Interim Chancellor Corlis P. Cummings
Governor's FY07 Budget Recommendations for the University System of Georgia
Joint Appropriations Committee
Wednesday, January 18, 2006
Good morning ladies and gentlemen. I stand before you today as a proud product of the University System. I was born and raised in Georgia. I have two degrees from the University of Georgia. I am also a mother of two children, who, one day, I hope will attend one of our fine universities on a HOPE scholarship. And so, I thank you for all that you have done for the University System of Georgia and for this great state.
A number of our Regents and presidents are here today. These individuals work together and with you on our shared goal of "Creating A More Educated Georgia." On behalf of our more than 250,000 students, 38,000 faculty and staff at our 35 institutions, I bring you greetings.
Our goal is to create a more educated Georgia, which we work to realize through our core mission of teaching, research, and service. "Creating A More Educated Georgia" goes to the heart of what we do, everyday. It is what our hard-working faculty strive to achieve in classrooms. This is what our doctors and other health professionals do when they help citizens better understand how to stay healthy.
"Creating A More Educated Georgia" is what our cooperative extension agents are really doing in their interactions with Georgia's farmers. Each of you understands how important "Creating A More Educated Georgia" is for this state and the future prosperity of its citizens.
And so you have supported public higher education well. Let me say "thank you" for the record appropriation you provided in the FY06 budget. We are mindful of the demands on the state's resources and are committed to being careful and accountable stewards of the resources you have provided.
While we are focused on "Creating a More Educated Georgia," in reality, the work of the University System of Georgia supports all of the governor's goals for the state: a healthy Georgia, a safe Georgia and a growing Georgia.
These are three broad areas we will review with you today. With the funding that you have provided to the University System, how well are we doing? We are accountable to the citizens of the state and I will spend a few minutes talking about key performance indicators. Second, I will talk briefly about the impact that the University System has on the state, and the value that we add to the lives of our citizens. The rest of the presentation will focus on the governor's recommendations for our FY2007 Budget and the FY2006 Amended Budget and why those initiatives are important to the state.
Part I of our presentation will focus on accountability. The question we ask ourselves is: "how well are we doing?" In fact, we have asked that question and analyzed data around this key measure of accountability for a number of years. This model is a different way of assessing our performance on this key question.
You know our mission is teaching, research, and service. There are a number of input variables that go into this model. For example, the skill and ability of students, and economic and social factors that make up our student population. There are a number of things we consider in terms of performance, but ultimately, all boil down to some key factors: the number of productive citizens we add to the state, higher quality of life, economic growth, and lifelong learning.
The next several slides will frame the discussion on this question. We look at students, and measure how well we do in seeing students progress from their freshmen year through graduation. We look at research and service and measure how well these support the state's growth and development.
Georgians continue to enroll in our colleges and universities in record numbers. Note that the upward trends are the seventh consecutive year of enrollment growth to a record high in fall 2005 of 253,552 students.
And the academic quality of new students continues to rise. The average SAT scores of first-time freshmen in the University System hit 1107 in fall 2005, which is the highest in our history.
One of our goals in the University System is to continue to improve our retention rates. We are making progress in our retention rates. There are two ways to look at our retention rates. One is to look at students who enrolled at one specific institution and returned the following year to that same institution; this is the institution-specific rate. Another way is to look at students who started at one institution and returned to any institution in the University System; this is the system-wide rate. Our graph shows a significant improvement in retention rates both ways since 1993.
We are currently at approximately 80 percent for the system-wide rate, and 74 percent for the institution-specific rate. We noticed the downtick in FY04. A single point decrease doesn't constitute a trend, but we are studying the reasons for it.
Likewise, we have to continue our focus on improving graduation rates. We are improving our graduation rates as well, when analyzed by both methods – the institution-specific and system-wide rates. Both are a record high for the University System. This is positive, but we are not content with these levels. In fact, improving retention, progression, and graduation rates are all strongly emphasized in our board's strategic plan for this year.
