May 9, 2005
FY06 budget shows 6% growth
BY michael terrazas
Emory’s Unrestricted Operating Budget (UOB) will grow by roughly 6 percent in fiscal year 2006, according to the proposed budget that has been endorsed by the Board of Trustees’ finance committee and is scheduled to go before the board’s executive committee on May 12.
The proposed UOB would total $575 million for the period from Sept. 1 to Aug. 30, 2006. The budget accommodates a base 3 percent merit-salary program, salary structure adjustments and market adjustments for select job titles, and funding to bring the University into compliance with changes in the Fair Labor Standards Act. These changes yield an increase of 3.9 percent in base salaries.
“Faculties are at the heart of the academy,” Provost Earl Lewis said. “A number of our faculties’ headcounts are too small in comparison with peers. To address this, new positions are budgeted in a number of the schools. We continue to see salaries for the best faculty rise more rapidly than inflation, and we strive to keep new-hire salaries from creating internal compression for existing faculty.”
Compensation in the form of fringe benefits also will increase, with the benefit rate rising from 25.3 percent to 26 percent. “The administration is recognizing rising costs of providing health care” said Executive Vice President for Finance and Administration Mike Mandl.
One priority for FY06, said Senior Vice Provost Charlotte Johnson, was increasing scholarship funding to keep all programs whole and implement modest increases for Emory College and the School of Law. Next year’s UOB maintains the Woodruff Libraries’ acquisitions budget and also adds staff for the Counseling Center and Student Health Services. The Graduate School will begin a multiyear plan to fund health insurance premiums for graduate students, who are required to carry insurance. Costs also are escalating due to continued growth in research and new facilities.
On the revenue side, endowment income distributions will decline 4.92 percent from FY05, according to Vice President for Finance Edie Murphree. “Our income distribution formula uses a three-year average market value in the calculation, so declines in the endowment market value in previous years are impacting the spending distribution in FY06,” Murphree said. “Assuming the current market value continues to improve, we anticipate our endowment distribution will begin to increase in two to three years.”
Tuition will increase from 4–6 percent for each of Emory’s schools, though the law school will post a 6.9 percent increase. Tuition continues to account for a large portion of Emory revenue (roughly 54 percent of UOB income). “In the future,” Johnson said, “we expect gifts to play a larger role in funding activities.”
FY06 will be the first year of the new “Strategic Plan Fund,” a pool of resources identified to help jump-start initiatives in the strategic plan, Mandl said. Projected to reach as much as $20 million a year, the fund will be created from three revenue streams: certain royalties related to Emory’s patents in the marketplace; a restructuring of the University’s “internal bank” that maximizes Emory’s income generated from cash reserves; and contributions from schools’ and units’ restricted endowment income streams.
“We’re figuring out how to leverage all three of these sources to most efficiently and effectively fund priorities identified through strategic planning,” said Johnson, who emphasized that the fund is designed to get projects off the ground.
“The sources of funding for the strategic plan will be threefold,” Lewis said. “The Unrestricted Operating Budget, the Strategic Plan Fund and the comprehensive campaign all will be critical.”