FY25 Budget Summary

Tue Aug 27 08:52:36 MST 2024

Dear ALVSCE Colleagues,

Last fiscal year, ALVSCE was a leader on campus in the effort to reduce spending to address the institution's financial challenges.  Our plan avoided the most painful measures that could have been taken - layoffs.  As you know, not being able to hire has wrought its own kind of pain that I don't want to undersell.  FY25 will be a year of change but hopefully with light on the horizon.  As Senior Vice President John Arnold and Interim Provost Ron Marx told campus on June 26th, "we are making significant progress to strengthen our financial position and anticipate closing the deficit in FY 2026."

Change in Budgeting
Colleges this fiscal year will not be funded based on their teaching and research activity and growth.  Instead, spending limits have been set by university leadership, called Spending Authority on unrestricted funds.  This is a significant change from the growth-oriented budget systems that we've operated under since FY15, but it doesn't mean we give up on our mission to the families and communities of Arizona.  John Arnold and Provost Glover expressed interest in creating a growth-oriented incentive for FY26. If growth incentives are implemented in FY26, our metrics this year will be the basis for our Spending Authority next year.

Unrestricted vs. Restricted
Spending Authority applies only to unrestricted funds such as state appropriations, summer session, indirect cost revenues, auxiliary, sales and services, fixed price complete, and so forth.  Restricted funds are primarily sponsored projects and gifts and are not limited by Spending Authority.  CU Boulder<https://www.colorado.edu/controller/policies/guide/ch-4-fund-revenue-accounting/unrestricted-vs-restricted> provides additional explanation of these accounting terms, and I shared further information in our May 7th retreat<https://arizona.app.box.com/v/alvsce-business-retreats>.  Vice President Shane Burgess and Associate Vice President Ed Martin continue to convince university leadership that the state line item for Cooperative Extension should also be treated as a restricted fund.

Our FY25 Spending Authority
Our current assigned FY25 unrestricted Spending Authority is as follows.

FY25
FY24
Change
CALES
$62,388,100
$70,285,800
-11.2%
Cooperative Extension (CES)1
$32,003,400
$23,985,600
33.4%
Experiment Station (AES)
$10,609,129
$12,390,029
-14.4%
ALVSCE
$105,000,629
$106,661,429
-1.6%
Note 1. CES increased by $9.037 million due to the water efficiency grant for this last year of funding.  These are not operating funds.  Remove this grant and CES lost ($1.019m) in Spending Authority.
Reducing Our Spending
Our ALVSCE plan to meet the spending reductions has not changed since Shane Burgess and I presented the plan to division leaders at the May 7th business retreat<https://arizona.app.box.com/v/alvsce-business-retreats>.  We will rely primarily on attrition without replacement.  This plan was designed to meet Shane's directive to avoid across-the-board layoffs.  University leadership has replaced the FY24 hiring and compensation freeze with something called a Staffing Plan.  For all intents and purposes, they operate similarly and will continue to restrict hiring and compensation adjustments in FY25.  In ALVSCE, our Staffing Plan is bare bones and units should not assume vacancies will be filled.  The Provost and CFO will fund faculty promotion increases.

Unit Spending Authority & Carry Forward
Business officers have been developing unit budgets with Janis Rutherford (CALES), Carolyne Greeno (CES), and Amanda Stevens (AES).  Unit budgets are being discussed with unit heads.  Units must operate within these budgets, even if they earn more self-generated revenue than budgeted. This means that faculty can spend only the amount of unrestricted funds that their unit head assigns them to spend, regardless of prior carry forward.  University leadership did not add carry forward balances to our FY25 Spending Authority.  This has caused a lot of questions, the biggest of which is if carry forward funds will be eventually returned to those who generated them.  Answers are still evolving from university leaders and I will share more when it becomes clear.

Financial Reports
Currently, there are no financial reports at the university that track our Spending Authority using the new rules for this fiscal year.  Historically, our financial reports do not align with this new way of budgeting, causing misinformation about carry forward balances.  Therefore, I ask that you check with your unit leader and business officer on a regular basis to confirm that your spending remains within the assigned Spending Authority. The ALVSCE Data Solutions Team under the leadership of Tara Mysak is creating ad hoc reports for our use as quickly as possible.

This is a transition year; I'm asking all of you for flexibility and patience.  Our business officers are committed to getting accurate, timely, and useful information to aid decision making.  We're working towards the same goal in an ambiguous environment.

You will certainly have questions.  Please speak with your unit head or business officer first.  I will share more information as soon as I have it.

[image0]
Jeff Ratje
Sr. Associate Vice President, Finance Admin Operations
Agriculture, Life and Vet Sciences & Cooperative Extension
(pronounced alv-see...we're more than CALES)
THE UNIVERSITY OF ARIZONA

Forbes, 314c
PO Box 210036 | Tucson, AZ 85721
Office: 520-621-1468
jmratje at arizona.edu<mailto:jmratje at arizona.edu>
www.compass.arizona.edu<https://www.compass.arizona.edu/>

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