The ultimate value of public higher education to the state is in the number of degrees we confer each year. In FY2005, we conferred 43,670 degrees. This is the ultimate measure of our performance. This is a 26 percent increase in degrees earned over the past four years. When you consider the average bachelor degree holder will earn $1 million more during his or her working lifetime than someone with a high-school diploma, you can begin to get a sense of the added economic value and impact of all these USG graduates on Georgia communities. Again, this is a tremendous return on investment for this state. I'd ask that you look at this graph closely; it is a key measure of your wisdom in supporting public higher education in Georgia.
Georgians enjoy broad access to higher education on a very reasonable basis. We continue a long tradition of low tuition, compared to other states. Georgia's four-year institutions charge the least tuition and fees among all 16 states that make up the Southern Regional Education Board (or SREB). Also note that we had the lowest percent increase in FY 2005 in tuition and fees among all SREB states. This is the smallest percentage increase on the smallest base.
Two of our research universities rank in US News & World Report's top 20 public universities in the country for academic quality. Georgia Tech ranks 9th and the University of Georgia ranks 19th. Georgia is one of only four states to do so. The other states are California, Virginia and Pennsylvania. Students in Georgia can take advantage of such extraordinarily high quality institutions for a very reasonable price. For approximately $4,648 in tuition and fees per year, a student can attend our research universities. To get a bachelor's degree in four years, a student pays $18,592.
And the research dollars the USG brings into the state have a significant economic impact. USG institutions received a record $980.6 million in sponsored funding in FY2004. This brings jobs and businesses to Georgia.
Let me move to our second area of discussion: what does the state get from its investment in the University System of Georgia? Chairman J. Timothy Shelnut made one of his four priorities for this year a thorough accounting of the total impact of the University System on the state. For a $1.6 billion investment by the state, the University System offers a direct $23.3 billion return. That's a return on investment of approximately 15 to 1. And it doesn't even factor in cultural contributions and the financial impact of construction on our campuses.
And it cannot reflect the priceless; the value and return on putting countless dreams in motion. Our top ranked institutions are an incredible testament to the investment that has been made – and sustained – in academic excellence. So, in Georgia, we have a system of public higher education that has been well supported, that has focused on building its academic reputation, all under a philosophy of providing broad and affordable access to Georgians.
That's a winning formula. And it didn't come by accident. It came from hard work, a focus on the core mission, a good partnership with you and the governor, and a willingness on our part to listen and to undertake significant changes to make our operations both efficient and effective.
So let me now turn to the governor's FY2007 Budget recommendations and how these help us reach that goal of "Creating A More Educated Georgia." If you will indulge me, I will highlight a few recommendations first, and then take up the rest in sequence as they appear in the governor's budget book.
Let's begin with page 283 line 39. As in previous years, the governor has fully recommended our formula request at $55.3 million. This is based on our enrollment growth of 1.6 percent. I feel it is important that in the governor's key recommendations, we go beyond the numbers and give you a sense of what you can expect for the money. The focus of the new formula dollars will be on hiring faculty to meet student demand, expanding programs to meet the state's needs, upgrading technology and equipment, and providing for other strategic needs. Ultimately, formula dollars are critical to the University System. They will help us in our goal of retaining and graduating more students.
Please look on page 283 line 34. FY 2007 is the dawn of a new chapter in the University System with the beginning of our 35th institution – Georgia Gwinnett College. Here you see our enrollment projections for the state's newest public college. It shows the phasing in of programs by the new college and the phasing out of undergraduate programs currently offered at Gwinnett by Georgia Perimeter College and University of Georgia. UGA will continue to offer graduate programs. Beginning this fall, the new college will begin enrolling juniors. In fall 2007, Georgia Gwinnett College will enroll freshmen, juniors and seniors. By fall 2008, all students at all levels will be enrolled in Georgia Gwinnett College.
The return on the state's investment in Georgia Gwinnett College will be significant for the region and the state. We will be able to provide access to public higher education to an additional 10,000 students in the region, which will contribute to the continued economic growth of the area. This new institution also will benefit the state and the University System by establishing new models for business operations, teaching, and partnerships with industry and the community that we can replicate at existing USG institutions.
