1. 1 Faculty Council September 15, 2003

2. 2 Today’s Agenda Today’s Agenda Recent History & Legislative Session Outcome Outcomes from Legislative Session that Impact Benefits University Finances & Budget Overview

3. 3 Recent History & Legislative Session Outcome

4. 4 New Leadership 2002 Elections Lt. Governor David Dewhurst 7 State Senators 31 State Representatives House Speaker Tom Craddick Chairmanships and Committee Assignments

5. 5 State of the State State faced $10 billion shortfall 7% reduction for 2003 fiscal year requested of all state agencies State agencies and institutions asked to reduce 2004-2005 budget request by 12.5% 2004-2005 budget request by 12.5%

6. 6 State Budget Outcome All Funds $117.4 billion ----- up 1.4% $117.4 billion ----- up 1.4% General Revenue $58.2 billion ----- down 4.3% Higher Education, General Revenue down by 1.7%

7. 7 140 days = 1,383 New Laws Over 5,700 bills/resolutions considered 1,383 passed (24%) UT Austin tracked over 1,400 bills 23% passed 23% passed

8. 8 Significant Legislation for Higher Education Tuition Flexibility HB 3015 (Rep. Morrison/Sen. Shapiro) 100% Indirect Cost Return HB 1887 (Rep. Morrison/Sen. Ratliff) Administrative Efficiencies SB 1652 (Sen. Shapiro/Rep. Morrison ) SB 1652 (Sen. Shapiro/Rep. Morrison )

9. 9 Tuition Flexibility Authorizes Board of Regents to set designated tuition charged to students 12-member legislative oversight committee Tuition set asides for financial aid: 20% for undergraduates 15% for graduates

10. 10 Indirect Cost Allows institutions to retain full 100% of indirect cost return on research Represents additional $39 million for UT Austin UT Austin

11. 11 Administrative Efficiencies Financial Management Human Resources Information Technology RegulatoryReporting

12. 12 Top 10% Preliminary Fall 2003 enrollment: 75% of incoming freshman Texas residents would be automatically admitted An amendment to SB 86 would have capped the automatic admissions at 60% of entering freshmen class SB 86 filibustered on last night of session....... and died

13. 13 Other Legislation of Interest Texas Enterprise Fund (SB 1771) $295 million/Governor’s Office Texas Higher Education Coordinating Board Sunset legislation (SB 286) CB membership: 18-9 “Success Initiative” ( replaced TASP) Doctoral Incentive Loan Program Pilot program for 3 community colleges to offer bachelor’s degrees (selected programs)

14. 14 Major Studies Relating to Higher Education Legislative Oversight Committee on Higher Education ( HB 3015 Tuition Flexibility ) Study of Student Financial Aid Programs ( Coordinating Board ) Select Committee on Higher Education ( SB 1652 Administrative Efficiency )

15. 15 Legislative Standing Committees Interim Study Charges House Higher Education Committee Senate Education Committee Senate Subcommittee on Higher Education House Appropriations Committee Senate Finance Committee

16. 16 Other Interim Activities General Studies ( various legislation enacted by Legislature) Interagency Work Group on Rural Issues Study and Implementation of Seawater Desalination Texas Traumatic Brain Injury Advisory Council Nutrition and Health in Public Schools Water and Health Issues Along the Border

17. 17 Outcomes from Legislative Session that Impact Benefits

18. 18 Outcomes from Legislative Session that Impact Benefits Reduction in State Premium Sharing for Part Time Employees: Impacts both individual and dependant coverage. 90-day wait period related to eligibility for medical benefits. Carve out for Graduate Student Workers. 90-day wait period for Retirement Plan Participation.

19. 19 How is UT Austin addressing the changes and options? Full time: University Salary Supplement Part time: University Salary Supplement Changes during the year: Supplement Adjusted Dynamically. 90-day wait period for medical benefits will be transparent to the UT Austin workforce. Legislation provides the ability to fund from non-general revenue sources.

