Inside Iowa State

Feb. 13, 2009

Teams working on budget priorities, strategies

by Anne Krapfl

Nine teams with specific assignments comprise the first line of attack in the effort to develop a balanced university budget for the fiscal year that will begin July 1.

Under the FY10 state budget proposed two weeks ago by Gov. Chet Culver, ISU's state appropriations would be $25.1 million (about 9 percent) lighter than they were at the start of this fiscal year. That reduction includes $7.2 million in reversions made to this year's budget. And for now, it is the figure university budget leaders are working with until the Legislature approves a state budget. The 2009 session is scheduled to adjourn May 1.

The strategic planning teams were organized last month to identify ways to reduce costs for processes and practices that cut across budget and organizational boundaries, for example, energy conservation, IT infrastructure, university support of institutes and centers, employee benefits or the practice of multiple commencement ceremonies each term. Where possible, the teams also are looking for ways to improve revenues.

All of the teams "formed around ideas people already had, in some cases, for several months," said Ellen Rasmussen, associate vice president for budget and planning. The teams are listed on the executive vice president and provost's web site (click on "budget and planning," then "strategic budget planning FY10"), and each has its own e-mail address to receive additional input from members of the university community.

Rasmussen said the teams will make recommendations by the end of February. Any cost savings achieved through their reviews will be attributed to the appropriate units as a first step in reducing budgets. She said there is no targeted amount to achieve in this step, just "as much as possible."

From the net reduction figure, the next step will be distributing reductions to the various units that receive state appropriations. Rasmussen said it's likely this will be done on a strategic basis, not across the board like last month's 1.5 percent reduction.

Bigger picture

Rasmussen said the work of the nine teams is intended to positively impact budgets for several years.

"It's a multi-year process, with some savings this year, some savings the next year and the year after that," she said. "We're going to plan our way through this," she added, noting that the new budget model offers the flexibility to plan for more than one year at a time.

Timeline

Even as the strategic planning teams continue their work, several factors force university budget planners to remain in "preliminary" mode. They include:

• Negotiations on a new multi-year contract between the state and AFSCME aren't completed yet. The salaries and benefits of most of Iowa State's merit employees will be covered by that contract.
• Iowa Legislature must approve a state FY10 budget

In turn, the state's budget development process awaits:

• Details of the federal stimulus package, specifically how much funding is coming to Iowa
• Outcome of the state's next quarterly Revenue Estimating Conference in mid-March

A few positives

While state appropriations in FY10 likely will fall back to levels of two to three years ago, Rasmussen said the budget news isn't all bad. For example, utility costs are moderating, and budget planners have backed down from their October estimate of 21 percent cost increases. Utility costs will rise, just not as dramatically, she said.

Student enrollment numbers for fall semester remain strong, with modest undergraduate and graduate increases still predicted over fall 2008 enrollments. And, due to greater success at capturing research funding and a cost recovery rate change, indirect cost revenue -- dollars distributed to ISU units to cover the costs of conducting research -- also are expected to increase, perhaps by $0.6 million, Rasmussen said.

Strategic planning teams are working to identify ways to reduce costs in ISU's FY10 budget, expected to be significantly smaller due to shrinking state appropriations.