June 16, 2016

To:          Faculty, Staff, Students, Alumni and Friends of the University of Louisville

Fr:           Dr. James Ramsey

Re:         FY17 Budget Proposal

Over the past weeks, we have been working diligently to create an innovative incentive-based budget for the University of Louisville that meets the 4.5% annual budget cut in state appropriation.  UofL would be the only university in the state that creatively returns tuition funds to support student success while simultaneously protecting the economic welfare of our faculty and staff. 

Conversations with Chairman of the Board of Trustees, Larry Benz, have been productive, resulting in three discrete operating budget options for the new fiscal year beginning July 1 (FY17).  They are:

·         Option 1:  5% tuition increase with a 5% tuition credit for undergraduate students who meet minimum criteria (30 credit hours per year and in good academic standing);  5% tuition increase for others; $1.1M annual budget reduction; no university-mandated layoffs; and investments in strategic initiatives.

·         Option 2:  4.0% tuition increase with a 4% tuition credit for undergraduate students who meet minimum criteria (30 credit hours per year and in good academic standing); 4% tuition increase for others; $2M annual cut; approximately 30 layoffs; and limited investment in strategic initiatives.

·         Option 3:  2.5% tuition increase; $2.9M annual budget cut; approximately 50 layoffs; and limited investment in strategic initiatives.

We appreciate the hard work that has gone into each budget option above.  After careful consideration, we feel strongly the first option is the most prudent and responsible, given our commitment to achieving the state’s mandated mission, protecting our faculty and staff, and encouraging student success.  Below is a brief description of some of the specific elements included in that budget proposal and why we advocate its adoption on June 21.

Here are the key points in Option 1:

1.       The welfare of our faculty and staff remains our top priority.  There will be cuts at the University, but no university-mandated layoffs. The Office of the President and the Office of the Provost will cut $500,000 annually from their administrative budgets to provide need-based aid for our students. Further, there will be no reductions in any programs or units that provide services directly to students (including SGA).

2.       Every member of the faculty and staff will be eligible for a salary increase. Additionally, we will implement phase 1 of market-based salary equity plans for all faculty and staff.  We must retain, as well as attract, talented faculty and staff at all levels and address critical salary compression and employee compensation issues resulting from past budget cuts.  Using a measure we have used in the past, we will not authorize salary increases for Board appointed administrators. 

3.       We will raise tuition by 5 percent; HOWEVER, we will refund, essentially freezing, the entire 5% tuition increase to any undergraduate student who receives 30 credit hours in an academic year and remains in good academic standing.  We call this new program Credit for Credits. This program responds to gubernatorial and legislative directives related to performance-based funding, and continues our pursuit of further improving the University’s graduation rate (which has dramatically improved since 2002).

4.       The Athletics Department will help fund strategic academic initiatives at the University. This budget plan calls for $2 million from athletics to fund new academic priorities.  We are grateful for Athletic Director Tom Jurich’s leadership to support our faculty and staff and the University’s mission to be top tier.

5.       This budget proposal allows the University to fund 21st Century strategic priorities while encouraging students to move steadily toward graduation in four years, thus avoiding fifth and sixth year expenses.

Under this budget, the University will remain on course to meet the objectives in our “2020 plan”, and our legislative mandate to be a premier metropolitan research university at the end of the decade. We are going to find ways to do more with less tax-payer support, following the lead of the Governor and General Assembly as they tackle Kentucky’s tough fiscal situation.

As always, students, faculty and staff are our highest priority. We’ve faced 15 budget cuts from Frankfort since 2002 for a cumulative reduction of $323M.   We have always strived to invest in student and academic programming as best we can (see chart below). We believe this new budget proposal meets these objectives, and we look forward to presenting it to the Board next week.