Emory Report

May 8, 2000

 Volume 52, No. 32

Budget for FY01-02 to focus on priorities

By Jan Gleason

In an effort to focus the development of the 2001-2002 operating budget on specific institutional priorities, University administrators were asked last week at administrative council to submit their FY2002 budget request 3 percent lower their 2000-2001 budget.

The budgets affected will be approved in February 2001 and run from Sept. 1, 2001, through Aug. 31, 2002. "As part of your budget package, you will be required to identify programs and activities that will be considered for elimination in order to fund higher priorities," wrote Provost Rebecca Chopp in a letter to council members. "Budget managers may request funding for modest new initiatives that reflect institutional priorities which would considered separately from the 3 percent reduction," said Chopp.

"This is not a budget crisis," said Chopp. "We simply want to engage in effective and efficient management of our resources in order to meet our aspirations. Since it will be months before we actually set the FY2002 budgets, this planning exercise will give everyone time to ask, 'Do we need to be doing this anymore?' and 'Is this really a priority in my office?'"

Several items are excluded from the 3 percent reduction: ITD package charges, debt service, scholarships and amortization. "These areas contain commitments that are already made and fixed costs that cannot be reduced," said Edie Murphree, associate vice president of administration.

Emory has enjoyed almost a decade of double-digit income growth, but things are starting to slow down. "Income from tuition and endowment spending two of our major sources of income for the Basic Educational and General Budget, are projected to grow at rates between 4 and 6 percent. Because this growth is slower than in the past, we are asking managers to look for ways to increase efficiencies," said Charlotte Johnson, senior vice provost for administration. "Our enrollments are going to be stable for the most part and our tuition increases will be modest."

Emory's endowment income is also projected to grow at a lower rate than in the past. "Although we do expect an increase in endowment income, we don't expect the increase to be as high as it's been in the past," said Murphree.

Construction projects that have been in the university's priority process for a number of years will not be affected by the 3 percent reduction. However, the university's ability to undertake new projects will be dictated by what happens to university resources in the future. "The funding for new buildings and renovation projects comes from a separate revenue source," said Murphree. "The projects are funded from external gifts and our capital matching program from the endowment."

The health care side of Emory's operations began to reduce budgets in 1996 in response to pressures of the managed care environment and reductions in reimbursements. "We are now in about the third or fourth year in feeling the effects of cost-cutting measures we had to take," said Gary Teal, assistant vice president of health affairs. "We have taken out entire offices, such as the Health Communications Project and the Clinical Pharmaceutical Research.

"From 1998 to 1999, we cut the budget of the non-clinical, corporate office of Emory Healthcare by 44 percent; on a $12-$15 million budget, that is significant. We've saved several million dollars on supplies because of a cost study we did. We've been trying to control costs in the information services area and will reduce that budget by 3 percent for next year. That's phenomenal, given the pressures in that area for staff salaries. "The hospitals try to use the Consumer Price Index and peg all their expenses to that," Teal said. "It's been running about two percent the last couple of years."

"It is anticipated that budget managers and administrators will use this summer and early fall to develop strategies to accomplish the three percent reduction," said Johnson.

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