Budgetary stewardship across campus enables new academic initiatives to progress

In the midst of lean economic times that have slowed budgetary and programmatic growth over the past few years, Emory staff members are coming up with ingenious ways to save money, thereby allowing the University to devote more resources to new academic initiatives vital to its mission.

When the Program and Budget Committee constructed the $284 million Educational and General Budget for 1996-97, approved Feb. 10 by the Board of Trustees, they had an actual income increase of about 7 percent (nearly $19 million) over the $265 million budget of 1995-96 to distribute. That increase, however, wound up feeling more like $22 million than $19 million, largely due to efforts in the service units to increase efficiency and lower costs.

Executive Vice President John Temple said those efforts run the gamut, from energy conservation measures in the Facilities Management Division, to Human Resources' and the medical center's implementation of the more cost-efficient EmoryCare health insurance program (which contributed significantly to a dramatic reduction in the University's fringe benefit costs), to cross-training of staff in the Admissions, Bursar and Financial Aid areas.

"Emory people have become million dollar donors," said Mel Lockhart, vice provost for academic enrollment and planning, "by identifying opportunities for cost savings and finding ways to do things better. This community deserves a lot of credit. There aren't many of us who could sit down and write a check for $1 million to the University, but the folks in these areas have done exactly that."

Enabling enhancements

The result of these savings is that new academic initiatives are allowed to take root during an era when most universities are struggling just to maintain the quality of programs they already have. Those kinds of savings are allowing: the College to reduce enrollment and add faculty positions to support interdisciplinary scholarship; the Graduate School to expand its TATTO program; the law school to begin making a gradual reduction in its burgeoning enrollment; and the theology school to have some "breathing room" in a nationwide climate of flat and declining seminary enrollment. The business school and the schools in the health sciences center also will be able to fund planned additions to their faculty and staff.

The $19 million growth in budget revenues over 1995-96, combined with $1.5 million in cost savings mentioned above and another $1.5 million from the Emily and Ernest Woodruff Fund, yields a total of nearly $22 million in funding available for continuing programs and new initiatives.

Of that $22 million, $5.4 million has been earmarked for enhancements and new initiatives, with an eye toward advancing the vision set forth in Provost Billy Frye's "Choices and Responsibility" published in 1994. Those elements include: support of teaching and curricular innovation and for supporting interdisciplinary scholarship; improving the campus infrastructure, particularly library and computer systems and service; and enhancements for external relationships and for activities to create/foster a sense of community.

"No budget will ever meet all the needs and hopes generated by an energetic, imaginative and highly capable academic community, and no one even expects that it should do so," said Frye. "We always have to make choices. But the l996-97 budget is remarkably good for these times, in that it accomplishes a number of critical things: it enables us to impose reasonable restraint on the growth of tuition (and we shall see more restraint in the future); it enables us to stay competitive in basic operating expenditures, such as salaries; it permits some continued growth in the faculty in selected areas, and meets most of the needs put forward by the schools and colleges; and it allows us to address, or begin to address, other special issues of vital interest to the future of Emory, such as further development of the digital environment and support of initiatives that will forward the objectives set forth in `Choices and Responsibility.'

"There is much that the budget does not do that we must continue to address in the future," he added, "but the point is that we are continuing to make significant progress when many, perhaps most, of our peers are at best stagnant, and at worst experiencing budget cuts."

Sources of income

Finding cost savings, which in turn allow reductions in high enrollments, is especially critical in a budget whose income side is as tuition-driven as Emory's. Tuition revenue of nearly $177 million accounts for slightly more than 62 percent of the budget. (The second and third largest income sources are: an endowment income of $44 million, which makes up approximately 16 percent of the budget, and income from indirect cost recovery from sponsored research totaling a little more than 10 percent.)

Nationally, universities and colleges are under increasing pressure to control costs and cut prices. In the face of increased competition from public universities, some private institutions have actually reduced their tuition rates in recent months. In the 1996-97 budget, Emory continues its effort to reduce the annual rate of tuition growth. While the rate of increase in Emory College's tuition was 10.8 percent in 1989-90, that rate has been declining steadily ever since to an eight-year low of 5.86 percent for 1996-97. (See chart on page 1 showing tuition rates for all colleges and schools, and a recent history of College tuition rates.)

To offset declining growth in tuition revenues and complement the savings generated by Emory employees, this year spending from the endowment to support the operating budget was increased.

"We are still comfortably within the basic guideline established by the Board of Trustees and we will remain there," said President Bill Chace. "If we were not to allow endowment spending to grow by 9 percent over last year's spending from the endowment, we would fall beneath that basic guideline, which says that we should spend no more than 6 percent and no less than 4 percent of the endowment's market value."

Other significant features of the 1996-97 budget include: a pool of more than $5.7 million to support modest salary increases for faculty and staff, a reduction in the rate budgeted for fringe benefit costs from 25 percent in 1995-96 to 24 percent (reflecting no reduction in benefits but containment of health care costs made possible by EmoryCare), and an increase in scholarship and fellowship support of $2.7 million for a total of $50.9 million. This item funds increases in the Financial Aid budgets that are proportional to tuition increases in each of the schools. This budget also includes more than $2 million in ongoing support to improve computer systems and service campus-wide. In related action, the Program and Budget Committee approved a $1.5 million project that will complete the wiring of the high-speed data (ethernet) network.

Despite a continuing trend of moderate budgetary growth, "I think what we've proved this year is that we can still grow through the wise distribution of resources," said Charlotte Johnson, associate vice president for budgeting. "It won't feel as glorious as the '80s, but we can still accomplish a heck of a lot through the strategic placement of incremental resources and by identifying savings in house."

--Dan Treadaway

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