UT President Presents Top 5 Funding Requests to Governor

UT President Joe DiPietro attended Governor Haslam’s budget hearing on Friday to advocate for the University’s top funding requests. The Governor’s budget hearings are an important first step in the State’s budget process, as the Governor weighs testimony from these hearings to develop a spending plan typically presented to the legislature in late January or early February.

The proposed spending plan is taken seriously by the legislature.  Usually, very few major budget amendments are passed. In fact, the legislature did not pass a single substantive amendment modifying the Governor’s spending plan last year.

100 percent graphic

In 2014, 100% of governor’s budget requests were approved by the legislature.

To put it frankly: Recent history suggests that if you want your major priorities to be funded, they typically need to be included in the Governor’s proposed spending plan. While any budget proposal will ultimately have to win the approval of the state legislature, the Governor’s budget hearings are a critical launch point to the budget process as entities compete for limited resources and other budgetary pressures begin to mount.

A very important 25 percent

State funding for the University is essential.  It represents about 25 percent of UT’s total budget, and despite the decreases in state funding that have occurred since the 2008 recession, UT has continued to increase its performance outcomes, graduating more students and producing more research.

But UT’s current business model, which relies heavily on tuition increases to offset dwindling state funding and fill a growing budget gap, is unsustainable as a long-term plan to continue providing affordable education to students and services to all Tennesseans.

The University is doing its part to address this budget gap through analysis that will result in recommendations to increase the efficiency, effectiveness and entrepreneurship of its campuses and institutes. Read more about the University’s funding and performance metrics here.

What are the major state funding priorities for the University of Tennessee in 2015?

 

budget-01-9.7M-alt-151Full allocation of funds based on campus performance.The state’s funding formula for higher education has recommended UT schools receive $9.7 million in new funding.  President DiPietro is asking the governor to recommend that UT receive full allocation of this amount.

Why: UT has worked hard to make sure its institutions are the top performers in the state in order for the campuses to be awarded funding.  Last year, the University was awarded 34 percent less than the formula recommended.

 

budget-01-7.3M-alt-151$7.3 million in additional funding for UT institutions that provide services to all Tennesseans. The funding would cover the Institute of Agriculture (UTIA), which has a presence in all 95 counties, Institute for Public Service (IPS) and Health Science Center (UTHSC).

Why: These institutions provide services that benefit all Tennesseans. In 2013, UTIA, IPS and UTHSC provided outreach to more than 6 million people. And unlike our campuses, these units do not have tuition mechanisms to increase funding.

 

budget-01-capital-projectsFunding for the West Tennessee 4-H Center ($14.3 million) and Knoxville-Science Laboratory Facility ($83.7 million). The state’s higher education coordinating agency (THEC) has ranked both projects in the top six for funding by the state.

Why: Both projects are critical to moving the University forward. The West Tennessee 4-H Center would provide youth in west Tennessee with a camp experience in addition to serving as a conference center. The science laboratory will provide new facilities to educate students and produce groundbreaking research. The University has already raised matching funds for these projects.

 

budget-01-maintenance-navyFunding for building safety and maintenance.
The University is requesting $53 million for 11 projects that will improve building safety and upgrade some existing facilities.

Why: These projects will ensure that our campuses are providing safe learning and work environments for our faculty, staff and students.

 

budget-01-salaries-tealSalary increases for UT employees. President DiPietro is requesting, at a minimum, a cost-of-living salary adjustment.

Why: The University has a $150 million market gap in terms of employee pay that it is trying to close over time. As state employees, the University is asking the state to help fund increases for UT employees, as their work is critical to the state’s future.  UT employees did not receive a cost-of-living adjustment in last year’s budget.

5 Things You Should Know About the Governor’s Budget Hearings

1. The Governor’s budget hearings are where the state budget process begins.
The Governor’s budget hearings serve as a launch point for the State’s budgeting process. All state departments, agencies and entities, including the University of Tennessee System, will lay out their funding requests for the state’s next budget year—requests that the Governor will ultimately weigh as he compiles his 2015-2016 budget proposal. That proposal ultimately will be presented to the legislature in late January or early February and can be amended or passed into law in its proposed form.

