CHATTANOOGA – Following the success of a two-year set of self-imposed budget restraints in 2015, University of Tennessee President Joe DiPietro informed the Board of Trustees Wednesday that the University is preparing another set of cost-saving goals.
In 2015, the Board approved a set of budget boundaries to implement for two fiscal years that began on July 1, 2015. The measure was to address a projected $377 million annual funding gap by 2025 through a system of self-imposed fiscal restraints and priorities.
A budget advisory group organized by DiPietro set a goal of $68 million in re-allocations by the end of the current fiscal year, on June 30.
“We’re on track to exceed that goal,” DiPietro said.
While DiPietro praised Gov. Bill Haslam for this year’s proposed state budget, he acknowledged that not every year will bring a budget favorable to higher education, especially if the economy enters a recession.
“We know that we cannot continue to rely on the economy remaining so strong, and as I said when we created the Budget Advisory Group two years ago, we need to be prepared for the next downturn,” he said.
To continue that preparation, DiPietro reconvened the group in January to update self-imposed budget boundaries and to develop new goals that cut costs and generate revenue while focusing on excellence, efficiency, effectiveness and entrepreneurship. The Budget Advisory Group (BAG) will continue to use a model that assumes 3 percent inflation, 3 percent tuition increases and flat state funding as it works to develop new initiatives for additional savings, such as through strengthening the program review process to make sure all units, departments and colleges are effective and efficient.
“Making those decisions now, while times are good, may ease the pressure to make tough choices in times of recession,” DiPietro said.
Through those difficult decisions, the University will continue self-limiting its tuition increases, which it began in 2015. For the third year in a row, DiPietro said, tuition increases would be kept at 3 percent or less, which is the lowest in more than 30 years. He also noted that 44 percent of UT undergraduates graduate with a bachelor’s degree and without debt. Those who graduate with debt owe an average of $24,000, but people with a college degree have as much as a seven-figure increased lifetime earning potential.
“A UT education remains a wise investment,” he said.
DiPietro said a revised set of budget boundaries for fiscal year 2017, which begins on July 1, and fiscal year 2018 will be presented to the Board’s subcommittee on efficiency and cost savings at the upcoming Board meeting in June.
Board members also heard a report during the Finance and Administration Committee meeting Wednesday morning. UT Chief Financial Officer David Miller gave an update on the state’s Facilities Management Initiative and selection of Jones Lang LaSalle (JLL), a Chicago-based real estate management company, as the firm to offer contract services. The state and JLL now must complete a master agreement, expected by the end of April, after which institutions may decide whether to opt in to the agreement.
“The institution is in the driver’s seat here with negotiating what services, if any, they may want,” he said.
Board Vice Chair Raja Jubran added that any savings achieved by use of contract services could be used by participating institutions in redirecting to student-centered budgets. “The final decision is with the institutions on one condition – they must explain their decision to the board,” he said.
DiPietro also discussed the state’s Facilities Management Initiative during his comments.
“We have lived up to our commitment to the state of being engaged throughout this process to ensure we have all the information needed to make an informed decision about the participation of our campuses and institutes in this initiative,” he said.
Each campus will review the proposed contract and work with its team and campus community to make its decision. Each campus will present its decision to the Board of Trustees during its annual meeting June 22.
“Given the sensitivity of this issue, we want to be transparent in helping our Board and the public understand the plans of each campus regarding this matter,” DiPietro said.
The Board also approved DiPietro’s request to amend the terms of his employment agreement to place a four-year limit on the option for him to serve in a post-presidential tenured faculty position at 75 percent of his base salary as president. Under the amended terms, after four years in a faculty position, the salary available to DiPietro would be adjusted to the average base salary of full professors within the College of Veterinary Medicine.
DiPietro requested the amendment at the Board’s Executive and Compensation committee meeting in March. The change now mirrors employment agreements with new chancellors.
In other business, the Board approved:
- Incentive compensation plans for fiscal years 2017-2018 and 2018-2019.
- Assessment and payment recommendations for the fiscal year 2015-16. performance-based variable compensation plan.
- Revising the quantitative performance goals for the fiscal year 2016-2017. performance incentive payment plan for university officers.
- Revising the annual presidential performance review process.
- UT Health Science Center tuition and fees for the fiscal year 2017-2018 to increase the in-state maintenance fee by 2 percent and, by college, to increase the out-of-state tuition by an equal dollar amount. There will be no increase for College of Nursing graduate programs or online programs.
- Expanding the UT Health Science Center regional tuition rate program for the College of Pharmacy.
- Expanding UT Chattanooga regional tuition rate program to freshman and sophomore students.
- Appointing Ron Maples as UT system treasurer.
- Revisions to the UT Martin undergraduate admission and continuation requirements
- Changing the UT Knoxville Stokely Family Residence Hall to Stokely Hall.
- Naming the graduate school of education in the College of Education, Health, and Human Sciences at UT Knoxville for alumnus David T. Bailey, a longtime supporter of the college and the university. Bailey is a 1950 graduate of UT’s Haslam College of Business and was on the Volunteer football and golf teams. The David T. Bailey Graduate School of Education is ranked 47th among all public universities by U.S. News and World Report.
- Naming the Joseph C. and Judith E. Cook Grand Challenge Honors Program in UT Knoxville’s Tickle College of Engineering after alumnus Joe Cook and his wife, Judy. Joe Cook earned his bachelor’s in industrial engineering in 1965. The family’s support will enrich the experience for students involved in the prestigious program.
- Establishing a bachelor’s degree in sustainability and a master’s degree in supply chain management at UT Knoxville.
- Creating a new data science and engineering doctoral program for UT Knoxville in a partnership with Oak Ridge National Laboratory and is modeled after the doctoral program in energy science and engineering offered through the UT-ORNL Bredesen Center for Interdisciplinary Research and Graduate Education. Pending approval from the Tennessee Higher Education Commission, an inaugural class of 10 students will begin this fall.
- UT Knoxville’s simplified and streamlined student code of conduct for all student groups.
- Awarding a UT Knoxville honorary degree to Jon E. Meacham, Pulitzer Prize-winning writer, editor and scholar. Meacham will receive a Doctor of Humane Letters. A Chattanooga native, Meacham is currently the executive editor and executive vice president of Random House Publishing. He has been editor of Newsweek and a writer for The New York Times and The Washington Post, and he is a Society of American Historians fellow.
- For their service, honorary resolutions for former UT Knoxville Chancellor Jimmy Cheek and former interim UT Martin Chancellor Bob Smith.
For an archived webcast of the full board meeting, and meeting materials, go to http://trustees.tennessee.edu/.