WM Visitors Hear of Budget Forecast

By Amber Lester Friday, February 05, 2010

The William and Mary Board of Visitors got a peek at what the new fiscal year’s budget could look like at its Friday morning meeting.

Vice President for Finance Sam Jones told the board fiscal year 2011 will hurt, but not nearly as bad as fiscal year 2012. By that year, stimulus funding will be completely gone and the base reduction of state funding could be $10.5 million.

Jones offered a little encouragement, however. “The good news is that we’re still in a balanced position,” Jones told the board.

He gave a preview of potential operating budget items for fiscal year 2011, all subject to change depending on the wills of the General Assembly and the Board of Visitors. The finance department is tracking not only expenditures, but also potential savings for the coming budget. So far, the staff has found $954,000 in potential additional savings for 2011. On Feb. 21, the Virginia House and Senate will announce their budget proposals. The Board of Visitors will make budget decisions in April.

If faculty and staff received 1 percent salary raises, it would cost the college $1,050,000. Gov. Tim Kaine’s budget proposal, released one month before he left office, provided no state funds for salary increases, so any money for raises would not come from the state.

Much of the potential operating budget is devoted to new buildings and facilities opening in fall 2010, including the School of Education, the Cohen Career Center, the Small Hall expansion and the power plant. The finance department estimates the expenses to open those buildings will be $1,486,000. To staff the career center, the college will need to allocate approximately $145,000.

For financial aid, the college will need to devote $500,000 for graduate students and $350,000 per 1 percent increase in cost for undergraduate students. The stipends offered to graduate students are “not competitive for what we want to do,” Jones said.

Operating expenses should come to $238,000 in utility costs and $250,000 per 1 percent campus-wide for departmental operating funds.

Between all the costs that are known are two important question marks: the amount of fundraising revenue and the amount of money devoted to hiring new faculty. The college has already had success in raising money in a difficult climate; William and Mary set a record for fundraising in fiscal year 2009, bringing in $50.8 million.

Effects of Kaine’s Proposal
During the meeting, Jones also gave an overview of Kaine’s proposed budget. While most of Kaine’s budget focused on cuts to K-12 education, it did have some recommendations for reductions to higher education funding. Kaine’s budget would implement a previously announced 15 percent reduction by Fiscal Year 2012, while rebalancing the state support and federal stimulus funds.

Kaine also called for no salary increases in the 2010-12 state biennium. In addition, his budget would require state employees contribute toward retirement. In 1983, the state began making contributions to retirement funds to make up for a lack of salary increases. Kaine’s proposal would ask employees to contribute 1 percent in 2011 and then 2 percent in 2012. Currently, 80 percent of WM’s faculty is enrolled in the optional plan.

Kaine’s proposal would also move any interest earned on auxiliary balances and 5 percent of existing auxiliary balances to the state general fund. For William and Mary, that would amount to a loss of about $250,000. Finally, Kaine calls for the financing of capital projects and equipment by debt. William and Mary’s still needs to finish the renovation of Tucker Hall and the completion of Integrated Science Center 3.

William and Mary submitted three operating and capital budget amendments to the General Assembly. The amendments request operating funds for new facilities, along with funding for phases 2 and 3 of cooling plant and utility improvements.

WM President Taylor Reveley asked Jones about the odds the state could slash college budgets again before the current fiscal year ends.

“[The odds are] relatively small,” Jones said. He added that by the time the General Assembly finishes its session, any flexible money will have already been spent.

“The song we’re singing most loudly is, ‘Don’t cut us anymore this fiscal year,’” Reveley told the board. “I don’t think they will, but they’re desperate.”