2. The Governor’s budget proposal is taken seriously by the Legislature.
In Tennessee’s recent history, the legislature typically has not made major modifications to the Governor’s proposed budget. In fact, last year the legislature did not pass a single substantive amendment modifying the Governor’s spending plan. The only amendments made were at the request of the Haslam Administration in light of dwindling state revenues. To put it frankly: Recent history and experience suggests that if you want your major priorities to be funded, they typically need to be included in the Governor’s proposed spending plan.

3. Last year’s revenue woes are likely to result in a conservatively crafted budget.
Tennessee’s last budget year closed with a $300 million revenue hole—a hole that may result in up to a 7 percent cut to state departments, agencies, and entities. In fact, at the Governor’s hearings, it is expected that each entity will detail what impact a 7 percent cut would have on its operation.

There is some good news in the state’s revenue numbers for the current fiscal year. General Fund revenue is roughly $91 million over projected levels at this point. But given last year’s mid-session revenue crisis where the Governor had to significantly alter his spending plan, we’re likely to see a more conservatively crafted budget to insulate against the possibility of revenues taking a turn for the worse.

4. There is mounting pressure from all sides.
The Governor is facing mounting pressure on both sides of the budget equation—there is mounting pressure to further cut state taxes, which will in turn limit the state’s ability to fund existing services; and there also is mounting spending pressures behind various state services whose needs have been building for a number of years. For higher education specifically, these needs include, but are not limited to, adequate state funding for the day-to-day operations of campuses, funding to improve academic quality and services to students, to maintain existing buildings, and to address aging infrastructure and growth through the funding of needed new facilities.

5. Higher education’s budget hearing is on December 5 at 2:30 P.M. CST.
You can tune in live to watch UT President Joe DiPietro lay out the University’s key priorities or check back here for coverage. To tune in live, click here.   

UT President Joe DiPietro Joins Panel on Higher Ed Workforce Preparedness

Reliable funding that enables excellence while holding institutions accountable is the single-greatest challenge facing public higher education, University of Tennessee President Joe DiPietro told a gathering of Nashville business leaders on Wednesday.

“We really started to address this challenge when our board met in June, and I suggested higher education’s current business model is unsustainable,” DiPietro said. “Since I took office in 2011, I’ve gotten in front of our legislature every year, and frequently, to tell them it’s a problem.

“It’s what keeps me up at night, so we’re rolling up our sleeves to seek a long-term solution that doesn’t require 4 to 6 to 8 percent tuition increases. We have to do everything we possibly can to ensure effectiveness, efficiency and entrepreneurial approaches to filling funding gaps, all while maintaining our excellence.”

DiPietro’s comments came during the Nashville Business Journal’s 2014 annual “Nashville Ahead” program. He joined three other higher education leaders for a panel program titled, “A Discussion on Higher Education and Workforce Readiness.”

More than 100 leaders in business, industry and government attended, and when asked what business could do to most help higher education, DiPietro had a two-part answer.

“First, be truth tellers. If we’re not producing the product you need, pick up the phone and let us know. We seek to produce the best-prepared graduates that we can, and we need your input to ensure that,” he said.

“Second, we have to commit to high standards for education in Tennessee. To say to Tennesseans, ‘We need to have standards’ is nothing new. Having and adhering to standards is critical to the important completion agenda behind Gov. Haslam’s ‘Drive to 55’ effort. It’s critical that students arrive at college well-prepared, and that’s what standards make happen. I encourage your support for high public education standards at all levels in Tennessee.”

UT campuses already actively partner with business to meet needs throughout Tennessee and beyond, according to DiPietro.

“Our campuses have consciously worked with employers to respond to the needs of the market,” he said. “Industry told us we need more engineers in Tennessee, so our UT Knoxville campus, for example, partnered with Eastman to grow STEM (science, technology, engineering and math) education while also enhancing it, and the result is we’re producing more engineers whose education has them very well-prepared.

“The needs of the population and of healthcare providers we partner with to serve the population called for expanding our efforts to train doctors, nurses, dentists and pharmacists. As a result of that, our UT Health Science Center is working with Saint Thomas Health here in Nashville to greatly expand our presence in Middle Tennessee. At the same time, in West Tennessee, UT Martin is expanding capacity in rural communities like Parsons to produce more nurses.

