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Fiscal Year 2021: Budget Planning

Across the nation, universities are debating if, and how best, to open in the fall or to delay opening in order to protect the health and safety of their communities. This uncertainty makes predicting our fall enrollment—and revenue from tuition and fees—difficult. As a conservative measure, we are planning for a 2.5% decline in tuition and fee revenue for this coming academic year.

Though the Texas economy is inherently strong, it is presently deeply impacted by the downturn in the oil and gas industry and the reduction in sales tax revenue. This, in turn, affects the general and education state funds on which UTSA relies. While there are important efforts happening to explore how best to reopen our economies—locally, in Texas and nationally—it is hard to predict when we will see full economic recovery to pre-pandemic conditions. Consequently, we are preparing for a conservative 10% budget cut in state appropriations coming to UTSA in FY21.

If these approaches turn out to be too conservative, our Incentivized Resource Management (IRM) principles allow us to adjust course. 

The pandemic’s economic reverberations will likely continue through FY21 and at least the coming FY22/23 biennium. While we expect our revenues to be affected over the next three years, our efforts will remain focused on maintaining our positive institutional trajectory toward our three strategic destinations.

Throughout this process, we will adhere to our budget planning principles ensuring every decision aligns with UTSA’s mission, core values, identity, and strategic plans and destinations.

IRM Principles

While current events may impact the pace at which we can reach our shared goals, our creativity and entrepreneurial spirit are undaunted. IRM provides us with an ongoing activity-based framework to manage our financial resources going forward, particularly as our colleges and divisions adjust and align expenses with anticipated revenues. 

The following key principles guided the design of our IRM budget model:

  • Align resources with institutional priorities
  • Support the decision-making process with reliable data and analysis
  • Improve budget transparency
  • Incentivize revenue growth and cost effectiveness
  • Improve fiscal accountability and management of resources
  • Evaluate the budget process periodically and adjust as necessary
  • Develop a budget model that promotes clarity and understanding for academic and administrative leaders with financial responsibilities

As we continue to monitor the long-term effects of the pandemic, these principles allow us to adapt our budget planning as needed to focus on institutional priorities and core services. Routine evaluation of our budget process is built into this model, as is transparency in how we will approach our budgets.

In the coming months and years, revenue growth and cost effectiveness will be key to our success. Both are incentivized in the IRM model. All colleges and divisions are encouraged to explore different paths to grow revenue or implement cost-effective efficiencies. The “all-funds” approach to expense reduction is designed so that all colleges and divisions contribute to the financial health and position of our institution. Furthermore, under the IRM model, revenue-generating units (academic colleges and auxiliaries) realize the impacts of expense reductions in both their direct expenses and their allocated support unit expenses.

The Strategic Investment Fund (SIF) is primarily intended to align resources to enable the entrepreneurial pursuit of the university’s highest priorities, developed through a systematic campus-wide process. When colleges or divisions increase activities or realize increased net revenues, this process is designed to provide support by making resources available in a proactive and demonstrable way, in a timely fashion and as supported by excess revenues. This process is especially useful as we navigate uncertainties this fall related to enrollment and tuition and fees.

Our adoption of the IRM budget model enables us to keep our budget planning flexible. Should our situation improve as we move forward, the annual IRM budget planning processes allow us to more easily pivot to a less conservative financial plan, if or when our circumstances allow.

Planning Phases

Based on the state’s economic outcome and our revenue projections from enrollment, research and philanthropy, we are preparing for a $37M reduction to unrestricted funding sources from our FY21 estimated revenues of $371M.

The university has created a conservative, two-phased budget plan for FY21 to address this expected shortfall and ensure we’re able to continue to fulfill our commitments to our students’ success and critical research.

Phase 1: Budget Reduction of 9%/10%

Beginning next fiscal year, a reduction of unrestricted expenditures (fund types: Education & General, Designated Tuition, Other Designated Funds and Fees) budgets will be required to address anticipated revenue declines in tuition (statutory and designated), state appropriations and other revenue shortfalls. Academic Colleges that are home to faculty appointments and provide direct instruction to students are required to reduce expenditures by 9%, and all other divisional units are required to reduce expenditures by 10%.

Budget reductions will be applied to all unrestricted fund groups, including Other Designated and Auxiliary funds. This action allows us to shift the new reduced levels of permanent expenditures across all funds, according to appropriate or allowable uses. By doing so, we ensure the university aligns funding sources with strategic priorities as we work through these uncertain times.

