BUDGET IMPLEMENTATION TEAM UPDATE

APRIL 2019

The data reported in this update focus on expected strategy implementation and expense reductions for the 2019 fiscal year only. The Budget Advisory Committee identified the items below as those that would impact the FY19 and FY20 budgets. Additional strategies and reductions planned for FY20 will be implemented and reported on next year. The committee set a goal of identifying $25 million in reduction strategies to be implemented across the two budget years.

• Increased KERS Obligation: $10 million • Expected KTRS Increase: $2-3 million • Decreased State Funding: $5,060,769• Decreased Tuition Revenue: $4-$6 million• Expected Budget Impact: $21-24 million• Committee Goal: $25 million

The University Budget Office balanced the FY19 budget with reduced expenditures in areas identified by each VP area during BAC process. Table 1 shows the revenue and savings identified by each area and the percent of strategies that are expected to be realized in FY19. The goal of the committee was to capture about 70% of the biennial savings in the first year. That goal will be met with 68% of all strategies expected be realized in FY19.

PERSONNEL EXPENSESEach VP unit identified personnel reductions for FY19, which include position eliminations, contract reductions, and changes to pension classifications. Table 2 shows personnel savings for each unit as of March 31, 2019. At this point we have realized more than 100% of planned personnel savings for this fiscal year. The expectation is that 100% of expected FY19 personnel savings will be realized by the end of FY19 and that goal was being met at the time of this report.

OPERATING EXPENSESIn order to understand spending in relation to the expected cuts in each area, the Budget Implementation Committee will track year-to-date spending in relation to FY18. If expected savings are evenly distributed across the 12 months, we would expect to see about 75% of expected savings realized at this point in the fiscal year. Most VP units were above that benchmark as of March 31, 2019. Year-to-date savings appear to be outpacing expected savings for most units. However, several of those units have expected expenses that will post later than in the prior fiscal year. Once those items are processed, the percent realized will decrease for those units. The expectation is that 100% of expected FY19 operating savings will be realized by the end of FY19 and that goal was being met at the time of this report.

*Due to the extension of the postsecondary tuition waiver, the expected $2 Million dollar savings from this strategy will not be realized in FY19. Additional savings from employee reclassifications have been used to cover the savings expected from this strategy for FY19.

NOTE: These data represent the first nine months of FY19 and are likely to be affected by the timing of expenses and contracts. It is likely that the percent realized for those units with percentages over 100% will decrease as those expenses are posted.

NEW REVENUEIn addition to budget savings, some units implemented strategies to increase revenues to meet their share of the budget reduction. Academic units introduced new online programs in Sports Management (Health Sciences), Criminal Justice ( Justice and Safety), Business Administration (Business and Technology) and Communication Studies (CLASS). All of those programs have yielded increased revenue beyond the strategy projections. Athletics implemented revenue strategies tied to the Learfield contract and revenue guarantees in basketball, which have also produced greater than anticipated revenue. The expectation is that 100% of expected FY19 new revenue will be realized by the end of FY19 and that goal was being surpassed at the time of this report.

YEAR-TO-DATE SUMMARYAs shown in Table 5, we have recognized more than 100% of the expected savings from the strategies that have been implemented at this point in the fiscal year. Some of those savings will decrease as we continue to spend in the final quarter of this year. Overall, we have yielded 78% of the total expected $25 Million in budget reductions over the 2019 & 2020 fiscal years. Overall, more than 70% of the nearly 500 final budget reduction strategies have been implemented (Table 6). Both of these measures indicate that we will meet the goal of attaining 70% of the expected budgetary impact in FY19.

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