Faculty and staff participation in the voluntary separation program, larger-than-expected savings in the cost of supplies and utilities, no pay increase for non-unionized staff and faculty, and the ability to use up to $9 million in reserves have enabled UNH to be within approved financial parameters for fiscal year 2012 (July 1, 2011-June 20, 2012), UNH officials reported to the financial affairs committee of the USNH Board of Trustees Dec. 12.
The use of reserves to fund incentives for a voluntary separation program for staff and faculty has been an important tool in the deficit that resulted after the $32.5 million (48.5 percent) cut in UNH’s state appropriation last spring. To date, 94 members of the staff and faculty have opted to participate in the separation incentive program; eligible faculty may still elect to do so until Feb.1, 2012. The estimated annual savings from the separations achieved to date will be $8.9 million, beginning in FY13.
In addition to the positions eliminated through the voluntary incentive program, 18 staff members have had their jobs eliminated as a result of the $32.5 million state funding shortfall, and all other vacant positions have been frozen or are being filled internally. Balancing the FY12 budget was also dependent on no pay increase for non-unionized staff and faculty at UNH. The same groups at Keene State College, Plymouth State University and Granite State College were authorized to receive 2 percent because those schools reported better financial results.
Also during the Dec. 12 meeting with the Financial Affairs Committee, UNH officials presented a proposal for FY13 cost of attendance. This proposal requires full USNH Board of Trustee approval in early 2012.
Chief Information Officer and Associate Vice President for Finance Joanna Young reports that the university is still anticipating a deficit for FY13 (July 1, 2012-June 30, 2013) even with the tuition increases proposed to the committee as well as plans to enhance revenues by increasing the proportion of out-of-state students from 45 percent to 50 percent of the incoming class and by growing the size of the class to 3,000. Other contributions to overall revenue targets include growing online course offerings, an increase in the number of international students via Navitas and growth in sponsored research.
In addition, the university will have to hold down expenses by meeting targets for faculty participation in the voluntary separation program, maintaining the current hiring freeze, and keeping all other operating expenses flat.
The actual deficit amount for FY13 will not be known until the next round of FY12 projections are complete in April 2012. That amount will be distributed to university offices and departments, to be addressed in their planning for FY13, she said.
Another item that must be addressed in FY13 is the university’s operating margin. The USNH Board of Trustees has told the university that it must have a 2 percent operating margin. UNH’s current operating margin is -1.2 percent. Operating margin is the ratio of net operating revenue to total operating revenue. It tells us how much operating revenue is left over to pay for fixed costs such as debt. It is an important measure of fiscal health particularly to bond rating agencies that evaluate an organization’s ability to repay its debt. UNH must keep a strong operating ratio to satisfy bond holders and the rating agencies that we can repay our debt to keep our cost of debt low and allow us to access additional debt in the future.