Budget Update
January 29, 2024
Budget updates discussed at Thursday’s Budget Town Hall are highlighted below.
Budget Outlook
We have made significant progress in reducing our spend of central university reserves this year. Our initial budget reflected a deficit of $15.7 million, and we are now estimating a deficit in the $5 million range. The primary driver of this progress is our hiring pause and central salary savings, as enrollment-driven tuition gains are largely offset by increased irregular labor and operating inflation.
Looking ahead to FY2025, based on the Governor’s budget recommendation, conservative enrollment growth, and a fully funded position list, our central unit budget reflects a $16.3 million deficit.
In order to reach our goal of a balanced budget by FY2027, our Budget Advisory Group has developed recommendations for achieving $6.5 million in deficit reduction in FY2025 and an additional $6.5 million in FY2026. These measures, developed through extensive consultation with stakeholders and units across the university, combined with sustained enrollment and moderate tuition rate increases, will set us up for a sustainable, balanced budget in FY2027.
Deficit Reduction Plan
Our plan involves five strategies intended to uphold our budget principles, sustain our forward progress and momentum in all areas of the university, and realize needed reduction goals. These strategies are summarized below and explained in more detail in our Budget Update and Deficit Reduction Plan document posted on the budget website.
Continue working on Budget Optimization Initiative Projects
These strategic initiatives are focused on 1) sustainable and scalable revenue growth, and 2) expenditure reduction through efficiencies and shared service models.
Centralized Salary Savings
Holding salary savings in a central salary savings pool will generate a recurring expense offset while also creating a more dynamic and strategic approach to deploying personnel resources as needed across the university. Budgeting expenditures according to established plans and priorities will also increase transparency.
As part of this change, we will 1) ensure units have sufficient base budgets to attend to adjunct, irregular, and operating needs, 2) create a central pool for one-time needs, 3) create a central pool for market, equity, and retention needs, and 4) create a structure and central funding for one-time vacation payouts and moving expenses.
Revenue Enhancing Investments
We will create a clear, consistent structure and process for revenue-enhancing investments to support the adaptation and growth of new revenue streams available to all units.
Increased Administrative Recovery Rates
We will increase administrative recovery rates by ½ percent to reflect significantly increased overhead and administrative expenses costs. The average impact of this rate increase by college/unit is $6,200 annually, and we are working individually with units to ensure this increase does not impact their local and auxiliary success.
Expenditure Reductions by Division
We have assigned a total of $2M in expenditure reduction goals by division based on the respective percentage of the central university budget, understanding that the deficit cannot be solved through revenue growth alone. Assigning reduction goals by division rather than unit provides a larger canvas for assessing needs and opportunities.
Vice Presidents will be empowered to work with their teams to identify options and recommendations for achieving these goals. They are encouraged to review vacant positions as part of their analysis with the understanding that layoffs and/or furloughs are not part of our current strategy.
Next Steps
We will be working to operationalize these strategies over the next few months and encourage you to actively contribute to these efforts through engagement, dialogue, analysis, and feedback. By navigating this challenge together, we can uphold our values and principles, maintain our momentum, solve our deficit, and position ISU for continued success.
Please work with your UBO and unit leads on specific questions or concerns about the deficit reduction plan and how it impacts your department. Please also don’t hesitate to reach out to me directly with any questions, feedback, or concerns.
Jennifer Steele
Vice President for Finance and University Planning
(208) 282-4277
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