3.10 Financial Resources
3.10.1 Financial Stability
The institution’s recent financial history demonstrates financial stability.
Judgement of Compliance
The financial stability of the University of Tennessee at Chattanooga (UTC) over the past five years is graphically depicted below. The graph paints an explicit picture of a strong and stable pattern of growth. Annual increases demonstrate financial stability and allow for effective allocation of resources to the University’s strategic plan.
The University increased its enrollment from 8,656 students in the fall of 2006 to 10,526 students in the fall of 2009. This increase has provided a solid financial base for operational activities. The FY 2008-2009 budget and planning process was affected by the State of Tennessee budget crisis caused by shortfalls of state sales tax revenues. UTC’s state appropriation for FY 2008-2009 was reduced by $2,617,000 which was approximately a 5.67% reduction. The cuts were absorbed partially by the departments, and the University was approved to implement a 6% fee increase, which was used to offset some of the departmental cuts and provide approximately $555,000 for fixed cost increases.
UTC’s fall 2008 enrollment totaled 9,807 students. When compared to 9,558 in the fall of 2007, that total represents an increase of 249 students. The increase in enrollment allowed the University to increase its tuition and fee budget $1,625,000 during the FY 2008-2009. However, the University used $1,000,000 to offset an additional $1,539,000 cut in state appropriations for the FY 08-09 budget. Additionally, the UC Foundation awarded $4,654,045 in unrestricted and restricted funds for various programs.
The University ended the FY 08-09 year with revenues exceeding expenditures. The excess of revenue over expenditures was used to increase the E & G fund balance surplus by $500,000 for a total of $4,374,488 which is 4.35% of total expenditures. The university set aside $2,110,661 in a renewal and replacement fund for future needs. The University of Tennessee (UT) controller’s statement of balances shows the increase in the current surplus for the FY 2006-2007, FY 2007-2008, and FY 2008-2009.
The FY 2009-2010 budget and planning process was affected by additional cuts that reduced departmental budgets by $4,534,400. The university was authorized to increase student fees for FY 2009-2010 by 7%. In addition, the university was allocated Federal Stimulus funds of $11,447,800 dollars for FY 2009-2010. The Chancellor, with input from the Executive team, allocated Stimulus funds for non-recurring expenditures and capital assets. The UC foundation also awarded $5,671,309 in unrestricted and restricted funds for various programs. The budget planning process allowed the university to focus on its core mission of educating students.
The total UTC budget for FY 2009-2010 including Auxiliaries totaled $115,921,766. The FY 2009-2010 budget including Auxiliaries increased $8,912,000 over the FY 08-09 budget. The proposed E & G budget unallocated net assets were 3.73% of expenditures and transfers, which is within the UT recommended percentage range of 2.5% to 5%. The proposed Auxiliary budget unallocated net assets were 4.97% of expenditures and transfers, which is within the UT recommended range of 3% to 5%. The budgets were approved by the University of Tennessee Board of Trustees on June 17, 2009 (pp. 6-9).
UTC Budget and Finance Overview
Some $10,849,500 of state appropriations will have been reduced from the UTC base budget revenues between 2008 and 2011. As a result, the institution’s executive team and shared governance leaders have collaborated to shrink the budget in a manner that is forward thinking and strategic to ensure the strength of our instructional divisions and academics. We have elected, to the extent possible, to hold the instructional components of the university harmless from historical budget reductions, while seeking to first reduce those functions, operations, and expenditures deemed non-core to the teaching mission of the university.
Our strategic focus is one of “financial rebalancing” over the next 3-5 years. New external revenues from growth in tuition and fees and internal reallocation of existing resources are being directed to our highest strategic priorities. As a result, we have made many difficult but productive budgetary decisions, which have resulted in continued financial stability:
- Over $2 million of recurring funds will be allocated to the part-time instructional base by our planning.
- New 2010-11 revenue support will be introduces for academic operating budgets.
- New revenue support will be introduced for research and library holdings.
- Some $24.1 million of MOE/ARRA stimulus funds received from 2008-09 - 2010-12 will provide new instructional equipment, new technology, faculty and staff computers, microscopes, supplies, and significant facility improvements and energy management. These funds will also ease the transition of reduction-in-force of staff, allowing for seamless operational transition.
- While an additional 6% base budget reduction is required for 2010-12, the State will again provide “temporary” stimulus funds to mitigate the operational impact of some $2.8 million in reductions.
- Enrollment growth revenues and improved student retention initiatives have helped the institution mitigate the impact of base budget reductions by infusing some $2.8 million of new recurring revenues to offset budget reduction.
- The institutional fund balance is strong with $4.3 million in reserve. This amount is sufficient to respond to unexpected changes in the economic climate.
- An additional non-recurring reserve of $3 million is available for emergencies and leveraged initiatives.
- Major ERP technology platforms are in place and fully funded, inclusive of the new Banner student information system.
- The Physical Plant remains strong and viable with over $100 million of capital maintenance projects completed in the last 10 years, inclusive of over $22 million in infrastructure upgrades to the central energy plant, roof replacements, building exteriors, fire alarm systems, elevators, and ADA improvements. An additional $73 million in capital outlay and capital maintenance projects are approved and in progress, inclusive of a new $48 million library complex and a new student recreation facility of $23 million.
- Statement of Balance, 2006-07
- Statement of Balance, 2007-08
- Statement of Balance, 2008-09
- Business and Financial Affairs web page, Budget Planning Process
- 5. UT Board of Trustees Meeting Minutes, June 17, 2009, Approval of budget, pp. 6-9