The most effective budget for IU would minimize student fees and maximize employee earnings, said MaryFrances McCourt, senior vice president and chief financial officer.
McCourt delivered a presentation of IU’s budget assumption for the 2016-17 year at the Board of Trustees meeting Feb. 4.
She provided three possible budget scenarios, along with an analysis of each in order to determine which would be the most effective upon its implementation.
“This is the first time we’ve gone to the board before completing the budget process,” McCourt said. “Although we have already set the tuition rates for this year, there are many other expenses and plans we have to finalize.”
In order to provide a one percent salary increase for employees of the University, the tuition must rise at an even higher level to match the higher salaries.
“The Trustees have to look at these budgets in order to discuss other parts of the meeting agenda, such as residence hall housing rates and the Bicentennial Strategic Plan report,” Board of Trustees Secretary Debbie Lemon said.
Financial officers are concerned with return on investment rates for higher education, the maximization of fiscal efficiency in existing departments and the allocation of resources in new University programs and initiatives.
The Office of the Senior Vice President and CFO generates detailed models to examine incoming revenue and how to appropriate the money into well-structured budgets. They are constantly holding conferences and reconfiguring their findings throughout the year.
“It’s about finding efficiency, areas to cut costs and ways to better the campus,” McCourt said. “We are financially liable at the end of the day, and our biggest driver of expenses is, of course, the people.”
The tuition increases that were set last year are currently projected to bring in roughly $15.7 million in 2017.
This will allow the University to increase the pool of money dedicated to employee salaries.
The models McCourt presented to the Board of Trustees provided a range of different scenarios of raising wages and managing appropriations.
The third plan, a 2.5 percent salary pool increase, was concluded to be the best recommendation, according to board members.
Projections said the plan’s implementation would be the most effective in the long term.
The scenario makes financial aid increases proportionate to tuition increases and prevents structural deficits.
“We focus on delivering value to employees,” McCourt said. “It isn’t about taking away from the campuses by cutting costs; we want to maintain the best and brightest, improve our institution and find ways to construct plans so we can become more efficient, and re-invest the saved money.”
The budget assumptions presentation highlighted the University’s maintenance and reduction of benefit costs over the years, which is an atypical feat in today’s challenging economic landscape.
“It’s been phenomenal,” McCourt said. “We’ve been able to emphasize and restructure areas such as healthcare through our efforts, proving we can deliver value to our employees while saving money.”
Although McCourt said IU has many moments to celebrate, each fiscal year brings new challenges for its financial officers.
McCourt said the “balancing act” of bringing in revenue, appropriately allocating funds and satisfying the needs of all individuals in the university’s ecosystem will never cease to be a challenging process.