“In Chattanooga, we have numerous ventures with Volkswagen that serve both that manufacturer and students at our UT Chattanooga campus very well, and Volkswagen is just one of many business partners UT Chattanooga is working with.”

DiPietro was joined by Western Governors University Tennessee Chancellor Kimberly Estep, Middle Tennessee State University President Sidney McPhee and Volunteer State Community College President Jerry Faulkner to discuss current trends in higher education to prepare students to be better-prepared employees.

DiPietro routinely meets with business, industry and economic development leaders through formal and informal events. Alumni and industry councils also help campus leaders keep in touch with the business world.

“The University of Tennessee leads our state in helping students complete their degrees, and we are becoming more entrepreneurial in the ways we partner and work with business and industry to provide a well-trained workforce that ultimately benefits all of Tennessee,” DiPietro said after the program.

UT Board of Trustees Kicks Off Discussion on Multi-Year Initiative

Benchmarking, economic forecasts and hypothetical strategies to overcome declining state appropriations and make the University of Tennessee more effective, efficient and entrepreneurial was the subject of the UT Board of Trustees’ Wednesday workshop.

UT President Joe DiPietro had set the stage for Wednesday’s discussion about funding at the trustees’ annual meeting in June. The board’s workshop covered the issue more in depth and allowed trustees to ask questions. The purpose of the discussion was not to devise strategy but gain a better understanding of the issue in order to plan a multi-year initiative.

Projections are that the University could face a gap in state funding of more than $150 million over the next decade–assuming the University could limit tuition increases to 3 percent annually, inflation did not exceed 3 percent annually, and state funding did not increase. To cover such a gap, tuition would need to be compounded to 55 percent or 4.5 percent each year.

DiPietro has said that continuing to increase tuition to cover declining state appropriations is a business model that is struggling, and it is not sustainable to continue to pass along additional costs to students and their families. The University has three options: take no action, get smaller or start on a bold initiative to fix the problem, he said.

“We own this problem. We have to fix it,” DiPietro told trustees. “Change is normally painful for everybody. We will seek broad input. We will make tough decisions.”

Dr. Bill Fox, director of the Center for Business and Economic Research at UT Knoxville, provided the trustees a forecast of state revenues, and each chancellor presented initial thoughts on ways to streamline operations and increase revenues.

The trustees looked at data comparisons with other university systems and heard the president talk about ways other university systems and universities have addressed similar funding issues. UT has been using cost-saving measures since the 2008-09 recession and identifying lean processes. Ideas pitched included increasing enrollment of out-of-state students to raise revenue, reviewing academic portfolios, and analyzing better uses of campuses’ space.

“The current funding model of the University of Tennessee is perilously close to broken. Given the fiscal constraints on the state budget, which includes a structural budget deficit, it is unlikely that significant increases in state appropriation to the University of Tennessee will be forthcoming unless the sense of priority for funding higher education becomes widespread and improves. Thus, it is incumbent upon the University to be become more entrepreneurial, efficient and effective, by enhancing existing revenue streams, reducing expenditures, and reallocating existing resources to better achieve system/campus goals and objectives,” according to a UT benchmarking analysis submitted to the trustees.

The board next meets Oct. 2-3, when the discussion will continue. A more set strategy is expected to be revealed at the winter meeting Feb. 25-26 in Memphis.

DiPietro Takes Stand for Education, Tells Trustees a Plan Is Under Development

Education is critical to the future prosperity of Tennessee and should be a higher priority for the state. University of Tennessee System President Joe DiPietro told the Board of Trustees yesterday he is committed to reversing the current trend of dwindling state appropriations for higher education.

The board also honored UT President Emeritus Joseph E. Johnson with the Trustees’ Lifetime Achievement Award, the highest honor bestowed by the board. Johnson has worked continuously for the University since 1963, serving in several executive positions including UT president from 1990 to 1999. He is credited with devising the structure of the UT System and raising fundraising levels and support.

Trustees approved a $2.05 billion budget for fiscal year 2015, reflecting relatively flat state funding for higher education. The budget includes a 6 percent tuition increase for most undergraduate and graduate students and contains no salary increases for faculty and staff for the first time since FY11.

