Chapter 4: Criterion Two
The institution has effectively organized the human,
physical resources necessary to accomplish its purposes.
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.
- State Appropriations. In general, the Nebraska Unicameral Legislature appropriates tax revenues to the University of Nebraska system, rather than directly to UNK. Central Administration then determines the distribution of these funds to each campus.
UNK's state appropriations increased from $20,996,521 in FY 1993 to $32,386,591 in FY 2003, which is an annual growth rate of 4.4%. The actual percentage increase in state appropriations over the previous year has varied from a low of 1.0% in FY 1998 to a high of 8.2% in FY 2002.
As a percent of current fund unrestricted revenues, state appropriations have remained consistent over the last decade. State appropriations represented 61.2% of current fund unrestricted revenues in FY 2003, compared to 63.3% in FY 1993. This percentage ranges from a high of 63.4% in FY 1998 to a low of 61.2% in FY 1999 and FY 2003.
- Tuition and Fees. UNK collects tuition on a per-credit-hour basis, with different rates established by the Board of Regents for undergraduate and graduate students, residents, and nonresidents. Under the principles of fund accounting for higher education, only a few of the numerous fees charged by UNK are included in this revenue classification. These fees are admission fees, late registration fees, late fee payment surcharges, and graduation fees. The remaining fees appear as sales and services of educational activities.
Total tuition collections have increased every year during the past decade. Rate increases have offset revenue losses resulting from declining enrollments. In FY 1993, UNK collected $10,939,682 in tuition and fees, compared to $15,279,136 in FY 2002. This represents an annual growth rate of 3.8%. The percentage increase over the previous year has ranged from a low of 0.4% in FY 1998 to a high of 9.7% in FY 2002.
Over the past decade, the rate increases in the charge per credit hour have varied by course level (undergraduate versus graduate) and the student residence status. Figure 4.16 in Appendix D shows the details for each year by the rate categories of undergraduate resident students, undergraduate nonresident students, graduate resident students, and graduate nonresident students. The highlights are as follows:
- For undergraduate resident students, tuition increased from $49.75 in the fall of 1992 to $140.00 in the fall of 2003, an annual growth rate of 6.9%. The percentage increase from the previous year has ranged from 3.0% to 14.9%.
- Undergraduate nonresident tuition increased from $84.75 to $212.75 per credit hour from the fall of 1992 to the fall of 2003. Rate increases ranged from 2.9% to 15.1% and the annualized growth rate was 8.7%.
- For graduate resident students, tuition increased from $57.00 in the fall of 1992 to $128.75 in the fall of 2003, an annual growth rate of 7.7%. The percentage increase from the previous year has ranged from 3.1% to 15.0%.
- Graduate nonresident student tuition increased from $97.50 to $266.25 per credit hour from the fall of 1992 to the fall of 2003. Rate increases ranged from 3.1% to 32.3% and the annualized growth rate was 9.6%.
Over the course of the past decade, UNK also has increased admission fees, late registration fees, late fee payment surcharges, and graduation fees.
- Grants and Contracts. UNK receives funds from the state and federal government in the form of grants and contracts for specific projects or programs. Although such grants and contracts are restricted funds, most agreements include provisions that permit UNK to receive reimbursement for indirect (or "overhead") costs associated with administering the grant or contact. The principles of fund accounting classify these reimbursements as unrestricted funds.
Indirect cost reimbursements have grown over the past decade, but represent a small portion of current fund unrestricted revenues. In FY 2003, reimbursements from federal grants and contracts were $127,069, while reimbursements from state grants and contracts were $40,929. According to information from UNK's audits, the University did not receive any current fund revenue from either federal or state grants and contracts in FY 1993 or FY 1994.
- Sales and Services of Educational Activities. This revenue category includes charges to the public made by UNK units such as the Safety Center, the Nebraska Small Business Development Center, the Testing Center, and the Elderhostel Program. In addition, it includes special fees charged to students who enroll in certain laboratory sections or special classes. It includes also some mandatory fees related to specific educational activities.
Revenues from sales and services of educational activities increased from $724,724 in FY 1993 to $2,790,891 in FY 2003, an annual growth rate of 14.4%. As a share of total unrestricted current fund revenue, this category has grown from 2.2% in FY 1993 to 5.3% in FY 2003.
- Other. Interest earned on fund balances represents the largest share of revenues in the "other" category. State support for the Scholarship Assistance Program (SAP) and the State Scholarship Assistance Program (SSAP) follow earned interest. In addition, this category includes funds from the exclusivity agreement with the Pepsi-Cola Corporation, the lease of farmland, and charges for rental of space.
Revenues from this source increased from $512,553 in FY 1993 to $750,317 in FY 2003, an annual growth rate of 3.9%. As a share of total unrestricted current fund revenue, this category has declined from 1.5% in FY 1993 to 1.4% in FY 2003.
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.
- Instruction. This function consists of expenditures related directly to providing courses and other instructional activities. At UNK, this includes the specific cost centers assigned to each academic department, summer session, and off-campus instruction. It includes also cost centers that directly support the educational mission in a more general manner, such as assessment of student learning, the World Affairs Conference, General Studies Program, Honors Program, and reserve funds for academic equipment and improving instructional quality. Current fund unrestricted expenditures increased from $19,568,794 in FY 1993 to $26,242,870 in FY 2003, an annual growth rate of 3.0%. As a percent of total current fund unrestricted expenditures, instructional expenditures went from 57.1% in FY 1993 to 51.9% in FY 2003.
