Agenda Item No. V. B. 1. a.

Washburn University Board of Regents





SUBJECT: FY2005 Budget Guidelines



DESCRIPTION:



The Administration developed guidelines for the FY 2005 budget in consultation with the Regent's Budget and Finance Committee.



FINANCIAL IMPLICATIONS:



The Budget Guidelines include a budget for tuition, sales tax and state aid revenues, a recommendation for performance increase policy for faculty and staff, and selected recommended operating expense increases.



RECOMMENDATION:



Based upon Regents Budget and Finance Committee consultation, President Farley will present the Budget Guidelines at the July 21, 2004 meeting.





Date ________________________ Signature ____________________________

Jerry Farley, President



WASHBURN UNIVERSITY

BUDGET GUIDELINES REPORT

JULY 21, 2004





Developing budget guidelines is a critical step in the University's annual financial planning process. These guidelines become the road map for how change will affect the University. The University can adjust to its environment through reasoned and effective decisions that will systematically effect change, or it can be swept along by changes in the environment to which it must react without planning. Budget guidelines become the watershed between these two courses of action.



The budget for FY05 will recognize environmental changes and continue to adjust, refocus and move the University forward. By setting guidelines, the Board will authorize the University administration to proceed with a more exhaustive process. Campus leaders will make literally thousands of individual budget decisions that will result in a comprehensive budget following these guidelines and accomplishing desired outcomes. The Board will see that comprehensive budget later this fall.



Two major issues must be addressed now for the FY05 budget planning process. These are the general salary program and the level of tuition. There are several other basic decisions which impact these two global issues:



enrollment projections,

program priorities, and

compensation objectives.



Faculty and staff are the University's primary resource. Combined faculty and staff compensation totals almost 80% of the University's budget. If the University is to maintain the quality educational experience it desires for its students, the faculty and staff compensation package must be competitive. This is the only way the University can continue to attract and retain the highly qualified personnel. Thorough comparative salary surveys have been completed and while we have made remarkable progress in difficult economic times, our salaries still lag behind comparable institutions and other market comparisons. Thus, salaries and wages must continue to be one of our budget priorities. Even so, other program initiatives must be funded as well. The final budget proposal to be prepared from these guidelines must successfully balance all these priority needs and initiatives.



Salary Guidelines:



Decision: Increase overall faculty and staff salary total.

Recommendation: To maintain competitiveness nationally and with other Kansas institutions, increase overall faculty salary and non-faculty salary and wages total based on performance. Since every individual's salary increase is based on performance, and performance awards are not based on the current salary of the faculty or staff member, no overall average percentage is meaningful. Performance awards will be distributed to all faculty and staff based on the attached FY 05 Performance Pay Proposal.

Enrollment Projections:



Decision: Base budget on stable, decreasing, or increasing enrollment projections.

Recommendation: Total projected enrollment for FY 05 is based on actual Summer 2003, Fall Semester 2003 and Spring Semester 2004, which is a conservative approach. While we expect full-time first time enrollment and transfers to increase and part-time enrollment to stabilize, the economy remains somewhat fluid and calls for conservatism in our projections.



Tuition Rates:



Decision: Determine the tuition rate for FY 05.



Recommendation: Tuition totals almost 40% of the University's operating revenue. In order to provide funding for salary increases and other program improvements, a $15.00 per credit hour increase is required.

Program Priorities:



Decision: Funding for priorities other than salaries.



Recommendation: While salaries are the top priority, other initiatives must be funded. Resources will be set aside to fund increases in priority programs such as Scholarships, the AIS project, select academic and administrative programs, mandatory increases in utilities and health insurance, and selected one-time allocations.



Revenue Summary:

Sales tax - FY 04 projected collections are above budget. However, in order to maintain a conservative budget, no increase will be budgeted for FY 05.

Tuition - increase $15 per credit hour excluding Law - $2,568,640

Tuition - increase due to FY 04 unbudgeted enrollment increase - $776,215

State aid - restoration of prior cuts in SB345 funding - $455,060 increase



FY 05 Performance Pay Proposal

July 21, 2004



The following methodology is proposed for awarding performance-based pay increases for faculty and staff for FY05. (The language used in this document is more readily applied to staff employees rather than faculty employees, but it is hoped that the translation is easily made.) The methodology described, which was the result of numerous discussions among faculty, staff, administration and members of the Board of Regents for its FY02 implementation, is based on two fundamental principles:



Principle #1: Keeping staff/faculty compensation competitive is a University priority.

Principle #2: Wage/salary increases should be based on performance.

(Note: Where salaries or wages in certain positions are too low for reasons not related to performance, adjustments to position salary level will be made separately from the performance evaluation process.)

Performance pay increases will be awarded using a multi-tier system.

Tier 0: Performance during the evaluation period meets only minimal

expectations. In such instances, no pay increase will be granted, but a

performance improvement plan will be put in place to enable the

individual to perform satisfactorily all of the functions of his/her position.

Tier 1: Performance during the evaluation period meets only minimal

expectations. Such individuals will receive a .50% increase to base

wage or salary, and a performance improvement plan will be put in

place to enable such individuals to fully meet the expectations of their

positions.

Tier 2: Performance during the evaluation period meets expectations.

Expectations of staff and faculty of Washburn University are very high,

but most individuals meet or exceed these expectations. Those

individuals whose performance meets expectations will receive a 1.5%

increase to base wage or salary.

(Note: This increase is a recognition of satisfactory or better

performance and helps keep wages and salaries competitive, thereby

aiding in the retention of employees. It is not a cost-of-living

adjustment, nor is it automatically awarded to every employee. Also,

please note that this 1.5% increase is NOT in addition to the Tier 1

increase of .50%.)

Tier 3: Performance during the evaluation period exceeds expectations.

The remainder of the wage/salary increase pool will be distributed to staff

and faculty based on the performance evaluation systems in place in the

various units, on a dollar rather than a percentage basis. Staff and

faculty whose performance has exceeded expectations as evaluated

by the methodology adopted by their academic or administrative unit

will receive a Tier 2 1.5% increase to base wage or salary plus additional

wage or salary increases based on the level of performance achieved.

There must be a meaningful differentiation between levels.


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