Provost’s Update on the Budget

    As we all know, the past year has been difficult for UCF and all state universities. State-mandated budget reductions have impacted every aspect of how we teach students, conduct research, and operate our university. During these difficult times, UCF's faculty and staff members have made tremendous efforts to maintain our level of excellence, and, clearly, our students are better off for your sacrifices and contributions. This update is designed to provide an overview of what has happened in the past, where our university stands now, and what difficult financial decisions we face in the immediate future.

Recent Budget Reductions
    As I have mentioned in previous Provost's Updates, UCF has been proactive in responding to the ongoing budget reductions that have accompanied Florida's economic downturn. We have tracked shortfalls in state revenues and closely monitored the quarterly budget transfers we receive from the state, allowing us to anticipate state-mandated budget cuts and respond quickly.

    This fiscally conservative approach has afforded colleges and divisions time and flexibility to respond to state-imposed budget reductions. As a result, the impacts of budget cuts on UCF—particularly with regard to personnel—may not have been obvious to those outside the university.

    While some universities have been forced to lay off faculty and staff members, UCF has dealt with personnel reductions through attrition. We have experienced a significant—albeit silent—reduction in force. State-mandated budget cuts have eliminated funding for 73 faculty positions and more than two dozen A&P and USPS positions. Beyond these positions that have been lost to budget cuts, an additional 68 faculty positions and 141 staff positions remain unfilled.

    Between July 1, 2007, and June 30, 2008, $33.1 million was removed from academic and administrative unit budgets in anticipation of budget cuts. During that same period state-mandated budget cuts totaled $28.2 million, leaving $4.9 million to apply toward future budget cuts.

Update for July 1
    Unfortunately, the forces that contributed to these budget cuts and personnel losses are still at work. On June 12, the state notified agencies of a one percent per quarter reduction in state funds, starting July 1. Maintained over the fiscal year, this will result in a 4 percent reduction that will drain $10.9 million from UCF's 2008-09 budget.

    Because of our conservative approach to spending, we have $4.9 million set aside to address reductions for this fiscal year. That still leaves $6 million the university must cut, with the distinct possibility that our budget will be reduced again if the economy continues to decline.

    To cover this shortfall and continue our fiscally conservative approach, college and division budget allocations for this fiscal year are being reduced by a total of $11.4 million, effective July 1. The resulting funds will be used to cover the $6 million shortfall and create a $5.4 million reserve fund that will be used to manage additional budget cuts of up to 2 percent during this fiscal year and beyond.

    Including this most recent budget reduction, UCF has incurred an almost $40 million decrease in state support since July 1, 2007. This reduction represents 13.5 percent of the general revenue and lottery funds included in the original fiscal year 2007-08 budget. In fact, colleges and divisions will start fiscal year 2008-09 with budget allocations comparable to those they received in fiscal year 2006-07.

    While our state funding has decreased, student demand has not. Throughout the years, UCF has become an institution of choice, as recently evidenced by the more than 26,000 first-time-in-college applications we received for summer and fall. While the demand to enroll is high, our diminishing state funding is making it increasingly difficult to serve all those who wish to enroll.

Protecting Our Future
    Though our proactive budget cuts have helped us avoid the personnel reductions faced by fellow state universities, we must face the fact that revenue projections and long-range economic forecasts hold little hope for economic recovery until some time in 2010. We are now forced to take steps to adequately support those programs and activities that are most crucial to the success of our students and university. Regrettably, those steps will likely involve the elimination of some academic and administrative programs and activities.

    We believe that college deans and division vice presidents are the best judges of their programs and activities. Making these decisions is never easy. However, each college and division will be allowed to keep 70 percent of the funds made available through the elimination of programs or activities.

    Thirty percent of the funds resulting from such eliminations will be used to support university-wide initiatives that are crucial to student success. Examples include, but are not limited to, course availability in areas of very high student demand and library acquisitions and hours of operation.

    Deans and vice presidents will discuss with me those programs and activities they believe should be considered for elimination. Each proposal for elimination will be thoroughly and seriously considered and must take into account:

• the impact on student credit hour production
• the impact on currently enrolled students and the way that impact will be addressed
• the resulting reduction in personnel and the way the reduction will be handled

    I also will expect descriptions of how the funds made available because of eliminations will be used to strengthen our instructional and research efforts. Viable proposals will be discussed with President Hitt and, with his approval, shared with the Board of Trustees.

    We hope to have recommendations made and decisions approved this fall.

    The talented and dedicated people who work at UCF are our greatest asset, and we have done all we can to protect those who have helped the university achieve its many successes. I regret that economic circumstances are forcing these difficult decisions, but I want to thank you all for striving to maintain the high quality expected of UCF despite these trying times.

    As we move forward, I will continue to regularly communicate about our fiscal challenges and the steps we are taking.

Terry L. Hickey, Ph.D.
Provost and Executive Vice President

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