- Research. This function consists of expenditures specifically targeted to produce research outcomes. At UNK, this includes the Center for Vocational Education and cost centers for individual research projects funded by the Dean of Graduate Studies and Research. Current fund unrestricted expenditures for research increased from $166,795 in FY 1993 to $274,431 in FY 2003.
- Public Service. This function consists of expenditures targeted for non-instructional services provided to individuals outside of the institution. At UNK, this includes the Nebraska Safety Center, the Center for Rural Research and Development, and instructional TV production. Current fund unrestricted expenditures for public service increased from $370,320 in FY 1993 to $922,406 in FY 2003, which represents an annual growth rate of 9.6%. As a percent of total current fund unrestricted expenditures, public service expenditures went from 1.1 % in FY 1993 to 1.8 % in FY 2003.
- Academic Support. This function consists of expenditures to provide support services for the institution's primary missions of instruction, research, and public service. It includes subcategories for libraries, museums, academic computing support, academic personnel development, and course and curriculum support. At UNK, this function includes the Calvin T. Ryan Library, the Museum of Nebraska Art (MONA), the Walker Art Gallery, the deans' offices, and the portion of Information Technology Services' budget attributed to academic computing. Current fund unrestricted expenditures for academic support increased from $3,495,367 in FY 1993 to $6,072,656 in FY 2003, an annual growth rate of 5.7%. As a percent of total current fund unrestricted expenditures, academic support expenditures went from 10.2% in FY 1993 to 12.0% in FY 2003.
- Student Services. This function consists of expenditures for activities intended to contribute to the student's intellectual, cultural, and social development outside of the formal instructional program. It includes intercollegiate athletics only when the program is not organized as an auxiliary enterprise. This function at UNK includes Financial Aid, the Advising Center, Career Services, and Counseling Services. It also includes the Antelope newspaper, music and forensic trips, theater productions, International Education, and International Student Services.
In FY 1997, UNK reorganized its Athletics Program as an auxiliary enterprise. As a result, current fund support for athletics no longer shows as an expenditure for student services in the official UNK audit. Instead, this support now shows as a non-mandatory transfer to auxiliary programs in the audit. For the purposes of consistency in data, however, this analysis includes current fund support for athletics as student services function expenditures for all years.
Current fund unrestricted expenditures for student services increased from $2,359,660 in FY 1993 to $4,101,575 in FY 2003, an annual growth rate of 5.7%. As a percent of total current fund unrestricted expenditures, student services expenditures went from 6.9% in FY 1993 to 8.1% in FY 2003.
- Institutional Support. This function consists of expenditures for activities intended to provide for both the short-term functioning and long-range viability of the institution, other than physical plant operations. Major subcategories include executive management, fiscal operations, public relations, and administrative computer support. At UNK, this includes the Chancellor's and Vice Chancellors' offices, the offices reporting to the Vice Chancellor for Business and Finance (other than Facilities), the Admissions Office, the Registrar's Office, and the portion of Information Technology Services' budget attributed to administrative computer support. Current fund unrestricted expenditures for institutional support increased from $3,842,489 in FY 1993 to $5,101,658 in FY 2003, an annual growth rate of 2.9%. As a percentage of total current fund unrestricted expenditures, institutional support expenditures went from 11.2% in FY 1993 to 10.1% in FY 2003.
- Operations and Maintenance of Plant. This function consists of expenditures for operation of the physical plant. Major subcategories include physical plant administration, building maintenance, custodial services, utilities, landscape and grounds maintenance, and major repairs and renovations. Current fund unrestricted expenditures for operations and maintenance increased from $2,785,363 in FY 1993 to $4,211,105 in FY 2003, an annual growth rate of 4.2%. As a percent of total current fund unrestricted expenditures, operations and maintenance expenditures went from 8.1 % in FY 1993 to 8.3% in FY 2003.
- Scholarships and Fellowships. This function consists of expenditures made in the form of grants to students. At UNK, this includes Scholarship Assistance Program (SAP) and the State Scholarship Assistance Program (SSAP). In the official audit, this function includes also various undergraduate and graduate tuition waivers. The state accounting system, however, considers tuition waivers as an offset to tuition revenue and not as an expenditure item. Current fund unrestricted expenditures for scholarships and fellowships increased from $1,658,687 in FY 1993 to $3,596,624 in FY 2003, an annual growth rate of 8.0%. As a percent of total current fund unrestricted expenditures, scholarship and fellowship expenditures went from 4.8% in FY 1993 to 7.1% in FY 2003.
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 $4.3 million in the last three fiscal years has had a significant impact on the operations of UNK.
|Increases and Decreases to Base Budget for FY 2002 - FY 2004|
|FY 2002||FY 2003||FY 2004|
|Base Budget from Previous Year||$ 40,546,169||$ 43,357,886||$ 44,780,380|
|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||-|
|Student Recruitment & Retention||42,500||42,500||-|
|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|
|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)|
|Subtotal-Decreases||$ (291,246)||$ (2,338,991)||$ (1,675,828)|
|Final Base Budget||$ 43,357,886||$ 44,780,380||$ 44,390,036|