Update on 5% Reduction Plans On February 12 th UT System advised that the proposal to mitigate the 5% reduction with TRB appropriations (debt savings) was not an optimal strategy. – Would have relieved campuses of $41.4M UT System recommended the entire reduction be shown (to LBB) in FY2011 – LBB intends to lapse amounts shown in FY 2010

Update on 5% Reduction Plans Does not mean we can’t save FY 2010 funds towards our potential reduction. Plans published to UT System Website: s/UT_5-Percent-Reduction-Plan.html

Update on 5% Reduction Plans Legislature must pass a bill to reduce our budget. – They will not convene until January 2011 – Any FY 2010 money lapsed for potential reduction will no longer earn interest for the campus/agency On March 15 th LBB ed agencies to notify all that the next process would be to set aside FY 2010 reduction amounts by August – Only 1 UT Campus allocated FY10 funds: UT PB $32,603

Other Texas Universities’ Plans for FY11 Merit CAMPUS%Comments University of North Texas0% Texas A&M0% UT HSC-SA0% UT Pan American0%Selected equity adjustments & reclassification Univ of Houston – Clear Lake1.75% UT Austin2%Awarded 0% in FY 2010 Univ of Houston2% UT San Antonio2.3%Will be pd lump sum – no base salary adjstmts Univ of Houston - Victoria2.5% UT Southwestern3%Awarded 0% in FY 2010 UT Dallas?? UT El Paso??May set a pool for ‘partial’ year merit. Texas Tech University?? Texas State University??

FY 2011 Resources & Requirements Review Handout Projections of Semester Credit Hours Discussion re: Award of $1.6M April 21 Meeting: – Finalize awards of $1.6M – Review of how each area spent funds allocated in FY 2010 (both base budget and one time funding) Template will be provided

FY 2011 Operating Budget Instructions Each President is required to: – “examine the resources used at the institution and, where possible, redirect resources towards high priority mission activities, strategic competitive investments and reserves in preparation for potential future financial shortfalls.”

FY 2011 Operating Budget Instructions “Use of prior year balances should be limited to critical items, unique opportunities, or projects funded from prior year income committed for that purpose. Generally, balance usage should be reserved for nonrecurring activities.” – No balance usage can be recommended in the budget to the BoR without the consent of the Chancellor, EVC and AVC-Controller / Budget Officer.

FY 2011 Operating Budget Instructions Requested that each campus maintain and preserve 2 to 3 months of operating reserves. – FY 2009 AFR Operating Expense Coverage Ratio = 4.2 – Coverage continues to decrease as balances are spent, e.g Multifunction Office Building; Parking Garage, etc.

FY 2011 Operating Budget Instructions Chancellor and Board Chair strongly urge cost containment and reductions in academic and administrative overhead

FY 2011 Budget Hearing April 8 th with UT System Questions/assignments sent to each VP with responses due March 31 st Draft Budget due to UT System May 10 th Final Budget due June 1 st Board of Regents consider/approve Annual Operating Budgets August 12 th