Minutes of May 20, 1994 Meeting The meeting convened at 10:00 a.m. in room 2428 Cathedral of Learning. UPBC members present were: Thomas Anderson, Nitin Badjatia, Toni Carbo Bearman, George Chambers, Thomas Detre, Darlene Harris, James Holland, Carol Kenderes, Peter Koehler, Franklin McCarthy, Richard Nelson, Sharon Nelson-Le Gall, Mark Nordenberg, Jack Ochs, Ben Tuchi, Philip Wion, Julius Youngner, and Judith Zimmerman. Also present were: Rhonda Gross, Jeffrey Liebmann, William Madden, and Robert Pack. UPBC members not present were: Jacob Birnberg, Ronald Gardner, Randy Juhl, Michael Kurela, Dennis McNair, and Jeffrey Romoff. Approval of Minutes The UPBC approved the May 10 minutes. FY 1995 Operating Budget Parameters The most recent draft of the FY 1995 operating budget parameters was distributed including: Revenues Tuition -- Increase of 4.5% to 5.0% University-wide Fees -- No increase Commonwealth Appropriations -- Increase from $124.8 million to $128.9 million Unrestricted Endowment Applied -- Increase of 3.0% Income from Sponsored Projects -- Increase of 8.0% (subject to change due to possible indirect cost rate "pause" Short-Term Investment Revenue -- Increase of 3.0% Expenditures Faculty and Non-Faculty Salaries -- Increase of 2.7% for maintenance and current estimates of $1,738,625 for merit, $434,655 for equity, and $86,931 for market Student and TA/TF/GSA Salaries -- Increase of 4.0% Union Salaries -- Increase of 3.75% University Funded Financial Aid -- Increase with tuition Debt Service -- Increase of $1.5 million to $10.2 million Programmatic Increases -- Constant at $1.25 million Library Acquisitions -- Increase of 1.95% Operating Expenditures -- Increase of 1.95% Renewals and Replacements -- Increase of $750,000 to $1.65 million Research Development Fund -- Increase of 8.0% Utilities and Insurance -- Increase of 3.0% Required Budget Reduction -- $4.0 million Koehler explained that only maintenance of real salary was expressed in terms of a percentage increase. He stressed the importance of preventing misunderstanding that could arise relative to the new compensation policy if faculty and staff simply compare their salary increase to the sum of the University-wide increases for maintenance, merit, equity, and market. Wion clarified several points, emphasizing that the parameters are not the actual budget. He called for evaluation of the appropriateness of the current parameter structure to eliminate any areas where inadequate budget control exists. Koehler asked how the compensation fund pools would be distributed to departments, so that faculty and staff would not feel that deans were inappropriately distributing increases, especially those due to promotion. Wion suggested that an earlier draft of the compensation policy called for units to have a written policy explaining the use of merit funds for promotions. He added that units have some financial flexibility relative to unfilled positions and the difference between actual and budgeted positions. McCarthy responded that any such funds are generally used to make up for shortages in operating funds. Gross clarified that the proposed budget parameters are best estimates and that salaries will be verified in the coming weeks. Wion stated that the UPBC must be clear that approving the parameters means approving the percentage increases to salaries, not the current estimates of actual increases. In response to McCarthy's question, Gross explained that FY 1995 capital project rankings will be completed in June. Madden added that capital expenditures will be funded from Plant Funds with a $1.5 million increase to Debt Service and a $750,000 increase to Renewals and Replacements. Koehler moved that the UPBC adopt the proposed FY 1995 operating budget parameters. Bearman seconded. In response to Ochs' questions, Tuchi stated that the University would probably not refinance any debt this year and that the $1.5 million increase to Debt Service could support approximately $10.5 to $12.0 million in capital projects. Wion suggested that the proposed increases to Library Acquisitions and Operating Expenditures of 1.95% be altered to give the former a higher priority. He distributed information detailing FY 1994 Operating Expenditures and suggested that this $73 million is a very mixed group of expenditures, not all of which support academic units and called for a detailed examination. Wion moved to amend the motion by raising the increase in Library Acquisitions from 1.95% to 3.00% and lowering the increase in Operating Expenditures from 1.95% to 1.85%. Nelson-Le Gall seconded. Zimmerman and Bearman supported the amendment. Koehler cautioned that some items within Operating Expenditures, such as postage, are not in the University's control. Tuchi suggested that total library expenditures should be examined, cautioning that the desire to improve the libraries does not necessarily make them deserving of a permanent budget reallocation. He warned that adding to the Library Acquisitions budget will increase the need for staffing and space. Pack agreed that the library personnel budget is constrained. Youngner suggested that the UPBC identify areas in need of further study and assign the work to smaller groups. The motion to amend the FY 1995 operating budget parameters was approved 8 to 4 (with two abstentions). Tuchi distributed detailed debt service information based on approved FY 1995 capital projects. He explained that the recently approved building for the School of Health and Rehabilitation Sciences creates a need to raise the Debt Service increase, although the project expands both debt service and revenue. Alternatives, such as leasing, have been examined but would result in no net savings. Tuchi moved to amend the motion by raising the increase in Debt Service from $1.5 million to $2.0 million and reducing the increase in Renewals and Replacements from $750,000 to $250,000. McCarthy seconded. Anderson reminded members that SHRS is keeping incremental revenues generated to fund the building, which he suggested was an insidious practice. Detre stressed the grave need to relocate the School into a new facility. Ochs stated that funding an emergency from Renewals and Replacement was poor policy. Gross suggested that Debt Service and Renewals and Replacements should be viewed together as the University has committed significant funds toward preservation projects, classroom improvements, and ADA compliance. Ochs suggested that the proposed balance of preservation projects to E&G Renewals and Replacements was fiscally imprudent. Tuchi disagreed, suggesting that funding reconstruction from debt is logical until more information is available. The motion to amend the FY 1995 operating budget parameters was approved 12 to 2. The motion to adopt the amended FY 1995 operating budget parameters was approved unanimously (with one abstention). In response to Anderson's question, Tuchi stated that renovations to the facilities for the new basketball coach would probably be included in FY 1995 private or auxiliary funded capital projects. In response to Ochs' question, Tuchi added that inclusion of the $18.8 million financing for the College of Business Administration in the distributed materials did not imply that the funds had been pledged, adding that he believed approximately $1.3 to $1.5 million had been raised to date. Tuchi added that approval of the Commonwealth budget is not likely to occur before mid-July, but that there were no indicators that current assumptions relative to impacts on the University were not accurate. The meeting adjourned at 11:59 a.m.