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Provost’s Update on the Budget

This year’s budget situation continues to change, making it particularly challenging to understand and explain. Since it is important that you and your colleagues remain informed about our constantly evolving fiscal environment and the associated financial implications, I will do my best to provide the information needed to understand where we are and where we may be headed with regard to state support.

UCF’s 2007-2008 initial state allocation increased by $22,909,718. This allocation included $11.6 million in enrollment growth funding and approximately $10 million in line-item funding for specific legislative priorities. The line-item allocations UCF received provided approximately $4 million to support specific instructional and research activities, $2 million to complete the 2006 legislatively mandated salary increases, $1.6 million to cover increases in health insurance premiums, $1.2 million to cover the operation and maintenance of new or expanded buildings, and $60,000 to cover increases in insurance premiums paid to the state on behalf of the university. We were also provided approximately $2 million to offset tuition losses due to declines in the number of non-resident students enrolled at the university. This additional $2 million in state funds represents no net revenue gain, and the legislature provided no funds for salary increases other than the one-time $1,000 bonuses that have already been allocated.

State-mandated budget cuts to date removed $9,594,293, or almost half, of the university’s initial allocation. Given the restrictions associated with designated line-item funding, this substantial budget cut left the university with little new recurring money. The new recurring funds that did remain are being used to address the many challenges associated with enrollment growth and have allowed many academic units to recruit new and replacement faculty. Furthermore, while the state-mandated cuts removed recurring funds from the university’s budget, the legislature did provide $3.3 million in nonrecurring funds. We allocated approximately one-third of those nonrecurring funds to support student instruction during the spring and summer semesters, with $629,325 added to college budgets to increase course offerings to students during the upcoming summer sessions. As always, the colleges determine how those additional monies are allocated. The remaining nonrecurring funds will be used to assist the colleges and divisions in dealing with future budget reductions.

Over the past several weeks, we have closely monitored reports that another $1 billion statewide shortfall would likely occur before the end of this fiscal year. Yesterday we received formal notification that cash disbursements to SUS universities would be reduced in preparation for an additional budget cut of at least 3.8% this fiscal year. While the actual budget reduction will not be final until the legislature convenes in a few weeks, funds equivalent to a 3.8% budget cut are already being removed from the cash disbursements the university receives twice each month. Coupled with the 3.6% budget cut we experienced earlier this academic year, this additional 3.8% budget cut means that UCF’s 2007-2008 state allocation has now been reduced by 7.4%, or approximately $20 million. We intend to use the centrally accumulated funds described earlier to at least lessen the impact of this most recent budget reduction. I will immediately begin discussions with the college deans and division directors concerning the steps that must now be taken as we deal with this most recent budget reduction. Given the very real possibility that our fiscal environment will continue to deteriorate, we must now also begin to assess the impact of future reductions to our state budget.

Our current and future budget situation will be the first topic of discussion when the president and vice presidents convene in a two-day meeting early next week. I will be able to provide more detailed information regarding the steps being taken to deal with current and future budget shortfalls after that meeting. In the interim, I can only thank you for your continued efforts and resilience in the face of what has become a very difficult period and commit to keeping you informed as we learn more about what lies ahead.