Proposed budget cuts should follow the approaches and priorities listed below, leaving sufficient funding to meet the university’s strategic mission as we move forward.

  1. Colleges and divisions should review previous expenditure plans in light of institutional and college/division priorities to identify alternative budgeted funding sources, where needed, to support continued progress towards our goals. The key to this planning will be for each college/division to determine how best to align their operations and core services to resources while finding creative efficiencies.
  2. Reductions to the permanent (recurring) expense budgets in FY21 must be made, expenses cannot be shifted to one-time sources. FY21 budget plans should include any out-year permanent expense commitments, including those for existing strategic faculty hires.
  3. Budgeted vacant positions should be reviewed and reorganizations considered to determine which positions are critical to meet institutional strategic needs. Positions deemed not critical or essential should be eliminated and the associated permanent expenses removed from FY21 budgets.
  4. Budgeted reserves (A9000) that are not committed to a permanent expense should be eliminated. For budgeting reserves, provide a list of the permanent commitments to that reserve.
  5. M&O and travel budgets should be reduced wherever possible but remain at a level consistent to the needs of the operation and staffing levels.
  6. Planned efforts to create efficiencies through process improvements, job duty and/or assignment reorganization or shared services should be implemented immediately, with expenses eliminated in the permanent budget to align with these new processes.
  7. If the college/division proposes budget reductions to budgeted position salary expenses, please keep in mind the following:
Layoffs
Layoffs can be considered when the unit does not have enough work for the employee to perform or there is a financial condition that precludes them from covering the salary. In this case, colleges/divisions could be able to fill the position when the financial situation improves.

Reduction-in-Force (RIF)
RIFs can be considered when departments are re-organizing and there is no intention of replacing the position in the near future. 
Please include position information and indicate the option selected (i.e. layoff or RIF) in the comments section of the form.

Additional budget cuts will be needed by Other Designated and Auxiliary areas that are projecting their own revenue declines for FY2021 due to impacts of the pandemic. This includes revenues from both mandatory and incidental fees, sales and services.

Phase 2: Planning for a Possible Additional 5% Reduction

As we approach the fall semester, additional information will be provided as it becomes available regarding anticipated state appropriation reductions and fall enrollments. At this time, our exercise for Phase 2 is to identify an additional 5% of permanent expense reductions, for a total of 14% for academic colleges and 15% for divisions. Conducting this planning now will ensure we are ready to adjust our FY21 expenses according to other revenue scenarios, as well as address the FY22/23 biennium as needed.

Process

Throughout the planning process, colleges and divisions engaged in a collaborative process with their respective units to align and connect collective resources to deliver the university’s strategic mission.

Instructions and guidelines provided to each college and division are archived below.

Preliminary plans should be uploaded into the SharePoint folder created for each unit no later than May 22 and contain:

  • Narrative stating the college/division specific framework used to inform the budget reduction plan (one page)
  • Participatory process utilized to develop and vet the preliminary plan (one page)
  • Completed UTSA excel template for the college/division

The President, Provost, Senior Vice President for Business Affairs and Vice President for Research, Economic Development, and Knowledge Enterprise will convene and host a budget review on May 27 and 28, during which each college/division leader will present their respective preliminary plans for discussion and evaluation. Input and feedback will be shared, particularly with an eye towards identification of cross-unit synergies. Opportunity will be provided for further revision by the college/division to finalize the respective budget plan by June 5. 

Final recommendations will be forwarded for consideration by the University Leadership Council and Resource Management Team (RMT) per our participatory decision-making framework. Final decision by RMT will be communicated no later than June 15.

As you prepare to share your preliminary plans during the May 27 and 28 budget review, please use the following guidelines to develop your presentations.

  • Presentations should be five minutes in length, with no more than three slides.
  • Include key points the budget review group should know about your proposed reductions.
  • Review the impacts to your core mission and services, both positive and negative. Consider the following:
    • Realign and focus on your most important functions, services and business processes.
    • Identify functions or services that will be negatively impacted due to the proposed reductions.
    • Confirm that your core mission and/or core services will continue.
  • Share the efficiencies you will implement or are currently collaborating on to minimize operational disruptions.

Please upload presentations to the Sharepoint folder created for your unit no later than May 26.