Dear Faculty and Staff:
As we continue to carefully weigh the impact of various budget-reduction scenarios and identify solutions that will be the least harmful to our ability to carry out our land-grant mission, I want to bring you up-to-date on the steps that the Executive Committee of the President’s Cabinet has approved for the system-wide Fiscal Year 2021 budget process.
As you know, on May 13, WSU received notification from the governor’s Office of Financial Management (OFM) directing all state agencies to identify operating budget savings for the fiscal year beginning July 2020 due to anticipated declines in state revenues caused by the COVID‑19 pandemic. WSU was assigned a state appropriation reduction target of $37.2 million, and in June all units completed scenarios modeling the impacts of such a reduction on their FY 2021 budgets.
After an extensive hearing process during which each chancellor, vice president, and dean presented a proposal to reduce their area’s Permanent Budget Line (PBL) funds by 10%, our Executive Committee (myself, President Schulz, former Interim Provost Bryan Slinker, new Provost Elizabeth Chilton, Vice President of Health Sciences Daryll DeWald, Vice President of Research Chris Keane, Vice President of Student Affairs Mary Jo Gonzales, and Office of the President Chief of Staff Christine Hoyt) reviewed the proposals and analyzed the implementation options, using the 4 core budget principles President Schulz outlined to guide us. Three key recommendations follow.
- System-wide furloughs will not be implemented at this time.
- Areas may consider other personnel actions such as holding open vacancies, FTE reductions, phased retirements, and position eliminations in finalizing FY 21 budgets. Timelines for actions impacting employees must be coordinated with Human Resource Services for compliance with state law and University policy.
- Furloughs may be considered in the future if deeper cuts in state funding are announced or if student enrollment is significantly less than currently projected.
- Auxiliaries and other self‑support areas that do not receive state funding may need to utilize furloughs based on operating revenue reductions related to COVID‑19 impacts.
- Areas with positive core fund carryforward balances will be allowed to use up to 5% of their June 30, 2020 carryforward to offset their 10% reduction target on a one‑time basis.
- This action is possible due to the outstanding efforts and achievements of the fiscal recovery effort that has improved the University’s overall fiscal health. Preliminary 3‑year results indicate an increase in core fund carryforward of more than $30 million.
- Based on this preliminary assessment, a portion of these carryforward funds can be used to offset up to $5 million of the University $37.2 million FY 2021 reduction target.
- Area reduction targets will be recalculated based on 10% of the actual June 30, 2020 PBL. The planning targets were based on estimated PBL balances; this revision will determine reductions based on the true planning-level budget of each area going into FY 2021.
- Central area savings of approximately $2.5 million will be used to mitigate the reduction targets for the College of Arts and Sciences, the WSU Libraries, and the Office of External Affairs and Government Relations. The first two areas are essential to enabling students to achieve their educational goals (budget guidance core principle No. 1). Supporting External Affairs and Government Relations is critical to our efforts in obtaining additional federal and state funds to help with our COVID‑19 response.
Next steps in finalizing FY 2021 budgets
Using these recommendations, areas should revise FY 2021 plans being mindful that the hiring freeze and reductions in discretionary spending announced by President Schulz on April 1, and later by Governor Inslee, are still in effect.
- By August 7, our Budget Office will provide final reduction targets for FY 2021 and the amount of carryforward that may be used by each area to offset reduction targets.
- By August 31, the Budget Office will provide budget development templates for fiscal years 2021, 2022, and 2023 to both finalize plans for FY 2021 and begin initial planning for the FY 21–23 biennium.
- These templates will be due to the Budget Office by September 30. Budget hearings may be scheduled to review any developments that might impact these plans and to discuss our response strategies. These budget activities will continue our all‑funds budgeting practice implemented in FY 2020.
As we enter this new fiscal year, several uncertainties remain. This includes possible changes to projected student enrollment and the potential for deeper state cuts. The Budget Office continues to analyze various means to mitigate the impact of future shortfalls. This includes identifying savings to be garnered from central resources, renegotiating prior commitments as necessary, and exploring new federal and state funding opportunities to help support the financial impacts of COVID‑19.
Decision-making across the WSU system has been and will continue to be guided by the principle commitment to maintaining instructional quality and advising for our students.
Thank you again for your efforts on behalf of the University during these challenging times. Please continue to watch for regular updates regarding the University’s finances in the weeks ahead as additional information becomes available.
If you have questions about the budget reduction process going forward, please send your inquiries to the budget office.
Vice President of Finance and Administration