Update Regarding State Budget - July 2014
As we start the University’s new fiscal year, I wanted to provide a brief update on the state budget and its impact on JMU, as we understand it so far. The $96 billion 2014-16 biennial state budget was passed by the General Assembly and signed by the Virginia Governor on June 23, 2014. Due to an unanticipated shortfall in state revenue of $1.5 billion, the final budget did not include most of the targeted increases for higher education found in the earlier versions of the budget (e.g., operating money for newly opened or renovated facilities such as Duke Hall and the Student Success Center at JMU). In most cases, state spending is maintained at current levels, and the budget does not include any state funding for salary increases; however, we will receive $2.8 million annually for Education & General (E&G) maintenance reserve projects and $1.85 million annually for the Equipment Trust Fund Program for the purchase of new instructional academic equipment across the various Colleges.
The university will receive new general funds of $1.2 million in the next two academic years to maintain the commitment already in place for current funding levels for new in-state undergraduate enrollment. While the university did not receive other new state revenues as initially planned, we will be able to cover funding for state-mandated health insurance and retirement increases, six new faculty and 1.47 part-time faculty lines (to achieve our student/faculty ratio goal), academic operations, facility operation/maintenance and student financial assistance through new tuition and fee revenues and reallocations.
During these times of constrained state budgets, competitive compensation remains a high priority for JMU. The state has indicated that its revenue projections for this coming year will likely not be met, and a revenue reforecast will be required at some point this coming year. Without state budget support for salary increases and due to the economic uncertainty of state revenues so early in the fiscal year, we will need to continue to explore the best way to move forward in implementing strategies for university compensation priorities. We will continue to communicate with the University community as we get additional details from the state and are able to make specific budgetary determinations for this year.
As the new state general funds for the 2014-15 university budgets are very limited, the university’s cost drivers are mainly covered by tuition and fee revenues and reallocations. A few examples of the major cost drivers covered in the University’s FY 2014-15 budget are as follows:
- Medical Insurance - $540 increase for each employee. The University is required to cover 52% of the new Education & General (E&G) costs and the state covers 48%. The University’s share of the cost is $663,780.
- Virginia Retirement System - The University’s 52% share of the E&G cost of the Virginia Retirement System increase from 8.76% to 12.33% for each eligible employee totals $1.2 million.
- Academic Affairs Operating & Enrollment Growth:
- New Enrollment Growth Faculty - $700,000 to maintain 16:1 student/faculty ratio and provide operating funding for those faculty lines.
- Academic Program Operations & Support (including differential Tuition) - $4.1 million for supplies, materials and operating funds for academic departments.
- Library Materials Operating - $150,000
- New facilities operating and maintenance costs for Duke Hall, Student Success Center and Ice House - $1.6 million
- Divisional Operating - $436,662 for cost-to-continue funding and new program/operation costs for the Student Success Center where departments from four divisions have been located.
- Undergraduate/Graduate Scholarships and Undergraduate Financial Aid - $1.3 million additional funds are needed to adjust for tuition increases and new financial aid funding. Additional funding of $1.1 million will be allocated for need-based undergraduate student aid and $231,961 for the tuition increase impact on undergraduate and graduate scholarships.
As more detailed information becomes available, I will continue to communicate with the university community. Let me personally thank all of you for your commitment to James Madison University, and for all that you do to provide the best possible learning environment for our students. I hope that everyone will enjoy the remaining weeks of the summer - which seems to go by so quickly!
With appreciation and best regards,
Jon Alger, President