20. 20 How is UT Austin addressing the changes and options? Retirement: – 90-day wait period for new hires for participation in either TRS or ORP. –Will consider the entire month where the 91 st day falls. –If services begin before the actual appointment date, the 90-day wait does not apply. –New Hires can participate in the supplemental plans on day 1.

21. 21 Benefits Update Continuing Employees: –Will receive salary supplement based upon their 8/31 or 5/31 relationship with the University and their FTE status and benefit status on 9/1/03. –Will have salary supplement adjusted dynamically based upon FTE status and benefit status each month.

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24. 24 Benefits Update Graduate Student Workers (GRAs, TAs): –All continuing Graduate Student Workers will receive both a salary supplement (for dependant coverage) and the traditional benefit supplement. –All incoming Graduate Student Workers for 9/1/03 and 1/1/04 will receive both a salary supplement (for dependant coverage) and the traditional benefit supplement. –A Graduate Student Benefit Committee will be put together immediately to identify options for 9/1/04.

25. 25 Benefits Update New Hires (9/1/03): –Will be immediately eligible for health benefits. –Will be subjected to new premium structure. Are not eligible for salary supplement.

26. 26 Communication Annual Enrollment: –Mass electronic communication; hard copy to those without email –Dispatch –Benefit Information Sessions: Morning/Afternoon/EveningEnglish/Spanish Benefit Fairs: Main Campus and Pickle –Targeted Communication: Potential Retirees Graduate Student Workers Part Time Employees –HRS Web Site: University Home Page –HR Forum –Town Hall Meeting

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28. 28 University Finances & Budget Overview

29. 29 Legislative Session Financial Outcome Positives Negatives 100% IDC Retention +$20M 100% IDC Retention +$20M Tuition Flexibility Tuition Flexibility Continued downward trend in State financial support Continued downward trend in State financial support  GR reduction ($22M)  P/T Benefits ($6M)  90 Day Wait ($2M)  TX Tomorrow ($3M)  B-on-Time ($?M)  Higher tuition set asides $20M -$33M

30. 30 Total University Budget Educational & General Component 59% Endowment Component 9% Research Component 20% Auxiliary Component 12% $846.7M + 6.8% University Finances FY03/04 Total University Budget $1.44B $176.6M + 2.2% $129.1M – 1.0% $292.2M + 12.6% $1.44B + 4.7% or $63M

31. 31 University Finances What percentage of University Budget is funded by State General Revenue?

32. 32 Total University Budget Educational & General Component 59% Endowment Component 9% Research Component 20% Auxiliary Component 12% $846.7M + 6.8% University Finances FY03/04 Total University Budget $1.44B $176.6M + 2.2% $129.1M – 1.0% $292.2M + 12.6% $1.44B + 4.7% or $63M

33. 33 University Finances What percentage of Academic Budget is funded by State General Revenue?

34. 34 Budget Accomplishments For our State Improved research competitiveness Improved research competitiveness For our Students Additional faculty positions Additional faculty positions Increased tuition & scholarship support Increased tuition & scholarship support Capacity to invest in specific programmatic initiatives Capacity to invest in specific programmatic initiatives For our Employees Preservation of a competitive benefit program Preservation of a competitive benefit program Possibility of mid-year salary program Possibility of mid-year salary program

35. 35 It was a challenge to balance the budget! Efficiency Improvements $5M from Office Supplies & Credit Card changes…more to come $5M from Office Supplies & Credit Card changes…more to come Across-the-board Budget Reductions $25M total reductions…$4M from occupied positions $25M total reductions…$4M from occupied positions Reduced Infrastructure Funding $10M reduction in an area already under funded! $10M reduction in an area already under funded!

36. 36 What are our Continuing Challenges? Infrastructure Funding - $30M+ annual shortfall

37. 37 Facility Aging Drives Repair & Renovation (R&R) Requirements There is a significant bubble of R&R requirements in the near future. A substantial portion of the University’s Plant, those projects built in the 50’s through 80’s, is approaching 30-60 years old and will require substantial repair and renovation.

38. 38 What are our Continuing Challenges? Competitive Compensation Program Funding - $15M recurring

39. 39 Thank You