Budget Planning: A Message from Executive Leadership

We have all been aware for some time that Texas’ agencies and programs— including its institutions of higher education — are facing significant reductions in state funding.

It is impossible at this point to know how much UTMB’s General Revenue funding will be reduced. We should know within the next few days if the Legislature will be able to pass the state budget by the time the regular session ends on May 30. However, we think it’s highly likely that our funding will need to be finalized in a special session, which could last until mid- to late summer.

Clearly, UTMB can’t wait until then to develop the FY12 operating budget, which goes into effect Sept. 1, 2011. 

We have looked at financial models that take into consideration growth of the clinical and academic enterprises and various General Revenue reduction scenarios. As a result of this modeling, we are asking managers to prepare two draft budgets. The first draft is to be based upon achieving a $44 million reduction in UTMB’s overall budget for each year of the biennium. The second is to consider the current House Bill 1 budget, which is the most austere of the two budget bills to date. Under this scenario, we will need to achieve a $58 million reduction in our overall budget for each year of the biennium. Managers will receive additional details and instructions from Finance within the next week.

We have developed a set of guiding principles to help us determine where to invest and where we need to look for potential savings as we develop the FY12 budget.

• First and foremost, we need to continue to work to replace the loss of state General Revenue. As we have said on many occasions, UTMB must become less dependent on vulnerable state funding. Currently, 21 percent of our overall budget comes from General Revenue. Our goal is to reduce that to 10 percent over the coming years. 

• We must optimize our financial margin — funds that are available for reinvestment in our education, research and patient care missions — through enterprise-wide efficiency and continued strategic and targeted growth of UTMB’s Health System and clinical enterprise.
• We must maintain our current level of academic excellence, making targeted investments that extend our capabilities.

• We need to ensure that the goals of each organizational entity are aligned with institutional priorities.

It’s natural for talk of funding cuts to cause concern and anxiety. However, we are a resilient organization with smart, skilled and dedicated people. Our mission, vision and values are clear. We have the right plans for the future. We also have proven time and again that we have the innovative spirit and flexibility not only to respond effectively to operational and financial challenges but also to emerge even stronger because of them.

We appreciate your patience and the many cost-savings ideas you have brought forward thus far. We will keep you informed as the process unfolds. In the meantime, here are two good sources of timely information Ben’s Blog and Budget website.

Dr. David Callender, President
Dr. Garland Anderson, Executive Vice President and Provost, Dean of Medicine
Donna Sollenberger, Executive Vice President and Chief Executive Officer, UTMB Health System
William Elger, Executive Vice President, Chief Business and Finance Officer