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UNK Welcomes NCA

Chapter 4: Criterion Two

The institution has effectively organized the human, financial, and
physical resources necessary to accomplish its purposes.

Financial Resources

General Unrestricted Funds

General Unrestricted Funds are those that are under the control and discretion of the university for achieving its educational purposes. UNK can shift these funds between educational purposes at its discretion. Figure 4.15 in Appendix D shows the history of revenues, expenditures, and transfers out from FY 1993 to FY 2002. The following takes a more detailed look at this category.

Revenue Trends and Analysis. Revenue sources fall into one of six different categories; state appropriations, tuition and mandatory fees, federal grants and contracts, state grants and contracts, sales and services of educational activities, and other. State appropriations represent the largest portion of the budget, followed by tuition and fees, sales and services of educational activities, other revenues, federal grants and contracts, and state grants and contracts.

Over the course of the past decade, UNK also has increased admission fees, late registration fees, late fee payment surcharges, and graduation fees.

Expenditure Trends and Analysis. While the principles of fund accounting identify revenues by source, these principles classify expenditures and transfers by use (or function). According to the Higher Education Finance Manual: Data Users' Guide (pp. 16-18), there are thirteen functional categories of expenditures and transfers. The following paragraphs give a brief description of relevant categories, identify their portion of the overall current fund unrestricted budget, and review the trends over the past decade.

Base Budget Reductions. The raw data on revenues does not reveal the true nature of UNK's situation during the last three fiscal years. Although Table 4.3 shows a pattern of increasing revenues and expenditures, the state's fiscal crisis has required UNK to make significant reductions to its base budget. Increases for salaries and targeted program enhancements exceeded revenue increases, requiring UNK to make significant reductions to the base budget. The original FY 2002 budget included an increase of nearly $2.7 million targeted to salary increases and other specific cost items. Like many states, Nebraska's fiscal outlook took a dramatic turn for the worse, as state revenue collections failed to meet the projected levels. The Nebraska Legislature held a special session in October and November of 2001, four months after the start of FY 2002. The Legislature reduced the appropriation to the University of Nebraska system by $8.3 million in FY 2002 and $11.2 million in FY 2003. Subsequently, the Board of Regents allocated reductions to UNK of $288,246 in FY 2002 and $592,303 in FY 2003.

In addition to the $592,303 reduction, UNK's budget for FY 2003 also included enhancements of $3.8 million for salary increases and other targeted increases. Unfortunately, further budget reductions were to follow. Because of actions during the regular 2002 Legislative Session, UNK received a base budget cut of $378,301. In addition, a University system revenue shortfall resulted in an additional reduction of $159,815. Regrettably, state budget revenue collections continued to lag behind projections, resulting in another special session of the Nebraska Legislature in August of 2002 that reduced state appropriations to the University of Nebraska system by $15.3 million. The Board of Regents assigned $1,208,572 of this reduction to UNK.

The FY 2004 budget followed the pattern of the previous two fiscal years, with increases targeted for specific items and a base budget reduction. The increases included a salary increase of 1.75 % for all employee classifications, additional funds to cover increasing health insurance costs, inflationary adjustments for various goods and services, and additional funds for need-based student aid. The total increase for these items was about $1,285,484. The base budget reduction, however, was $1,675,828.

The cumulative effect of the base reductions of over $4.3 million in the last three fiscal years has had a significant impact on the operations of UNK.

Table 4.3

Increases and Decreases to Base Budget for FY 2002 - FY 2004
    FY 2002   FY 2003   FY 2004  
  Base Budget from Previous Year   $ 40,546,169   $ 43,357,886   $ 44,780,380  
  Targeted Increases           
  Salary & Wage Increases   $ 2,046,780   2,178,860   597,347  
  Health Insurance Adjustment   186,544   398,391   148,584  
  Workers' Compensation Adjustment   40,674   -   -  
  Building & Operating Maintenance   167,783   343,083   -  
  Utility Increase   66,622   71,285   61,674  
  Student Recruitment & Retention   42,500   42,500   -  
  Need-Based Scholarships   128,700   128,700   257,400  
  Diversity Funding for New Hires   138,735   71,791   -  
  Programs of Excellence   284,625   300,000   -  
  Deferred Maintenance Initiative   -   97,281   -  
  Property/Self Insurance Transfer   -   98,834   58,698  
  Miscellaneous   -   30,760   161,781  
  Subtotal-Increases   $ 3,102,963   $ 3,761,485   $ 1,285,484  
  Base Budget Cut - Nov. 2001   (288,246)   (592,303)   -  
  Base Budget Cut - May 2002   -   (378,301)   -  
  University System Shortfall   -   (159,815)   -  
  Base Budget Cut - July 2002   -   (1,208,572)   -  
  Base Budget Cut - May 2003   -   -   (1,675,828)  
  Miscellaneous Adjustments   (3,000)   -   -  
  Subtotal-Decreases   $ (291,246)   $ (2,338,991)   $ (1,675,828)  
  Final Base Budget   $ 43,357,886   $ 44,780,380   $ 44,390,036    

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