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August 2010 Issue

Featured - Regents Approve $2.1 Billion Fiscal-Year 2012 Budget Request

Regents Approve $2.1 Billion Fiscal-Year 2012 Budget Request

A $2.1 billion Fiscal Year (FY) 2012 budget request approved at its August meeting by the Board of Regents of the University System of Georgia (USG) includes new dollars to meet year over year student enrollment growth of 18,914 students.

“This budget request mirrors the times,” said USG Chancellor Erroll B. Davis Jr. “We are focusing our efforts and our budget request on our core mission of teaching, research and service and the need to serve the continued and significant increase in enrollment at our 35 degree-granting institutions.”

The biggest driver of the regents’ request is a 7.8 percent increase from FY09 to FY10 in the number of credit hours students took during the year. This increase generated $145 million of the FY12 budget request. Almost 45 percent of this increase occurred at the System’s 16 two-year and state colleges, with the 15 four-year universities accounting for 35 percent of the credit hour increase and the four research universities 20 percent.

“Individuals are continuing to turn to higher education to prepare them for an increasingly competitive workplace,” said Vice Chancellor for Fiscal Affairs Usha Ramachandran. “And our enrollment trends indicate that many of these students are enrolling at our access colleges and four-year universities, where we can serve them with greater efficiency.”

Additional new dollars in the regents’ requested budget include, in addition to the $145 million for student growth:
* $8.7 million to maintain and operate new facilities in the system;
* $18 million for health benefits premium increases; and
* $4.9 million for health insurance for new retirees.

The regents continue to place a strategic priority on the expansion of medical education, with a FY12 budget request of $1.7 million to accommodate the second class of students at the Medical College of Georgia/University of Georgia partnership campus in Athens and to create a clinical campus in Rome. The inaugural class of 40 students at the MCG Athens campus started classes in August 2010.

The regents also approved a FY12 capital budget request of $432.3 million, which includes $1 million in equipment for one new facility, $190 million in new construction, renovation or infrastructure needs for 16 projects, $9 million in design funds for 4 projects, $215.1 million for major repair and renovation funds at all 35 campuses as well as construction to two additional projects, and $17.2 million for Georgia Public Library Service projects.

Following instructions from the Office of Planning and Budget (OPB) to all state agencies, the Board also approved reduction plans of 4, 6 and 8 percent ($77, $115 and $154 million respectively) for the current fiscal year (FY11). Any reduction plans adopted this fiscal year carry forward into FY12. The board also approved, as instructed, a 10 percent reduction plan for FY12, which, if enacted, would bring the USG’s reductions over the combined FY11 and FY12 budgets to a total of $192 million.

“Clearly we continue to be affected by the economic recession and the corresponding decline in state tax revenues,” said Ramachandran. “The instructions from the Governor’s office for additional reduction plans in the current fiscal year and continuing into FY12 dramatize the magnitude of the state’s revenue challenges.”

Ramachandran noted in her board presentation that if the System were to receive the full $2.1 billion requested and then had to implement the full 10 percent reduction in FY12, it would result in a total state appropriation below that of FY07. “But in FY07 we enrolled 259,945 students, while in FY12 we project to enroll 321,000 students – 61,000 more than in FY07.”

Currently, the System already is operating under a 4 percent reduction plan ($77 million) as the state withholds that percentage from all state agencies monthly allotments.

To reach the reduction targets, the USG will employ a range of institutional and system-level actions, Ramachandran said. At the institutional level, these actions include structural changes in operations, workforce reductions, hiring freezes, a decline in maintenance and a reduction in library subscriptions, books and hours. At higher reduction levels, courses and programs will be affected.

At the 10 percent level, Ramachandran said a combination of some of the following actions will be considered: an analysis of enrollment capacity at selected institutions, restrictions on learning support for students, and a review of all institutional fees. In addition, she said, there would be additional reductions at the institutional level.

The board also has approved new employee health plans to further reduce costs. These include the self-funding of the System’s HMO and high deductible plans, a tobacco surcharge, a new, alternative and less expensive PPO network, a requirement for all retirees at age 65 to pay the full premium costs if they do not select Medicare as the primary health care provider, and continued financial incentives for employees to switch to the high deductible plan. Together, these changes could save the System up to $30 million annually in health care costs.

Today’s actions on the FY12 operating and capital budget requests now go to OPB for incorporation into the overall state budget recommendations the Governor will present to the General Assembly in January 2011. Any action regarding reductions at the 4, 6, 8 and 10 percent levels will depend upon the final decisions by the Governor and General Assembly.

The FY12 capital budget request can be viewed at: http://www.usg.edu/ref/capital/budget/fy2012_capital_budget_recommend.pdf

Posted by Sonja Roberts on August 31, 2010
Published in: Board of Regents

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