The 2018 calendar year is coming to a close, and Murray State University officials are already working on the next fiscal year’s budget and are making proposals for fiscal year 2020.
The Board of Regents Finance Committee voted on Monday to bring an FY 2019 budget plan and budget proposal for FY 2020 to the full board for approval in December.
Interim President Bob Jackson said enrollment continues to be a pressure on the budget — as well as performance funding, deferred maintenance and pension obligations. “Those are all big factors,” he said.
Priorities include a cost of living increase for faculty and staff, allocating more funds to deferred maintenance and plans regarding improvements to educational facilities and housing. Additionally, the university plans to enhance marketing, recruitment and retention.
Jackson said the overall budget for 2020 has flat revenue funding in order to be conservative. “So you’re not going to see an increase in regard to what we’re proposing for next fiscal year, even with positive recruiting efforts that we feel are being put into place and the efforts that our recruiting staff are advancing today.”
When it comes to savings and efficiencies, Jackson said “there’s a pretty good gap to fill” for 2019 but mostly for 2020. Some of this effort includes voluntary retirement incentives.
Vice President of Finance and Administration Jackie Dudley said for FY19, the university is not likely to meet the budget projections for tuition and fees due to enrollment. The current projection is a net change in tuition and fees shortfall of $4.5 million. “It’s not surprising. It’s what we’ve been estimating all semester,” she said, and added that a lot could happen to that number in the spring and summer. (2018-19 enrollment is 9,466 students, according to Director of Communication Shawn Touney.)
To cover this shortfall, Dudley said the university plans to apply a $2 million budgeted contingency. She also said the end of FY18 had balances remaining in departmental accounts (from vacancies, savings on fringe benefits) of $2.5 million. The latter is a one-time amount, Dudley said. “That’s what we’re proposing to use to cover this year’s tuition shortfall.”
Dudley also discussed a “hiring chill” that will provide an additional level of review for any vacant positions. “That will serve us well as we go through the year,” Dudley said. Other savings involve limitations on new hiring decisions around the winter holidays.
In looking ahead to FY20, Dudley said performance funding has a 1% stop-loss provision. That estimated amount for Murray State is $433,000. She added it’s unknown at this time how MSU will fare in performance funding as awarding is based on size and volume. Enrollment is projected to be flat and the $4.5 million reduction will be carried over to FY20.
Other proposed changes include increasing the routine and deferred maintenance budget by $1 million more dollars, amounting to a 20-25% increase in spending in that area (currently around $4-5 million). The additional proposed money would go into two funds: life safety projects (elevators, generators, emergency lighting, etc.) and scheduled and routine exterior campus improvement (lighting, signs, power washing, landscaping, etc.)
A proposed COLA will cost around $907,000. Part of this effort involves bringing the lowest paid employees to $10.10 as part of a three-phase process underway. The third phase was not in the budget last year, but the proposal is to put this back on the table. Also, fixed costs involving promotions and awards amounting to $107,000.
Other items include a 3% increase in cost to liability and property insurance, $78,000 for a retention software upgrade, $150,000 for enhanced recruiting and marketing (an RFP review will come to the board for approval in December). Marketing has not been centralized and university officials are looking for an outside agency to assist in changing this. Jackson said there needs to be a focus on grant marketing and also yield marketing -- to enhance efforts turning applicants into enrollees.
The budget factors in new scholarship discount incentives in Fall 19 with the hope that discounts will pay for themselves through an increase in enrollment and tuition growth.
Retirement pension rates remain an unknown factor at this time. Dudley said if the rates stay the same then it’s funded in the budget. This is an area that Murray State will be closely watching. Contributions now are at 48% on payroll. KRS could go to 84% and KTRS, currently nearly 16%, could go to 30%. Murray State pays about $5 million a year in employer contribution (to both KRS and KTRS each). Dudley said if those increases materialize it would be “quite significant” as the combined increase would mean around a $9 million greater cost to Murray State.
The 2020 budget proposal includes proposals to cover a financial need. Last year, in the budget planning process, Academic Affairs identified reductions that totaled $106,000, but wouldn’t be ready until 2020, Dudley said.
Another line includes a 3% overall reduction to “executive levels” (each VP and president, including athletics). The proposal to assist the academic side of this reduction is to offer voluntary retirement incentives to temporarily include both transitional contracts for faculty and sick leave credit purchase.
Provost Mark Arant explained the transitional contract would be increased to an additional year (adding a three-year option), compensation for these contracts would also increase to 3.75% per credit hour (currently 3.5%) for a maximum of 45% and sick leave buyout would be used in addition to the transitional contract (currently, it’s either/or). This proposal is only temporary. Arant said once the June 2019 deadline passes, the university will revert back to its old policy and also the sick leave buyout would not be offered further.
While the committee approved these plans, they must be approved by the full board before going into effect. The next scheduled full board meeting is on December 7.