Please look on page 283 line 33. The next budget recommendation relates to meeting the Governor's goal of providing leadership development opportunities for school principals and superintendents. The Leadership Institute is a public-private partnership of the University System, the Department of Education, the Governor's Office and the Georgia Partnership for Excellence in Education.
In the state of the state, Governor Perdue focused on the critical role school principals play in teaching students. Georgia's Leadership Institute for School Improvement provides unique leadership development programs that blend best practices from business and education to enable school leaders to drive student success. More than 5,400 such leaders have been trained since 2002. Test results across all subjects and grade levels have seen gains in these districts.
With $1.5 million in new funds, we will be able to allow 840 additional educational leaders to participate in the successful Georgia Leadership Institute for School Improvement program. Over the next three years, 2,520 individuals would benefit from this $1.5 million investment.
Let's move on to page 282, line 22. Bio-Sciences are a key focus of the governor. The Advanced Technology Development Center supports the formation and growth of cutting-edge science and technology companies in Georgia. This is essential to Georgia's economic future. The ATDC enables innovations developed through the USG and elsewhere to rapidly transform into growing businesses and jobs, that give the state a competitive advantage.
The single most important factor in making this happen is the availability of seed capital to fund the earliest stages of company formation and development. In FY 2000, the state provided $5 million in seed capital fund and in FY 2003 an additional $3 million in seed capital for biosciences. The matching requirement on these funds is $3 of private funding for every $1 in state funds. Let me share some results with you.
The $5 million seed capital fund from FY 2000 has been extraordinarily successful in attracting $145 million in capital investment, which has helped 11 companies get off the ground, which has created 270 jobs with an average salary of $98,000. Similarly, the more recent $3 million bio-science seed fund has helped 3 companies attract $7.5 million in private capital. Bio-Science is the next frontier in business identified by the Commission for a New Georgia. Clearly, your investment has paid off, and the additional $5 million will go a long way in helping more companies get started and provide knowledge-based jobs of the future right here in Georgia. This is a substantial return on your investment.
Our next recommendation takes us to the beginning – page 282, line 1. In the University System, merit salary increases reward those individuals who perform well. We run a merit system exclusively. Our goal is to attract and retain the best and the brightest in the country, and we thank the governor for the recommended increase of 4 percent.
We now move on to other important budget recommendations. Lines 2 to 5 on page 282 relate to increased cost such as health insurance for libraries on line 2, worker's compensation premiums on line 3, rent increase on line 4, and health insurance premiums for a variety of programs such as Agricultural Experiment Station, Cooperative Extension and others totaling $406,033 on line 5.
The next 3 lines relate to administrative adjustments. Line 6 allows us to properly align expenditures with programs and object classes as needed. Last year, the rent increase for the System Office was incorrectly posted to the libraries. Line 7 corrects this by transferring the funds to the System Office. Each year, we transfer the pay raise money for the Athens Tifton Vet Lab to the Department of Agriculture, which is where the personal services are recorded. Line 8 provides for the transfer.
The budget instructions for FY2007 required us to submit a 2 percent reduction scenario for all program budgets. The governor has recommended some of the reductions:
The Advanced Technology Development Center (ATDC )has proposed cutting back on the business insight initiative which is involved with surveying needs of manufacturers in the state. This is on line 9.
Line 10 is the elimination of one-time funds provided for formosan termite last year. Lines 11 and 12 were proposed reductions in vacant administrative support positions at Forestry Research and Forestry Coop. Line 13 is also a reduction scenario proposed by the office of minority business enterprises. Line 14 is the elimination of one-time funds for renovation and repair for public libraries.
