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Board of Regents Tackles Mid-Year Budget Cuts

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Plan Outlines How Funds Will Be Generated to Avoid Mid-Year Tuition Hike

Atlanta — October 12, 2004

A mid-year tuition hike for the University System of Georgia’s 250,000-plus student body has been averted as a means of generating some of the revenue needed to accommodate the latest round of state budget cuts.

Weeks of planning and discussion by Board of Regents’ officials have resulted in the identification of alternative means of generating the required $68.7 million in cuts to the University System of Georgia’s current budget. The USG’s original share of the $179.3 million in cuts sought from all state agencies’ FY 2005 budgets was $68.7 million. After a $3.9 million adjustment from the state, the USG’s amount was reduced to $64.8 million.

The Board of Regents approved the plan for absorbing the cuts presented to them today by University System of Georgia Chancellor Thomas C. Meredith.

A combination of three different “one-time” fund sources will be used instead of a tuition increase - along with $20.3 million in continuing reductions to the University System’s operating budget.

“This is a mixture of both good news and bad news,” stated University System of Georgia Chancellor Thomas C. Meredith. “On the one hand, we feel quite positive about mitigating the immediate financial impact a mid-year tuition increase would have had on our students. Still, we know the one-time cost cutting solutions we have identified are frankly stop-gap measures that only temporarily solve our problems. We will have to find these dollars from other sources for our FY 2006 budget.”

The $20.3 million in reductions to the USG’s operating budget will be identified via additional position eliminations, hiring freezes, delayed business purchasing, deferred maintenance, reduced operating hours and by hiring more part-time rather than full-time faculty to meet instructional demands - all impacts which will continue to hamper the University System’s ability to deliver high-quality academic instruction in appropriately sized classrooms and facilities.

The largest single portion of the $64.8 million in cuts will be absorbed by extracting nearly $28 million from the University System’s employee health-plan reserves – reducing the fund from a recommended 60-day reserve to a 30-day level.

Another $9.4 million will be generated by utilizing the matching-funds reserve previously set aside to construct the Merial research facility at the University of Georgia - a project that has been scrapped due to a change in plans by the private-sector entity that initially sought the cooperative venture with the state. Efforts are underway to identify another $7 million in additional cuts.

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