In 2001, tuition and fees made up 25 percent of unrestricted educational and general revenues for the University while state appropriations were 53 percent. In 2011, the lines crossed, with tuition and fees making up 47 percent and state appropriations 38 percent. That trend continues today with tuition and fees at 49 percent and appropriations at 39 percent.

E&G Funding Graph

In 2001, state funding made up 53% of UT’s unrestricted educational and general revenues. Today, state funding makes up only 39%, while tuition and fees make up 49%.

“We have to develop a plan and build a coalition,” DiPietro said. “We need for Tennessee to make investments in education. It’s not just what is right for us. It’s right for all Tennessee. It’s right for our children’s children as we go forward.”

UT’s undergraduate campuses in Chattanooga, Knoxville and Martin received modest increases based on the outcomes-based funding formula set forth in the Complete College Tennessee Act (CCTA). The CCTA funding formula is based on several metrics related to graduate and undergraduate graduation rates, undergraduate student progression and research expenditures. The performance outcomes by UT campuses resulted in a recommendation of $14 million in new funding, but the state appropriated only $5.7 million to the University. The state budget also provided no capital outlay, funding for non-formula units or funding for increased advising services.

DiPietro noted the governor’s Drive to 55 to increase the percentage of Tennesseans with some type of degree to 55 by 2025 and the Tennessee Promise, which will provide free tuition for students to state community colleges, are good steps.

“It’s now time to put the last piece in place,” DiPietro said. “I’m committed to trying to resolve this problem. I think it’s time for us, with your help, to make a stand, a stand about higher education, a stand about education in the state and a stand about reversing the trend.”

The University had hoped to keep tuition increases to 3 percent if the state could fully fund CCTA performance and provide other requested funding.

“After learning the amount of state support, we asked the chancellors to determine the revenue needs on each campus. Tuition helps fund operating costs, utilities, inflationary costs, scholarships and fellowships, additional faculty positions, academic program and research projects,” DiPietro said.

Tuition increases approved for all campuses effective this fall:

  • UT Chattanooga – 6 percent increase, or $365 a year more, for in-state undergraduates ($6,430 a year total) and $436 a year more for in-state graduate students ($7,708 a  year total)
  • UT Knoxville students admitted before fall 2013 – 6 percent increase, or $496 a year more, for in-state undergraduates ($8,766 a year total) and $572 a year more for in-state graduate students ($10,112 a year total).
  • UT Knoxville students admitted in fall 2013 under the 15-4 tuition model – 3 percent increase, or $294 a year more, for in-state undergraduates ($10,074 a year total) and $390 a year more for in-state graduate students ($11,584 a year total). The new 15-4 model charges new full-time undergraduates for 15 credit hours instead of 12 credit hours to encourage four-year graduation.
  • UT Knoxville students admitted in fall 2014 under the 15-4 tuition model – $10,366 a year for in-state undergraduates and $11,876 a year for in-state graduate students.
  • UT Martin – 6 percent increase, or $380 a year more, for in-state undergraduates ($6,716 a year total) and $454 a year more for in-state graduate students ($8,014 a year total)
  • UT Health Science Center – no tuition increases
  • UT Veterinary Medicine – 5 percent increase or $1,132 a year more for in-state students and out-of-state students

In response to Senate Resolution 626 considered this spring by the General Assembly following debate over the student-organized Sex Week event at UT Knoxville, DiPietro enlisted the help of campus leaders to develop recommendations for a System-wide policy on student activities fees.

The board approved the Policy on a Student Programs and Services Fee, which directs campuses to develop an opt-in procedure before the fall semester that allows students to expressly authorize payment toward student programs funded by the Student Programs and Services Fee (SPSF). The opt-in procedure applies only to UT Chattanooga and UT Knoxville. UT Health Science Center and UT Martin do not allocate any part of the fee to student-organized programming.

The policy also directs the campuses to include a statement with the opt-in procedure that student-organized programming may be controversial or objectionable to students and that a list will be provided of all student-organized programming funded by the SPSF during the previous academic year. The policy addresses the membership of the Student Programming Allocation Board, which allocates the SPSF for student-organized programming. It says the board must have a majority of non-student employees of the University with at least 40 percent of members being students.