Lines 15 – 19 relate to prioritized program reductions based on how central each program is to the core mission of the University System. For example, line 15 realigns the Education Go Get It – a public-private partnership focused on increasing high school graduation rates and college enrollment. As this program is transferred to the Georgia Department of Education, the University System looks forward to continuing its partnership in this initiative. Line 16 eliminates funding for the water policy institute. Line 17 transfers the nurse anesthetist program to the resident instruction program. Line 18 reduces funding for one of the public service institutes – the export study at the School of Law at UGA. Line 19 eliminates funding for the Georgia Career Information Services. Lines 20 and 21 are elimination of one time funding for the greenbelt study and the assistance to North Georgia College & State University.
Continuing on page 282, line 23 adds much needed maintenance and operation funds for the Agricultural Experiment Station at $700K and for the Cooperative Extension Service at $300K, for a total of $1 million. Line 24 adds funding for county extension agents for animal poultry and 4H programs at the Cooperative Extension program. Line 25 adds money for providing assistance to the fishing and shrimp industries through the Marine Extension Services.
On page 283, Line 26 and 27 relate to the Georgia Tech Research Institute (GTRI). One item is a correction of an error in personal services from last year. The second item is to fund a program to improve worker safety and prevent back injuries in the state's poultry industry. The next 3 lines (28, 29, 30) provide funding for the public libraries in Georgia in the amount of $900K for all libraries, prior year health insurance for local libraries in the amount of $220,000 and rent for the Georgia Public Library Services (GPLS) office.
On page 283 is the recommendation of $500,000 for the Griffin campus of the University of Georgia. This will allow UGA to add degree programs in agribusiness, consumer economics, and certification in special education.
Line 32 provides $27,430 to conduct a study on the shortage of nurse educators and determine the role that salary plays in the shortage and recommend solutions. Line 35 provides funding to SREB for the increase in contract cost as well as additional funding for the minority doctoral scholars program. Four additional scholars will be added.
Line 36 and 37 relate to the Georgia Research Alliance. If you have any questions, I will defer to Mr. Mike Cassidy. Line 38 provides an adjustment for the fiscal research center for the preparation of fiscal notes. Line 40 provides an adjustment to Georgia Southern University for a payback project.
Let me now move to the FY07 MRR and capital funding recommendations. Our total capital funding recommendation is $227.9 million including critical funds for MRR of $68.2 million and funding for 13 minor projects [at Fort Valley State University, East Georgia College, Gainesville State College, Kennesaw State University, Savannah State University, North Georgia College & State University, University of West GA, Skidaway Institute, Waycross College, Armstrong Atlantic, Dalton State, Georgia College & State University, and the University of Georgia].
The governor also has recommended funding for two projects that have significant private funding – the nanotechnology building at Georgia Tech ($80 million total) and the teaching lab building at Georgia State University ($75 million total).
Funding for Georgia Research Alliance projects is $21.5 million, and $900K is for equipment needs for the Traditional Industries Program.
Last, but certainly not the least, is funding for construction of libraries in four counties: Heard, Richmond, Forsyth, and Gwinnett.
Here is a list of the items recommended for the FY 2006 amended budget: workers' compensation premiums, $1.7M, on line ; a series of adjustments, including a rent adjustment between GPLS and the System Office on line 2; a GTRI personal services correction, $552,811, on line 3; a health insurance correction for libraries, $220,000, on line 4; Traditional Industries Program equipment, $900,000, on line 5; maintenance and operations funds for the Agricultural Experiment Station, $300,000, on line 6; bio-refinery in research consortium, $525,000, on line 7; and adjust payback for Georgia Southern, $677,118, on line 8 You have seen most of these recommendations in the FY2007 budget. If you have any questions regarding these, I will be happy to answer.
Ladies and gentlemen, this concludes my presentation of the University System of Georgia's FY2007 Budget and the FY2006 Amended Budget. It is focused, it is mindful of the state's many obligations and responsibilities, and it is designed to be accountable to you and all our funding partners. But it also respects our responsibilities to the state and its citizens to provide a public higher education system of tremendous quality and value. As I noted at the outset, your University System represents a tremendous investment on the part of this state -- and one that benefits us all. I'd be happy to take your questions.