1. THE AGGIE APPROACH TO BUDGET REDUCTIONS THE AGGIE APPROACH TO BUDGET REDUCTIONS A Texas Higher Education Human Resource Association Austin, Texas Texas A&M University, Human Resources DIVISION OF FINANCE January 24, 2011

2. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 2 Introduction  Have you heard that Texas has a budget problem?  We’re all facing budget issues  The problem is a moving target  Budget won’t be finalized until June or later  Planning for the worst, hoping for the best

3. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 3 Presentation Overview  Budget planning and action steps  People Impact  Reduction in Force  Faculty Voluntary Separation Program

4. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 4 Budget Reduction Plan—FY 2010 and FY 2011  November 2009 – State Comptroller announced that revenues have “weakened substantially”  January 2010 – State requested each state agency to submit a plan for 5% appropriations reductions for the 2010-11 biennium  Summer 2010 – Budget reversions for FY 2010 sent to the State; budget reductions implemented for FY 2011

5. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 5 Budget Reduction Plan—FY 2010 and FY 2011  Texas A&M University (CS)--$28M reduction  No across the board cuts—each Vice President and Dean provided with a reduction target  Flexible hiring freeze—All vacant positions must be approved by Vice President or Dean  No merit or pay plan programs for FY 2011— exception for faculty promotions, equity increases  Expansion of procurement/processing efficiencies—bulk purchases of computers, electronic document delivery

6. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 6 Budget Reduction Plan—FY 2010 and FY 2011  Texas A&M University (CS)--$28M reductions (continued)  Elimination or consolidation of low producing programs—non-degree, certificate programs  Targeted operational budget reductions—Travel, printing, postage, etc.  Position savings—job sharing

7. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 7 Proposed Budget Reduction & Reallocation—FY 2012 & FY 2013  May 2010—Received Legislative Appropriations Request (LAR) instructions  Starting point reflected 5% reduction implemented for FY 2010 and FY 2011  Submission should reflect an additional 10% reduction

8. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 8 Proposed Budget Reduction & Reallocation—FY 2012 & FY 2013  Summer 2010  Memo distributed to VPs and Deans $39M potential state reduction $21M reallocation for strategic priorities  Targets established and plans developed for TAMU units  Open forums held  Working group provided reallocation recommendations to President in November 2010

9. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 9 Budget Impact on People  Significant budget cuts were made to operations, capital and programs  Budget cuts impact people  Reductions in Force  Faculty Voluntary Separation Program

10. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 10 Reduction in Force (RIF) The overarching theme—Treat employees with dignity and respect.  RIF Business Plan  Identify the business reason  Provide the timeline  Tailor the plan (positions, employee selection, reassignment of job duties)  Include documentation  Submit for review and approvals

11. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 11 Reduction in Force (RIF)  RIF implementation  Supervisory training  Employee Notification—packet with FAQs; 60 day notice period, benefits continuation  Assistance for RIF’d employees  Support for supervisors  Support for coworkers

12. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 12 Reduction in Force (RIF)  Post implementation  Access to Benefits/Retirement Counselors Training classes Employee Assistance Program Email RIF support meetings  Hiring preference  HR assisted supervisors to tailor a transition plan

13. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 13 Reduction in Force (RIF)  Since Summer 2010  27 departments  125 individuals  Salary savings of over $5M.  25 RIF’d employees have been reemployed on campus

14. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 14 Faculty Voluntary Separation Program (VSP) Administered through the Dean of Faculties Office  Purpose: To help offset the budget shortfall  VSP was not an entitlement and approvals were consistent with the needs of the University.  If approved, required to sign separation agreement

15. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 15 Faculty Voluntary Separation Program (VSP)  Eligibility  Tenured faculty members  Based on criteria set by the college Tenured faculty who have been in current faculty rank at the University since September 1, 1995; or Tenured faculty members who have been employed with the University for 15 years or more

16. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 16 Faculty Voluntary Separation Program (VSP)  Application Procedures  Began August 15 and ended September 24  Faculty could withdraw application at any time before the Separation Agreement was executed  Accepted faculty were required to execute their Separation Agreement by 10/6/2010 or they were no longer eligible to participate in the program  After Separation Agreement was executed, faculty member had 7 days to revoke it  Voluntary separation date no earlier than December 15, 2010 and no later than August 31, 2011

17. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 17 Faculty Voluntary Separation Program (VSP)  Limited University funding for VSP so Colleges prioritized applications differently. Examples: Priority given to those meeting TRS Rule of 80 Length of service to University Order of receipt of applications Based on budget impact and program mission

18. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 18 Faculty Voluntary Separation Program (VSP)  VSP Payment  Accepted faculty will receive one lump-sum payment based on college criteria. Examples: 2 years of their 9 month University salary 1 year salary (based on current faculty appointment period)  Payment will be made within 45 days of the employee’s voluntary separation date

19. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 19 Faculty Voluntary Separation Program (VSP)  VSP Payment (continued)  All federal and state taxes and other deductions will be withheld as required by law  VSP payment does not count as “earnings” for TRS or ORP purposes and is, therefore, not eligible for TRS or ORP contributions

20. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 20 Faculty Voluntary Separation Program (VSP)  Additional information  Accrued and unused vacation payments due at the time of separation will be paid in accordance with Texas law  Any other pay and benefits will terminate or cease upon separation in accordance with Texas law, as well as System Policies, and University Regulations and Rules  Tenured status is relinquished

21. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 21 Faculty Voluntary Separation Program (VSP)  104 tenured faculty approved for VSP  Savings of slightly more than $15M

22. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 22 Faculty Voluntary Separation Program (VSP)  Lessons learned  Different eligibility requirements and payout amounts based on the College provided flexibility but problematic to administer  Verifying eligibility was challenging (15 years in same rank; or 15 years as tenured faculty)  Need enhanced communications Difference between separation and retirement Instructions for process to be rehired

23. Human Resources The Aggie Approach To Budget Reductions 01/24/2011 Page 23 Questions? Reduction in Force http://ppr.tamu.edu/rif/Default.aspx Voluntary Separation Program http://provost.tamu.edu/voluntary-separation-program Janelle R. Ramirez Executive Director of HR Operations janelle@tamu.edu 979.862.1723