UT sees big jump in budget shortfall

Retirement buyouts help limit job cuts as gap grows to $80 million

By Sharon Jayson
Wednesday, June 25, 2003

University of Texas officials are anticipating an $80 million budget gap over the next two years -- up $20 million from recent estimates.

Still, they say they will have to cut fewer than 150 positions, down from an estimated 500 jobs slated for the ax earlier this year. Officials planned to shed the jobs through a combination of a hiring freeze, attrition, layoffs and retirement buyouts. The latter proved to be a popular option.

"The response to the voluntary retirement incentive has been strong, and those acceptances are mitigating the need to lay off folks," UT President Larry Faulkner said in an interview.

However, in a Monday e-mail to faculty and staff members, Faulkner painted a bleak picture of university finances. Because an anticipated state budget cut of $30 million a year grew by about $10 million, the university will take $11 million a year from the campus repair and renovation budget. That budget, which has been about $13 million for several years, will be the first in line for the income that will come when tuition is increased, Faulkner wrote.

"The University has not seen the equal of our present challenges for many years," he wrote.

Lawmakers recently agreed to grant public universities the power to set their own tuition rates. So far, UT officials have not said how much tuition will increase. Kevin Hegarty, the university's chief financial officer, said officials are still figuring it out. He said a panel of students, administrators and teachers will offer recommendations on tuition policy and become a permanent part of the tuition-setting process. The members have not yet been named.

Faulkner said UT will see $22 million less each year in state appropriations, must spend $8 million a year to provide health-care benefits to part-time employees and must cover $4 million a year in costs for special programs. In addition, UT will receive $6.5 million less in annual income from the Permanent University Fund, a victim of the weakened stock market.

Although lawmakers also gave UT the ability to keep certain money from federal research grants, that money is committed to research, Faulkner said.

The buyout proposal, which was announced in April, offers employees who are eligible for retirement a $16,000 lump-sum payment if they agree to leave by Aug. 31. Already, 176 employees, including many custodians and employees in the physical plant and utilities, have signed up, said Kyle Cavanaugh, associate vice president for human resources.

The deadline for joining the voluntary program is 5 p.m. Monday.

Employees slated for layoffs will be notified in July.