Frequently Asked Questions: State Funding and the Budget
Click each question below to view the answers.
Current Biennium (Fiscal Years 2010–2011)
When did we know that the state was facing a serious budget shortfall and how did we plan for it?
Executive leadership has planned for continued decreases in state funding for more than two years. The university has worked to control costs and improve its ability to generate revenue through the clinical enterprise, grants, contracts and philanthropy. The ultimate goal is to reduce to 10 percent the proportion of our budget that comes from General Revenue in the next 10 years.
How much of UTMB’s budget is appropriated by the Legislature?
After the recent 7.5 percent reduction in base General Revenue, approximately 21 percent of our total budget comes from General Revenue. We also receive funding from other agencies related to specific programs such as Medicaid and Correctional Managed Care.
What can we do to become less dependent on state appropriations and avoid this kind of uncertainty every two years?
We are actively working to increase revenue we earn from the clinical enterprise, increase funding from research grants and contracts, and increase philanthropic support. Combined with continued careful management of expenditures, this additional revenue will help us reduce our reliance on General Revenue.
What were the total funding reductions in FY 2010 and FY 2011?
UTMB Health’s General Revenue funding was reduced by a total of 7.5 percent (an initial 5 percent reduction and subsequent 2.5 percent reduction); this is consistent with the percentage reduction faced by other state agencies in the current biennium. For UTMB, the 7.5 percent equaled $33.1 million.
In addition, the university’s Group Insurance appropriation for this biennium was likewise reduced 7.5 percent, or $5.1 million, for a grand total of $38.2 million in reductions this biennium.
How did we manage the funding reductions in FY 2010 and FY 2011?
UTMB Health reduced expenditures, improved efficiency and increased clinical revenues to offset the loss of state funding. Examples include: greater use of the Electronic Health Record, improved accounting and management systems, restructured service contracts, pilot programs to decrease repeat hospitalizations, chronic-disease management programs, and optimized purchasing through Texas Medical Center affiliations.
How were decisions made on how to manage the cuts in state funding this year?
Executive leadership carefully evaluated expenditures and projected clinical revenue to determine the amount that had to be cut from current budgets. They chose savings and efficiencies that would have minimal impact on our education, research and patient care missions, as well as on our mitigation, renovation and new construction timelines.
Will there be layoffs or salary reductions in the current fiscal year? If so, how will they be handled?
UTMB Health is making every effort to preserve positions, especially in light of the post-Ike reduction in force and the fact that we are one of four higher education organizations to have fewer staff today than in 2001.
That said, until the state budget is approved and we know for certain our level of appropriations for the next two years, we cannot guarantee that positions won’t be affected by a drop in state funding. We do pledge to keep employees informed as concrete decisions are made regarding our available funding.
Is there a hiring freeze in place for the current year? If so, how were decisions made to freeze certain positions?
UTMB Health is not currently under a hiring freeze, but we are carefully scrutinizing staffing levels. Currently, leadership approval is required before any position is posted (whether full-time, part-time, temporary or related to the use of employment agency personnel).
Is there a freeze on job reclassifications for the current year?
Will there be a spending freeze in the current year?
While no spending freeze has been implemented, we are carefully managing spending and working to increase revenue from clinical services, grants, contracts and philanthropy. We also are curtailing controllable expenditures, such as non-essential travel.
Coming Biennium (Fiscal Years 2012–2013)
What is the most recent information on the state budgeting process for 2012-2013 and how does it affect UTMB?
Texas faces a budget shortfall estimated at $25 billion, according to recent numbers. To begin addressing these projected shortfalls, a letter came from State Leadership on Jan. 15, 2010, asking state agencies to reduce their 2010-11 base General Revenue appropriations by 5 percent. Another letter received from State Leadership on Dec. 6, 2010, asked for additional 2.5 percent reduction from 2010-11 appropriations. For UTMB, these base General Revenue reductions amounted to $33.1 million.
It is important to note that, in terms of these reductions across all state agencies, higher education has taken on disproportionate cuts totaling $520 million, or 41 percent of overall reductions, in relation to its total share of the state budget. Higher education represents 12.5 percent of the total state budget and 18 percent of the total General Revenue expenditures. The House and Senate have each proposed lean budgets in their initial funding bills (House Bill 1 and Senate Bill 1). Legislators, working through their assigned committees, are currently gathering information on the impact of the proposed budgets on state services.
What happened to cause the state's budget shortfall?
Like many other states, Texas is dealing with the lingering effects of the recession and rising health care costs. Oil and gas revenues over the past couple of years have been down. The state took in less tax revenue than projected. The previous state budget was balanced with the use of one-time funds, including federal stimulus dollars, that are no longer are available. And, Texas’ population is growing, causing an increase in the cost to maintain basic state services at current levels.
More information can be found in this article:
When will UTMB know how much funding we will receive for the next biennium?
Although preliminary budgets have been put forth in House Bill 1 and Senate Bill 1, these bills will go through numerous changes in the coming months. The final appropriations bill is expected to be completed in May, but it could be delayed if any special sessions are called. (At this time, at least one special session is anticipated.) UTMB is tracking the progress of the state budget and will keep employees informed of any major, definitive news on the subject.
What is the timeline for developing UTMB’s FY 2012 budget and when will it be final?
The first draft of the university’s FY 2012 budget will be submitted in June in order to meet UT System budget deadlines. We anticipate that the UT System Board of Regents will approve the university operating budget during the middle of August. Adjustments may be made to our draft budget as we learn more about the final state budget in late spring/summer.
Will there be funding reductions in the 2012-2013 biennium?
