GUIDING PRINCIPLES FOR BUDGETARY ACTIONS

OU Faculty Senate– Norman Campus

4/11/2010

The Faculty Senate reiterates the importance of an active participation process between University administration, staff, students, and other relevant parties in matters related to long-term financial plans and short-term budgetary actions. To foster effective collaboration, we offer three fundamental principles to guide meaningful and useful discourse.

Principle 1. Active Participation of the Budget Council in All Institutional Budgetary Processes

Efforts to restore budgetary collaboration between the administration and the Budget Council will help assure that the University budgeting process will follow generally accepted good financial management practices, will maintain fiscal prudence, and will promote adequate and appropriate long-term sustainability as required for the institution. To achieve this, we offer these suggestions:

· The participation of the Budget Council throughout the development of the annual budget request should be substantially increased with an expectation that the council will have regular work sessions to discuss budget issues and to make recommendations.

· There should be transparency in budgetary deliberations and in information concerning the future, current, and historical revenues and expenses. Potential adjustments to the operations of the institution should be presented to the Budget Council and reviewed on a regular and recurring basis.

· To ensure that meaningful and timely input can be provided, information concerning the impact of budget projections on employee compensation and benefits must be routinely provided to shared governance groups, such as the Employee Benefits Council, the Senate Executive Committee, the Faculty Compensation Committee, and the Faculty Welfare Committee

Principle 2. Separate Consideration Processes for Long-Term and Short-Term Budgetary Issues

Over the course of time, it is anticipated that the University will confront a variety of issues that have differing time horizons. Some will represent concerns that may arise far into the future and will affect the long-term sustainability of the organization; others will represent problems that must be addressed in the short term in order to operate within annual revenue and resource estimates.

Long-Term Issues

· Examples of substantial longer term issues include: [1] rapid growth in the cost of employee health care coverage, which are affected in part by independent external forces, [2] retirement health care costs, which may be viewed as unfunded future budgetary mandates, and [3] other substantial externally mandated expenditures applied to the university above those currently foreseen could include requirements for increased institutional support of system-wide OTRS shortfalls.

· These long term issues require long-term strategies and may require more permanent changes in fiscal structures and arrangements as well as changes in the benefit programs we offer that are more in line with current best practices. Issues such as these should be considered as part of the regular activities of shared governance groups and proposals that will impact former, current, and future employees should benefit from an extended vetting period where information is shared and feedback is gathered before decisions are finalized.

Short Term Problems

· This category includes unexpected increases in utilities costs, as well as any budgetary cutbacks that occur due to substantially decreased revenues affecting the fiscal needs of the upcoming academic year. Substantial decreases in legislative allocations to the institution in a given fiscal year for whatever reason are a good example of a “short term problem.”

· Short term problems should be addressed through short term and temporary solutions whenever possible, avoiding permanent modifications to existing policies and benefits. Only after such problems have persisted or deepened should the institution consider promoting them from short term to long term problems, with the latter necessitating more permanent forms of remediation.

Principle 3. Certain Values Should Take Precedence in Situations Where Reductions are Inevitable

· Make every effort to minimize impacts to the fundamental educational mission and consider the short-term and long-term impacts of any changes.

· Invite input from all affected parties throughout the decision-making process. Their involvement is critical to avoid deterioration in the quality of faculty, staff, students, and mission achievement from budgetary reductions.

· Encourage maximal flexibility within colleges and units for short-term budgetary reductions. If long-term cutbacks are required, allow similar flexibility as much as is practicable.

· Consider how to effectively share the burden of reductions across the entire academic community making sure to balance this value against disproportionate impacts to less financially advantaged persons.

· Remain sensitivity to the employment expectations established when employees joined the organization. Maintaining a competitive position will require consideration of how changes in compensation will impact both recruitment and retention. Employees who committed to the institution in difficult times should be rewarded for their loyalty.