State orders budget cuts and furloughs on Institute

As funding cuts force schools in the University System of Georgia to revise their budget plans and accommodate projected funding cuts of between four and eight percent, Tech is turning to employee furloughs, decreases in employee benefits and a possible increase in student fees among other ideas to cover the costs. The total estimated loss to Tech as a result of the budget cuts amount to between $10 and $20 million, depending on the severity of the cuts.

The decision to reduce funding was mandated by the Georgia state legislature in an effort to bridge the $900 million loss in state revenues over the past year. Tech will comply with a mandatory state directive to implement employee furloughs to reduce salary costs. A total of six furlough days are currently planned for the 2009-2010 fiscal year.

Those earning less than $23,660 each year, research and teaching assistants, non-resident aliens on an H1B visa, those critical to life and safety and those on sponsorship money will be exempt from furloughs, causing some controversy.

“A problem arises when we do that and I understand this creates some iniquity but I’ll take responsibility for that decision – it was a business decision, and that decision was based upon this $6.2 million we save compared with the cost of forcing people to take furlough days if they’re on [sponsorship] money,” said Institute President Bud Peterson, at the Budget Town Hall meeting on August 24.

While furloughs are expected to save Tech money, they would still not cover the entirety of the cuts. Furthermore, furloughs are only a temporary solution and cannot sustain budget cuts over the long term. Where the additional money will come from is still to be determined. One way of meeting the remaining budget shortfall is to reduce funding for various departments across campus, both academic and non-academic.

“The academic areas last year absorbed a four and a half percent cut and the non-academic areas absorbed a seven and a half percent cut. But this year I think the commitment is to target the cuts more carefully,” said Jim Kirk, Director of the Office of Budget Planning and Administration.

Additional cost-cutting measures placed on Tech employees may include revisions to employee health insurance, a moratorium on future hiring and other actions the Institute deems appropriate.

Should the state decide to raise cuts to eight percent, there will be a $150 fee increase for students in addition to the normal $100 academic excellence fee. Undergraduate student body president Alina Staskevicius states that should the increase occur then all other fees would remain same.

“There would be a moratorium placed on all other mandatory student fees, so things like your athletic fee, transportation fee, technology fee, health center fee and all those things will not be increased in the next academic year,” Staskevicius said.

The cash flow into Tech from the state for the fall semester has already been reduced due to Governor Sonny Perdue’s decision to withhold 5% of state funds in anticipation of the budget cut, costing Tech over $5 million to date.

Over the 2008-2009 fiscal year the Institute lost over $29 million. These shortfalls amount to a loss of $34 million, or an 11.8% decrease in state funds over the past two fiscal years.

Fortunately, a federal stimulus package of over $12 million dollars has been made available to the Institute to offset the reduction in state funds. The stimulus will be available for two years and will be used to cover employee salaries.

The National Science Foundation will receive $3 billion worth of funds for research projects. Funding from the NSF and other government agencies could be a new source of revenue for researchers, reducing the amount of money paid by Tech to employees.

Due to uncertainty about amount of budget cuts, estimating the impact on instruction and research at Tech is speculative. Current trends have already seen the faculty-student ratio slipping from 1:21 to 1:22 over the past four years.

Peterson continued to stress the importance of Tech’s academic and research excellence to the world and emphasized that there would be efforts to preserve that standard.

“All of us here at Georgia Tech recognize that these circumstances will create a significant hardship for many in our community, and we will do everything possible to minimize the impact on our students and employees,” wrote Peterson in a campus-wide email.