Yes. House Bill 1 introduced in January 2011 recommended a $147.1 million reduction in base General Revenue for the 2012-2013 biennium, as compared to 2010-2011. Senate Bill 1, introduced shortly after House Bill 1, recommended a $105.8 million reduction in base General Revenue for the next biennium. The final reduction amount will not be confirmed until the final appropriations bill is passed by the Legislature. It is important to note that these reductions include the 5 percent and 2.5 percent General Revenue reductions mandated in FY 2010 and FY2011. UTMB is also carefully tracking funding reductions in partner agencies—such as TDCJ and the Health and Human Services Commission—that contribute to UTMB Health’s budget through contracts, Medicaid, Medicare, etc.
What are our plans for addressing funding cuts in the next biennium?
UTMB Health will continue to look for ways to increase efficiency, carefully manage expenditures and hiring, and increase revenue from the clinical enterprise, grants and contracts, and philanthropy. We may adjust the schedule for some of our proposed capital improvements. Such measures as cutting programs or staffing, forgoing salary increases for one or both fiscal years, and raising tuition and/or fees may be considered if absolutely necessary, but they are not the primary focus of our cost-saving efforts at this time.
Will there be layoffs or salary reductions in the next biennium?
UTMB is considering other options to meet targeted funding reductions, but we cannot guarantee at this time that layoffs or salary reductions won’t occur. We can guarantee that we will keep employees informed as decisions are made in the coming months.
The news media has been reporting that thousands of state employees will lose their job and that salary cuts and furloughs may also take place. Is this true?
At this time, any talk of layoffs or unpaid work furloughs is speculation. Much of the news coverage to date has been on the potential effects of the initial budget bills, House Bill 1 and Senate Bill 1. These bills represent the baseline from which legislators will negotiate the final budget and, if history is any indication, are more stringent than the final budget will be. During the information-gathering process currently under way, state agencies have been asked how these initial budget proposals, if passed, might affect operations, and the answers are unique to each agency.
With layoffs in 2006 and again after Hurricane Ike, can we eliminate more positions and continue to be UTMB?
UTMB Health is running a very lean operation in which the vast majority of positions are mission-critical. We are one of only four higher education organizations—and the only major university—to have fewer staff today than in 2001. We are taking every opportunity to remind the Legislature of this fact, as well as the return on investment the state realizes from UTMB Health. Although we cannot guarantee that there will be zero staff reductions if our funding is cut drastically, we are making decisions based on what it will take to continue fulfilling our mission.
Will salary increases for FY 2012 and FY 2013 be eliminated as a result of funding reductions?
We will continue to plan for salary increases related to promotion, tenure and exceptional merit for faculty and staff in FY2012, if funds are available to support the increases.
What are we doing to let lawmakers know we can’t sustain any more reductions?
We have highly experienced Legislative Affairs staff based in Austin, not only during the session but throughout the year. They meet with legislators and staffers directly on a regular basis (in session and out), facilitate meetings with UTMB Health executive leadership, coordinate meetings with university alumni and friends, and organize site visits to university facilities. The senior vice president for health policy and legislative affairs travels to Austin frequently, particularly during the session, and members of executive leadership are well-represented during scheduled testimony.
We also maintain a close relationship with UT System, which likewise is heavily involved in educating legislators and their staff about the impact of proposed legislation on higher education.
And, we work with partner agencies such as TDCJ and the Health and Human Services Commission to keep lines of communication open as bills affecting the health-related activities of each agency are proposed.
Is there anything I can do to help prevent UTMB’s appropriation from being cut?
Some level of decreased appropriations is inevitable given the state’s financial situation and balanced budget requirements. As an employee, you can minimize the impact of these cuts by watching spending in your area, looking for ways to increase efficiency and supporting efforts to increase revenue.
As a private citizen, you are encouraged to express your individual questions, opinions and concerns to your representatives. Please remember that state resources (such as work time, university equipment or office supplies, etc.) cannot be used in your efforts as a private citizen.
What’s going to happen with the correctional care contract? Will we still provide health care to inmates?
UTMB Health is committed to serving the vulnerable patient population in state prisons with available funding, but it cannot afford for the Correctional Managed Care program to operate at a financial deficit. The university is working closely with state officials, fellow provider Texas Tech University and UT System to find a sustainable way to provide quality health care to offenders.
If our budget is reduced, what programs are most likely to be downsized or eliminated? What will the impact be on our each of our mission areas?
We cannot say at this time what specific programs would be cut or eliminated, but as requested by the Legislature, we have prepared a document outlining the impact we and the state would feel if certain programs were affected by funding cuts. You may hear about such possible reductions in news coverage, but please remember that no decisions have been made to cut any specific program. Once we know our funding level for the next two years, any eventual cuts that may be necessary will be made with our mission, vision and values in mind.
If we have to reduce the schools’ budgets, will we lose faculty?
Faculty are the heart of our academic enterprise and central to fulfilling our mission. Although it is possible that some would choose to leave if certain budget cuts were eventually made, we are committed to retaining a world-class faculty and maintaining our aggressive recruitment efforts to attract new faculty.
Do funding reductions mean we won’t be able to mitigate Ike-related damage, storm proof the campus and continue with renovations and new construction?
UTMB Health must repair Ike-related damage, storm-proof the campus and continue with planned renovations and proposed new construction in order to fulfill its vital mission. Leadership is committed to continuing these activities. It is possible that we may need to be flexible in our timing on some projects, but we have no intention of abandoning our recovery and improvement efforts.
Will tuition and fees increase in FY 2012 and FY 2013? If so, by how much?
Increases in tuition and/or fees may be necessary, but no specific recommendations can be made until we know our final level of funding for the coming biennium. Any proposed increases would have to be approved by the UT System Board of Regents, and they would be communicated to students as soon as possible after they are decided upon.
How can I make suggestions regarding UTMB’s budget?
Click here to submit your ideas for reducing costs and increasing revenue.