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	*Office of the President*

	March 15, 2011


/From:/Daniel Mark Fogel, President
Jane Knodell, Provost

/To:/ The UVM Community

/Re:/*FY 2012 Budget Update*


    We are writing to update you on the status of the FY 2012 budget and
    the progress made since early February, when we last communicated on
    the subject. We have developed recommendations to bring to the Board
    of Trustees on many of our budget challenges and, while every
    proposed solution requires difficult choices, we believe that the
    recommendations outlined below would, if approved, allow us to
    maintain UVM's strong position while moderating the impact on the
    campus community. Our commitment to sustaining, enhancing, and
    improving the academic experience---our core mission---has been
    central to the decision-making process to date.

    Before reviewing the specific steps recommended to balance the
    budget, we do want to reflect on the relatively strong position UVM
    has maintained over the last several years during the international
    budget crisis. To be sure, the budget measures we have had to take
    have not been easy---some have been very hard indeed---but they have
    been leavened by holding tuition increases to an average of 5.3%
    over the last three years, by continued hiring of faculty and staff,
    by raises for all personnel except non-represented staff making more
    than $75,000 annually, and by continued investment in programs and
    facilities. In contrast, many other colleges and universities have
    had recourse to such stringent measures as double-digit tuition
    increases for consecutive years, extensive layoffs of faculty and
    staff, academic and non-academic program elimination, blanket salary
    and hiring freezes, and salary reductions and furloughs. Our intent
    throughout has been to minimize negative impacts on our core mission
    to the greatest extent possible. Despite a negative outlook for the
    entire higher education sector, Moody's Investors Service has just
    informed us it has revised the outlook for UVM from negative to stable.

    Over the last several weeks, we have been engaged in budget hearings
    with deans, vice presidents, and other senior leaders. They were
    tasked with two scenarios to address the budget gap: the first
    focused on identifying $3 million in potential expense reductions
    and revenue enhancements, and the second on identifying $6 million
    in reductions and enhancements. As we deliberated over the proposed
    reductions, we were guided by the following objectives:

        * Tocontinue to recruit outstanding and diverse students;
        * To assure a high-quality, affordable education for our
          students with appropriate levels of financial aid to provide
          access to the largest numbers of students;
        * To minimize the impact on faculty and staff;
        * To consider budget reductions within the context of each unit
          and not simply implement across-the-board reductions; and
        * To identify resources to reinvest in mission-critical
          initiatives to continue the advance of the University.

    The following summarizes the broad strategic decisions made to
    address the FY 2012 budget gap. We believe the most difficult of
    these decisions were simply unavoidable, and we are grateful that
    others reflect our ability to maintain our footing in critical areas.

        * Make targeted reductions in administrative and academic units
          totaling $2.9 million;
        * Budget for 0% salary increases for all employees for FY 2012;
        * Move forward with plans for changes to post-retirement medical
          benefits (details to be communicated later this week).
          Although these changes will not affect the FY 2012 budget,
          they are necessary to address longer term budget challenges.
        * Recommend a tuition increase of 5.8% to the Board of Trustees;
        * Invest up to an additional $1.5 million in student financial
          aid beyond the $10.8 million increase reflected in the
          original FY 2012 budget projection;
        * Hold undergraduate enrollment constant;
        * Continue all current tenure-track faculty searches in progress
          and move ahead with plans for faculty recruitments for FY
          2013; and
        * Maintain benefits without an increase in employees' percentage
          share of the cost of health and dental insurance.

    Notwithstanding our constrained budget, it is imperative that we
    invest in our future. Toward that end, we have also identified
    resources for targeted strategic investments in mission-critical
    areas, including resources to support the general education
    initiative currently under consideration by the Faculty Senate;
    resources to support the Transdisciplinary Research Initiative
    (updates on this year's progress, can be found on the TRI website
    <http://www.uvm.edu/%7Etri/>); and unit-specific academic needs.
    Information about the overall University budget as well as
    unit-specific budget reductions is available at the UVM Budget
    Planning <http://www.uvm.edu/budgetplanning/> website.

    The FY 2012 budget plan will require revision if the planning
    assumptions upon which it is based are not realized, including
    factors such as the legislative appropriation, enrollment and
    tuition revenue net of financial aid, and the rate of tuition
    increase that will win Board approval. We are doing everything in
    our power to bring them to fruition, but we must be prepared for
    further budget challenges.

    Throughout this process we have been engaged with the leadership and
    key committees of University governance groups, including the
    Faculty Senate, Staff Council, the Student Government Association,
    and the Graduate Student Senate. Their advice and counsel have been
    invaluable and greatly appreciated. Further, we received over 200
    creative cost reduction and revenue suggestions from across the
    University. Those ideas are also available at the UVM Budget
    Planning <http://www.uvm.edu/budgetplanning/> web site and have been
    shared with deans and vice presidents for consideration.

    We are grateful for the efforts of everyone involved in this process
    and believe that the difficult but necessary decisions we make now
    will allow us to continue on our path to realizing our vision of
    being among the nation's premier small research universities. The
    decisions we have made so far will shape the FY 2012 budget
    recommendations we will bring to the Board of Trustees in
    May---recommendations that will almost certainly evolve further
    through continuing dialogue with campus and board leadership in the
    intervening period. That dialogue will increasingly turn to measures
    we must set afoot as soon as possible in order to strengthen our
    management of institutional costs and of student cost-of-attendance
    in FY 2013 (beginning July 1, 2012) and beyond. Thank you.

    cc:Board of Trustees
    **