Contending With a $300 Million Cut, Florida Universities Find Insufficient Funds in Reserves
FlaglerLive | May 10, 2012
State universities are taking a variety of approaches to handle a one-time $300 million budget cut, but many are considering reductions beyond spending down reserves, the solution favored by the Legislature in debate over the plan this past winter.
The issue has moved to the forefront in recent weeks as University of Florida officials were forced to reconsider plans to slash the Computer and Information Science and Engineering department as part of its plan to deal with reductions.
Students who would have been affected by the cuts instead called for UF to draw on its reserves to solve the problem — in keeping, they said, with what the Legislature wanted the university to do.
But in a statement reacting to the uproar, university President Bernie Machen said the school had no plans to use its savings to cover the nearly $36.5 million reduction.
“That is not a viable option for the University of Florida,” Machen said. “We spent nearly $30 million of reserves last year to avoid having to make difficult budget decisions. … We must maintain sufficient reserves to manage unexpected expenses associated with air conditioning system failures, roof leaks or other major outages that could put buildings out of commission and cost millions of dollars.”
That was markedly different from what lawmakers said during and after the legislative session.
Speaking to reporters after meeting with Gov. Rick Scott on a separate higher-education bill last month, Senate Budget Chairman JD Alexander again underscored how lawmakers saw the plan.
“As far as cutting other universities, what we did is said, give us $300 million back out of the $859 million in cash you were sitting on,” said Alexander, R-Lake Wales.
Some universities have suggested they intend to do just that.
“Florida State University has made significant and difficult cuts to our operating budget as part of a multi-year plan to deal with budget shortfalls since 2007-2008,” said Ralph Alvarez, associate vice president for Budget, Planning and Financial Services at Florida State University. “Part of that plan involved building up our reserves, which we are now using to cover this one-year cut to our recurring state support.”
New College plans to spend $1.1 million in reserves to help deal with a $1.5 million cut. The school is also declining to fill some positions or hiring adjunct professors for faculty positions.
Some — like the University of Central Florida — say they’re working on a plan to deal with the cuts that will likely be more of a hybrid approach. UCF plans to handle its $52.6 million reduction “in a variety of ways,” said Grant Heston, a spokesman for the university. “Strategic use of some reserves is included in that.”
Several are still weighing their options or waiting for other factors in the budget picture to clear up — including how much of the 15 percent differential tuition allowed under state law the Florida Board of Governor’s and each institution’s board of trustees will authorize.
“Until we find out what the Board (of Governors) is going to do with tuition, it’s too early for us to tell what we’ll do,” said Lara Wade, spokeswoman for the University of South Florida.
Others are taking similar approaches, at least in terms of their reserves, to UF. The University of North Florida isn’t cutting programs or laying off workers, but is looking for other ways to save money, including attrition, said Joanna Norris, a spokeswoman there.
“Only rarely do we use reserves to pay for recurring items,” she said.
State law requires the schools to keep at least 5 percent of their operating budget in savings.
Florida Gulf Coast University had already used about $1 million in reserves to give employees a $1,000 bonus before the proposed reductions emerged in the Legislature. Another $750,000 has been committed for work being done on the student union.
The school was only about $2 million above the 5 percent minimum to begin with, said Steve Magiera, vice president for administrative services and finances at FGCU.
That gives the university few options other than to find savings elsewhere to cover the reduction, even after lawmakers approved $2.5 million in funding elsewhere to help patch up a cut that would have originally totaled $5.2 million.
“There’s just so little,” Magiera said. “Two million can be spent just so easily here.”
But Nuri Yeralan, coordinator for Save CISE at UF, said universities should be careful about not using the reserves — and that presidents like Machen, who have worried that the cut will end up being more than a one-time deal, might be creating a self-fulfilling prophecy by making reductions that lawmakers will then make permanent.
“If you don’t spend the reserves, and people are expecting you to spend the reserves, then it will indeed be a recurring cut,” he said.
–Brandon Larrabee, News Service of Florida