Leath shares preliminary budget information

A 3 percent increase ($5.2 million) in the operations appropriation from the state and additional tuition revenue (estimated $33.4 million) spurred by a fall enrollment projected to exceed 31,000 students highlight a preliminary budget for the fiscal year that begins July 1. President Steven Leath shared revenue and cost increases, university priorities and FY13 salary increase parameters with Iowa State leaders in a second budget memo last week. His authorship reflects the transfer of overall budget and planning coordination back to the president's office from the provost office, where it had resided since 2006.

As directed in the budget memo, Iowa State units will finalize their budgets by June 22. A final FY13 budget will be submitted to the state Board of Regents office in early July, with approval anticipated at the board's Aug. 3 meeting.

With slight increases anticipated in other revenue streams, Iowa State will have nearly $39.7 million in new operating revenues to work with in FY13.

What will it fund?

An estimated $6.8 million (20 percent) of the new tuition revenue will be set aside in a central fund for student financial aid.

Leath approved $10.2 million in funding for institutional priorities and for compensation increases in units that don't receive tuition or fee-for-service income in the budget model. New funds will complete and make permanent an annual $2.5 million commitment to university marketing campaigns and $2 million to the development of university-wide administrative software systems. It will add funds, $1 million and $2.5 million, respectively, to rebuild the deferred maintenance and Institutional Excellence funds.

It will provide permanent funding to institutional programs such as the ombuds and sustainability offices, university lectures program and Reiman Gardens, and provide additional funding to equal opportunity and compliance, and University Museums. It also will provide funds for compensation increases in central research and economic development offices and centers, and in ISU Extension and Outreach.  It provides funds to operate Troxel Hall when it is completed next spring.

The budget model's six central service centers (library, student services, facilities services, IT services, business services and academic support programs) will share nearly $7.1 million. This essentially is an increase in their spending authority for services provided to campus clients. In most cases, the funds will cover both additional services and compensation increases for the employees in the service units. In his memo, Leath noted that three years of state funding cuts and growing undergraduate enrollments have strained their ability to serve students and university employees well.

The remaining new dollars – about $15.6 million – will be distributed among the colleges according to enrollment and student credit hours offered. There, they'll cover compensation increases and other priorities identified by college leaders.

FY13 operating budget: Proposed distribution of new funds

Salary increases

Two documents, the university's year-old salary policy and the AFSCME contract, will shape how much of the additional revenues actually are used for salary increases. (Medical and dental benefits costs will go up 5 percent for all employee groups.) The salary policy, which covers faculty, professional and scientific staff, and post docs, requires university leaders each year to set minimum and maximum increases for employees receiving a satisfactory – or better – performance evaluation. For FY13, those parameters are:

• 1.0 percent minimum increase for those with salaries above $60,000
• 1.5 percent minimum increase for those with salaries at or below $60,000
• 4.0 percent maximum increase threshold

Proposed increases above 4 percent will require units to receive approval at the vice presidential level, final approval from the office of the president and, this year, also from Board of Regents executive director Robert Donley.

During a campus forum last week, associate vice president for budget and planning Ellen Rasmussen explained that the differentiated minimum, suggested by Leath, recognizes that the economic downturn has a greater impact on households with smaller incomes.

The board of regents asked the three regent universities to hold their university-wide salary increase average at 2.5 percent or lower. It's possible that some units within the university could finish with higher averages than that. Setting an average increase target is not a green light for units to award across-the-board 2.5 percent increases, Rasmussen noted. Individual increases should reflect performance evaluations, market or equity issues and any special retention needs. Requests for salary increases above 4 percent are due to the respective vice presidential office by June 8.

Salary increases for the FY13 faculty promotions ($6,500 for Distinguished Professors, $6,000 for University Professors, $5,500 for full professors and $4,600 for associate professors) and increases due to P&S reclassifications don't replace or eliminate performance-based increases. Neither will they figure into the unit or university averages, Rasmussen said.

The state's contract with AFSCME (American Federation of State, County and Municipal Employees) that covers merit employees calls for a 2 percent increase on July 1 and a 1 percent increase on Jan. 1, 2013. Those merit employees not at the maximum of their pay scales will receive up to a 4.5 percent step increase on the anniversary of their hire dates. The estimated average increase among ISU's merit employees next year is 4.34 percent.

Non-operating funds

If Gov. Terry Branstad approves the FY13 state budget, Iowa State will receive $221,858,141 in state support for its operating budget. It also will receive $19 million in the second of a four-year state commitment to construct Phase 2 of the Biorenewables Complex, $1 million to the ISU Research Park for facility improvements to accommodate pancreatic cancer research at NewLink Genetics Corp., and just over $1 million to support research initiatives that will advance state economic development.