Budget Set to Reduce

BY JUSTIN TONEY

The University will not be hiring for the position of internal auditor anytime soon.

Instead, the money set aside for salary and benefits for that and all other vacant positions that have been “frozen” will be saved and re-collected into the University’s general fund.

Executive Vice President for Administration and Finance Rick Hurley said that this is the main strategy of his department in preparation for future budget cuts.

“Every institution uses that strategy because of the nature of 900 employees turning over,” Hurley said. “There’s always going to be a chunk of savings.”

President Judy Hample has asked staff and administrators to prepare for a 5 percent, 10 percent or 15 percent cut in funds provided by the Commonwealth.

Hurley said that tuition will “definitely” rise next year, but the budget cuts will not be the direct cause.

The school has to match the state 50 percent for every increase in faculty saleries.

This 50 percent comes from the University’s maintained agency fund, which is suplimented by student payments.

The current state allocations, given in monthly increments, for the 2008-2009 fiscal year was set to $23,062,992.

The departments are preparing for this number to drop by up to $3.5 million.

Postponing and possibly canceling planned expenditures may become necessary to ballance the school’s budget.

“There’s a lot of uncertainty over it right now and you just put together the plan that you can, but don’t really know exactly how you’re gonna do it until the number arrives,” Hurley said.

Their plans follow the strategy used last year that compensated for a budget reduction of over $1.5 million at the end of the 2006-2008 budget. The strategy involves setting specific broad goals to reduce spending, and then addressing specific expenditures as they come.

As to which projects would be cut and which saved, Hurley said that salary savings come first, and then one-time funding items such as equipment.

“The final decision is made by President Hample, but she won’t make it until after extensive discussion with the executive staff,” Hurley said.

The money set aside for electricity, natural gas to run the power plant, repaying the debt and other operational costs will not be cut. Hurley said he will try not to cut academic programs, but that it is too early to speak on other expenditures.

“Some would call it luck,” he said. “[The planned cuts] are Band-Aids to get us through so we can have a balanced budget.”

Two months into a two-year fiscal cycle, the Virginia Treasury and Finance Departments realized that the Commonwealth would be unable to meet its promised allocations.

Associate Vice President of Business and Finance Rick Pearce says expected cuts for the University to an economy that the Governor’s office estimates will recede much lower than predicted two months ago when the current budget was decided.

“They’re doing it one and a half years ahead of the biennium,” Pearce said. “They’re basically just guessing at this point.”

The state budget for public appropriations comes from tax revenue, which Pearce says has not demonstrated that it will be enough this year.

Virginia law dictates that the Commonwealth’s budget can not be left unballanced.

This year’s budget cycle began July 1.

“If I’m not mistaken, they had anticipated that coroprate taxes would increase by six percent, when in fact for the last two to three months, they have only gone up by one percent,” said Pearce.

Still, Pearce believes that the decision to cut based upon early-estimated losses is a wise one.

“You don’t want to wait unti June to say ‘Oh my God! We only collected $90 million instead of $1 billion,’” he said.

Neither he nor Hurley felt any worry over the situation.

“We can handle it,” Pearce said. “We won’t shut the doors.”