University System of Georgia

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Regents Approve FY 2006 Budget Request

Atlanta — September 8, 2004

The economic realities and revenue shortfalls facing the state of Georgia continue to have ripple effects on public higher education, causing the University System of Georgia to submit a FY 2006 Budget Request that challenges its ability to meet the demands of a continuously growing student body.

The full Board of Regents approved the University System of Georgia’s $1.76 billion FY 2006 Operating and Capital Budget Request at its regularly scheduled monthly board meeting today. The board’s action paves the way for the Budget Request to move on to the state’s Office of Planning and Budget, and then to the governor, who will make his recommendations to the legislature when they convene in January.

“The request we have put forward is as responsive as humanly possible to the budget guidelines we were provided,” said Chancellor Thomas C. Meredith. “While we understand the current economic conditions, we have serious concerns about our ability to fully meet the needs of our students.”

The budget guidelines for the FY ‘06 Budget directed all state agencies to submit three different versions of the Budget Request, reflecting a reduction of 3 percent (or 97 percent of the current year’s budget), a full budget (100 percent, or the same as the FY ‘05 Budget), and a 5 percent enhancement budget (105 percent). Based on its current $1.6 billion budget, a 5 percent enhancement budget request would generate $80.5 million for the University System, while a 97 percent budget would reflect a $48.3 million cut.

The $1.76 billion request approved today by the Board of Regents reflects responsiveness to the budget guidelines, while outlining the critical needs faced by the University System – particularly record-breaking student enrollment juxtaposed against three straight years of state budget cuts. In all, the USG’s budget has been slashed by $382 million to-date (see attachment, by institution) since the state began experiencing budget and fiscal woes in late 2001 – including a $68.7 million cut just requested last month. When all the pluses and minuses are tallied, the University System of Georgia has incurred a net loss of $50 million in its operating budget since FY 2002, while it simultaneously experienced a significant increase in students. The reductions have resulted in per-student funding declining from $8,128 to $6,437 per full-time-equivalent student.

“That’s a 21 percent decline that is slowly shifting the cost burden to students,” Meredith stated.

Among other priorities, the BOR’s Budget Request illustrates the need for $103.4 million in “formula funding” to try to keep pace with the System’s exponential enrollment increase, which jumped from nearly 206,000 students in Fall 2000 to about 247,000 in Fall 2003. However, the $80.5 million that would be made available in the 105 percent budget does not even fully fund the formula covering enrollment increase. In addition, another enrollment increase is expected in the current academic year, further challenging University System officials to “do more with less.”

System officials also are requesting $27 million to implement the 13 recommendations of the Board of Regents’ recently completed Statewide Assessment, aimed at proactively addressing the USG’s projected growth of 200,000 additional students in the next decade. In addition, the Budget Request seeks $11.7 million to respond to state need in the areas of teacher training, production of health-care professionals, and increasing the number of Georgians who attend college.

“We must continue to prepare Georgians to meet the workforce needs of our economy and prudently plan for the future so Georgia is not left behind by the competition,” Chancellor Meredith stated. “The teacher and health-care worker shortages and the need to increase college attendance by the state’s citizens are documented challenges we face.”

The Board of Regents’ Capital Budget Request is strongly linked to a System-wide Capacity Study conducted by the USG’s Office of Facilities in 2003. That study reflected the University System will need to build at least 20-million gross square feet of new space to accommodate projected enrollment growth. Another 28 million gross square feet will need to be renovated or replaced. The System currently has more than 64 million gross square feet of facilities holdings. Over the next 10 years, construction of the new space will require $4 billion in funding, with an additional $2.4 billion needed for facilities renovation and $.6 billion needed to address infrastructure demands. In addition, University System officials anticipate having to raise at least $3 billion in privatized funding to meet its capital demands during that same period.

In this year’s budget request, $385 million is being sought for specific capital projects, including: $203 million for Major Projects, $116 million for Minor Projects, $35 million for Payback Projects, and $19.6 million to meet the capital needs of the Georgia Public Library Services.

The $203 million in Major Projects encompass the first eight projects on the Board of Regents’ Major Capital Priority List, updated this past June. That list - which annually ranks the USG’s capital priorities – currently contains 22 projects totaling $527.6 million dollars, for which state funding will be sought. To maintain existing facilities on the 34 public college and university campuses which comprise nearly 55 percent of the state’s real estate, USG officials are requesting $66.2 million in Major Repair and Rehabilitation funding in the current capital budget request.

“The University System is at a critical juncture,” said Chancellor Meredith. “The decisions we make at this point in time will determine whether we go in retrograde motion, or continue to position Georgia as a state that values and invests in higher education.”

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