On August 22, Interim President Gary Schuster sent out a campus wide bulletin stating that because of a state of Georgia tax revenue shortfall, all state agencies, including public schools like Tech that report to the Georgia Board of Regents, are being required to control their spending for the 2009 fiscal year. This means that Tech will experience a minimum six percent cut in state funding, with a 10 percent funding cut being the worst-case scenario.
For the 2009 fiscal year, which spans from July 2008 to June 2009, Tech receives almost $290 million in state funding. This accounts for around 25 percent of Tech’s total budget for the year. The mandated cut in state funding will only affects that money provided to Tech by the state, leaving 75 percent of the budget unaffected by the tax revenue shortfall.
“We’ve been told… to expect at least a six percent cut from Tech’s budget. But as of right now, the Board of Regents has required no actual percentage cut,” said Jim Kirk, Director of the Budget Planning and Administration Office.
“The Board of Regents doesn’t know right now, because it is waiting on information from the governor’s office. And the schools don’t know anything because they are waiting on the Board of Regents.”
However, this still means that Tech will still have to deal with a reduction of more than $17 million in the 2009 budget if the cut remains at six percent. If the worst-case scenario plays out, then a 10 percent budget cut will see almost $29 million being removed for the 2009 fiscal year.
Students will be directly impacted by a cut to the more than $263 million of state funding that is spent on Resident Instruction. This money is spent on academic and educational purposes and makes up the majority of the funding that Tech receives from the state.
In a response to the coming budget shortfall, a memo sent out by Steven Swant, Executive Vice President for Administration and Finance, has instructed all units of Tech to comply with a new list of expenditure and hiring guidelines.
As part of the new hiring policies, several positions will remain unaffected by the expenditure controls. This includes the hiring of teaching assistants and other student employees.
In other areas of spending, departments have been instructed to determine their essential needs, as spending will be limited to these areas.
The institute has also suggested ways to limit spending, such as using video conferencing and restricting state-funded equipment purchases.
Since all units of Tech are instructed to follow this memo, departments like Auxiliary Services and Athletics will also follow the new expenditure and hiring policies even though they receive no state funding.
“Instead of [determining budget cuts] centrally, trying to get input from all departments is important. Everyone involved has to feel they are invested in the process,” Kirk said. The Institute Budget Planning Committee (IBPC) has been assigned the task to determine Tech’s path forward.
Sitting on the IBPC are heads from the multiple Tech departments as well as Student Government Association, Presidents Nick Wellkamp and Aaron Fowler.
“I think that it is important to make the graduate students aware of the budget cuts now, so they aren’t surprised [when the final decisions are made],” Fowler said.
“The biggest worry for us will be how [Tech] operations will be affected,” Wellkamp said. “No one ever wants to deal with a budget shortfall.”
In a meeting on August 15 between Wellkamp and Schuster, several ideas regarding money saving policies for the campus were proposed. These included a possible renewed effort to promote energy conversation so that money could be used to help supplement the budget.
For the 2009 fiscal year, Tech will institute several short-term fixes to cut its spending said Kirk. These might include deferring maintenance, the purchase of replacement equipment or the hiring of new positions.
“However, the more short-term fixes you do, the more will come back to hurt you in the future,” Kirk said. If an expenditure like maintenance is deferred for the near-term, areas that need fixing will further deteriorate, increasing future repair costs or safety concerns.
Kirk also said the hiring policies could affect donations to Tech from outside sponsors if positions, like accounts, were left vacant for too long of a period.
There would a potential for overworking the current staff and mistakes might arise. This type of scenario might negative affect future donations.