Spending Controls and Budget Reductions

From: Sanford Shugart
To: All Faculty and Staff
Date:10/15/01  10:29 AM
Subject: Spending Controls and Budget Reductions

You are all aware that the Governor has called an emergency session of the legislature to balance this year's budget. They currently project a shortfall of $1.3 billion this year on a $48 billion budget. Governor Bush has expressed great support for our system and for education generally and will do his best, I think, to soften the blow to the education systems. Since the three education systems represent more than half of state spending and a good bit if the rest can't be cut (e.g. Medicaid,) I think it is likely we will have our budget reduced.

No cuts have occurred yet, and we don't want to over-react to these developments, but it is only prudent to prepare for what is coming. Therefore, we will begin now with efforts to reduce expenditures in preparation for the likelihood of cuts.

Our principles for this activity will be to protect learning first, protect our employees, and protect the long-term health of the college. I will recommend that a substantial part of any reductions in budget be covered from unrestricted fund balance, minimizing the impact on the college. But recurring cuts must be met from recurring funds, so there will necessarily be some budget reductions.

Fortunately, we have prepared for this possibility in several ways. Some funds have been stewarded in the operating budget in ways that will permit modest cuts without any immediate impact. The fund balance is healthy and intended to be used for times such as these. Also, we briefed the College Planning Council and sought their advice on how to reduce spending within the principles described above. I received the counsel of their working group of faculty and staff last week.

Here are the efforts we will undertake immediately.

1. The advertising budget is to be reduced for the remainder of the year. Some general advertising will continue, as well as a few strategic efforts in areas of high capacity (IT, Nursing, etc.)

2. We will review all contractual services and consulting agreements for reductions to the end of the year.

3. Out of district travel to conferences and any non-essential events will be greatly curtailed, any such travel requiring justification that it is vital to the interests of the college at this time. Any travel already fully approved will be honored; future travel and any approvals "in the pipeline" will be curtailed.

4. Use of "overtime" will be eliminated except in emergency situations. These will require prior personal authorization from the appropriate Provost or Vice President.

5. Temporary services will also require prior personal authorization from the Provost or VP and must be of an absolutely essential nature (e.g. vital to registration.)

6. Current year contingency budgets (such as the president's SPD contingency) will be greatly reduced or eliminated.

7. All departments are being asked to reduce supply expenditures by 10%.

8. The advisory group asked that we NOT put a permanent freeze on open positions. I appreciate the concern. The college is thinly staffed and freezing positions can be a hardship. Note that the college always freezes positions from November 1 to January 1 (it is poor stewardship to hire staff who immediately get three weeks of paid vacation...) We will honor this practice, of course, and evaluate whether the positions can be "thawed" in January based on what happens in the legislative session later this month. I will be surprised if some freezing of open positions isn't necessary in the end, but we can afford to take a "wait and see" approach to this.

Here are things we HAVE NOT done:

We have not frozen any faculty positions of any kind.

We have not reduced anyone's salary.

We have not interrupted anyone's education (i.e. tuition reimbursement continues.)

We have not cut the authorized positions, part-time or full-time.

Finally, I need to comment on the insurance situation. We have been expecting a rather stiff increase in our health insurance premiums this year. These are based almost entirely on the claims history at Valencia and the general increasing costs of such insurance. The rate increase is 29%. Of course, the college covers this cost for all employees in the plan. I have been very concerned, though, for the fourth of our employees who carry some dependent coverage in the plan. They bear the full cost of this coverage and it, too, is increasing by 29%. Therefore, I will recommend to the Board of Trustees tomorrow that the college share this cost increase with employees currently carrying dependent coverage. Their net increase in premiums, then, will be 14.5% annually.

This commitment is for one year only, while we evaluate aggressively the best options for continued coverage beyond 2002. We may all be looking at a different carrier, or we may remain with the current one. At any rate, we will give employees ample time to evaluate their alternatives and shop other alternatives, if they choose to.

A final word: Don't let these budget matters loom too large in your thinking. Budgets come and go; our mission remains. If our effectiveness depended directly on our budgets, then Valencia wouldn't already be the best performing college in Florida, since it has the least funding per student! My point is that our learning journey, our strategy for putting learning first in all we do, is still our main work. And as a friend of mine says, "The main thing is to keep the main thing the main thing."

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