$ 168.8$ 207.7$ 291.8$

Total Budget 119.9$ 360.6$ 726.9$ 1,444.6$

Percent State Funding 48.3% 46.8% 28.6% 20.2%

adjusted for expense shift ===> 19.4%

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Total University Total University BudgetBudget

Educational Educational & General & General ComponentComponent

59%59%

Endowment Endowment ComponentComponent

9%9%

Research Research ComponentComponent

20%20%

Auxiliary Auxiliary ComponentComponent

12%12%

$846.7M$846.7M+ 6.8%+ 6.8%

University FinancesUniversity Finances

FY03/04 Total University Budget $1.44BFY03/04 Total University Budget $1.44B

$176.6M $176.6M + 2.2%+ 2.2%

$129.1M $129.1M – 1.0%– 1.0%

$292.2M $292.2M + 12.6%+ 12.6%

$1.44B $1.44B + 4.7% + 4.7%

or $63Mor $63M

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University FinancesUniversity Finances

What percentage of What percentage of AcademicAcademic Budget is funded by Budget is funded by State General Revenue?State General Revenue?

30 Years 20 Years 10 Years Today

(in millions) 1973/74 1983/84 1993/94 2003/04

State GR Funding 68.6$ 190.5$ 219.6$ 291.8$

Total ACADEMIC Budget 71.6$ 287.0$ 458.5$ 846.7$

Percent State Funding 95.8% 66.4% 47.9% 34.5%

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Budget AccomplishmentsBudget Accomplishments

For our StateFor our State

• Improved research competitiveness Improved research competitiveness

For our StudentsFor our Students

• Additional faculty positionsAdditional faculty positions

• Increased tuition & scholarship supportIncreased tuition & scholarship support

• Capacity to invest in specific programmatic Capacity to invest in specific programmatic initiativesinitiatives

For our EmployeesFor our Employees

• Preservation of a competitive benefit programPreservation of a competitive benefit program

• Possibility of mid-year salary programPossibility of mid-year salary program

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It was a challenge to balance the It was a challenge to balance the budget!budget!

Efficiency ImprovementsEfficiency Improvements

• $5M from Office Supplies & Credit Card $5M from Office Supplies & Credit Card changes…more to comechanges…more to come

Across-the-board Budget ReductionsAcross-the-board Budget Reductions

• $25M total reductions…$4M from $25M total reductions…$4M from occupied occupied positionspositions

Reduced Infrastructure FundingReduced Infrastructure Funding

• $10M reduction in an area already $10M reduction in an area already under under funded!funded!

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What are our Continuing What are our Continuing Challenges?Challenges?

Infrastructure Funding - $30M+ Infrastructure Funding - $30M+ annual shortfallannual shortfall

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Facility Aging Drives Repair & Renovation (R&R) Facility Aging Drives Repair & Renovation (R&R) RequirementsRequirementsThere is a significant bubble of R&R requirements in the near There is a significant bubble of R&R requirements in the near future.future.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1910 1920 1930 1940 1950 1960 1970 1980 1990

Construction Decade

Gross Square Footage

A substantial portion of the University’s Plant, those projects built in the 50’s A substantial portion of the University’s Plant, those projects built in the 50’s through 80’s, is approaching 30-60 years old and will require substantial repair through 80’s, is approaching 30-60 years old and will require substantial repair

and renovation.and renovation.

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What are our Continuing What are our Continuing Challenges?Challenges?

Competitive Compensation Program Competitive Compensation Program Funding - $15M recurringFunding - $15M recurring

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Thank YouThank You