Mason Administrators Outline Budget, Legislative Proposals

Posted: February 4, 2011 at 1:02 am, Last Updated: February 4, 2011 at 5:07 pm

By Robin Herron

With legislation in the Virginia General Assembly pending, many of the budget-related issues discussed at a Feb. 3 meeting with employees hosted by Senior Vice President Maurice Scherrens and Provost Peters Stearns are still up in the air. However, the administrators outlined where the university currently stands and what impact the proposals would have.

(Slides used in the presentation are available here.)

Scherrens and Stearns addressed the university’s operating and capital budgets for fiscal year 2012, salaries, bonuses, tuition and employee contributions to state retirement plans.

Scherrens opened the presentation with a discussion of the general fund portion of the university’s budget, which has seen a steady decrease in support from the state from a 40 percent contribution in 2008 to a 25 percent contribution currently.

“When support from the state declines, the options are limited in terms of balancing the budget. We look for new revenue opportunities, cost containment strategies and increases in tuition,” Scherrens pointed out. Actions the university has already taken include such things as reducing discretionary expenses, restructuring, improving energy efficiency, expanding class sizes, reducing the number of sections and increasing teaching loads. In addition, contributions from auxiliary enterprises have helped the university adjust.

In terms of legislation, the university is pushing the state to fix what Scherrens called “broken promises,” including providing increased support for enrolling more students over the past five years, as well as providing half of the funds needed to operate new buildings. The university would also like the interest earned on its investments paid back from the state.

The university’s capital funding requests would cover planning for a life sciences building at the Prince William Campus and a health sciences building at the Fairfax Campus. And because of support from the Virginia Department of Transportation, Scherrens is optimistic that funding will be approved for a connector across Route 123 that would join the east and west sides of the Fairfax Campus via a motor vehicle/bicycle/pedestrian overpass.

Scherrens said that General Assembly actions over the next few weeks will impact tuition decisions and that the university Budget Committee efforts to develop balancing strategies should also result in some reduction to the preliminary 2012 in-state tuition increase estimate of 10 percent. “There are still many unknown variables at this time,” he said.

Stearns added that because of actions the university has already taken, it’s not likely that reductions in unit budgets will be required next year. “In the longer term, we will try to get pressure off tuition,” he said, adding, “We’re being as inventive as possible to develop new revenue sources.”

As another way to reduce costs, Scherrens announced that the university has engaged a facilitator to assist the university in conducting a number of operational efficiency and effectiveness studies in the support service areas. This initiative will most likely involve the use of consultants and peer reviewers and will span the next six to nine months. “We’re always searching for best practices,” he said.

Scherrens also outlined the current proposals for employee contributions to the state retirement systems.

  • For employees hired before July 1, 2010 who participate in the Virginia Retirement System (VRS), 5 percent of salary would be contributed to the retirement program; a 3 percent salary increase would help offset the contribution. This new system would take effect July 1, 2011.
  • For employees hired before July 1, 2010 who participate in the Optional Retirement Plan (ORP), the state’s contribution of 10.4 percent would be reduced to 8.5 percent.
  • Employees hired after July 1, 2010 currently contribute 5 percent to either the VRS or ORP, with the state’s contribution 8.5 percent for ORP.

In addition, discussions are under way in the legislature regarding a new optional defined contribution retirement plan for all employees to take effect in 2012.

Also, Scherrens noted that a 2 percent across-the-board employee bonus has been discussed, and if approved would likely be distributed in December 2011. In all cases of bonuses and salary increases, the university is required to pay half of the cost, which further impacts the university’s budget.

Regarding a question on cost-of-living adjustment (COLA) for faculty members, Stearns noted that the university has been working for the past three years on this. He explained that since faculty salaries are set based on the university’s peer group, the first step is to have the university assigned to a peer group that has a comparable cost of living. Although a COLA is not “imminent” even with a peer group adjustment, it is a first step, he said. “We’re working at the level of commitments and not actual money. That would be a basis to address staff salaries in the future.”

Scherrens said that the university will know much more about these issues by mid-March and will plan to hold an update briefing at that time.

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