The Diversity Advisory Council, comprised of representatives across the UT System, developed a diversity statement that was approved by the board. In part, the statement reads: “The Board affirms the educational value of a diverse and fully inclusive campus community, one that is enriched by persons of different backgrounds, points of view, cultures, socioeconomic status, and other diverse characteristics. The Board expects the University to engage in a variety of initiatives to advance diversity in all aspects of University life.”

The board approved performance goals and a retention amount for UTC Chancellor Steve Angle, who is eligible to participate in the Performance and Retention Plan for executive officers of UT after serving as chancellor for one year as of July 1, 2014. Angle’s plan covers July 1 through June 30, 2017. The maximum retention amount he can receive is $130,950, which is 15 percent of his 2014 base salary multiplied by three years in the plan. DiPietro recommended goals for Angle such as increasing the six-year freshman graduation rate from 37 percent to 47 percent and increase the number of alumni who donate to the University from 2,601 to 2,759.

UTHSC Chancellor Steve Schwab underwent a comprehensive performance review that is conducted for chancellors after four years in office and at subsequent four-year intervals. Schwab has been chancellor since 2010. DiPietro noted in Schwab’s review that UTHSC has stabilized the educational enterprise and grown the clinical functions, and he noted Schwab is committed to increasing total research expenditures, number of research proposals, research award dollars and number of research awards.

In February, the board approved two new policies on the use of University property that replace policies that had been in place for more than 40 years. Under the Tennessee Uniform Administrative Procedure Act, the rules were sent to the Tennessee Attorney General, who asked for some clarification of the rules. The board approved new language as part of the rules.

The “Use of University Property” rule states that students, employees, members of the Board of Trustees, government officials, contract workers, volunteers, prospective students, alumni and people invited by a student, student organization or employee are authorized users of University property.

The new “Use of University Property by Non-Affiliated Persons for Free Expression Activities” rule states that University property is not open for free expression activities for persons who are not students, employees or volunteers. There are exceptions to this rule, including a person invited by a student organization to join in the student organization’s speech, a person invited by a faculty member to join in the faculty member’s speech and a person invited by a University unit. The rule also states University and city streets and sidewalks parallel to those streets are open to speech by any person.

The board opened the meeting by presenting an honorary resolution for outgoing trustee Shalin Shah, the student representative from UT Chattanooga. Non-voting members R.J. Duncan, the student representative, and David Golden, the faculty representative, from UT Knoxville joined the board.

The board was informed of the University’s plans for the house and property in Knoxville bequeathed to UT by Eugenia Williams, who passed away in 1998. DiPietro accepted an advisory committee’s recommendation that the University issue an RFP to lease the property for a term of 99 or 50 years. The successful bidder would be required to restore the house and maintain other structures and property according to University specifications. The bidder also could occupy the house, make additions and improvements that meet historic restoration standards or construct a single family house on the property.

In other action, the board approved:

  • UTHSC’s regional tuition rate program for the College of Pharmacy in Memphis for a three-year trial period. Eligible students in Mississippi and Arkansas in a 50-mile radius of Memphis could receive a 75 percent discount on out-of-state tuition, beginning in fall 2014.
  • Extension of UTC’s regional tuition rate program for undergraduates and graduate students. The program is offered to students in seven counties of north Georgia and Alabama. Eligible students receive a 75 percent discount on out-of-state tuition. The undergraduate program has been in place since 2007, and the graduate program in place since 2010.
  • UT Knoxville Faculty Handbook revisions regarding faculty rights and responsibilities of shared governance.
  • Naming of the UT Knoxville volleyball practice facility the Joan Cronan Volleyball Practice facility in honor of Cronan, the director of women’s athletics retiring this summer.
  • Naming of the Chi Omega sorority house at UT Martin for Pat Summitt, Lady Vols coach emeritus and UT Martin aluma.
  • Revision of Academic Affairs and Student Success Committee charter
  • Tenure recommendations from all campuses.

The meeting’s full agenda and materials are posted at http://bot.tennessee.edu/.

An archive of the webcast meeting is available at http://www.tennessee.edu/.