Campus News - January 14, 2002 - 2002 Legislative Supplement

UNIVERSITY OF NEW MEXICO LEGISLATIVE FUNDING REQUIREMENTS
FOR FY 2002-03

By Curt Porter, UNM Budget Director

INTRODUCTION
The University's funding requirements for FY 2002-03 were developed on the basis of input from the campus community. The original priority list contained requests for funding of new formula modifications, new initiatives at the Health Science Center and a list of new funding priorities for special projects. All of those requests have been dropped in response to the state's revised revenue estimate for FY03.

Overall Legislative Priorities
As it has been in recent years, the funding requirements statement for 2002-03 is focused on issues that are high priorities for all six of the four-year institutions. The Council of University Presidents, which consists of the presidents of each of the six four-year schools, has met and identified its highest funding priorities. The council identified three basic priorities: the cost of opening the doors, i.e., full formula and workload funding; a base compensation increase of four percent; and an additional one percent compensation to create a pool for retention and recruitment of key faculty. The Council agreed that there are other high level funding priorities for higher education, including funding for the UNM Health Sciences Center, which is not on the funding formula, as well as nonrecurring initiatives from individual campuses.

Compensation
In FY 1999-00, the six four-year institutions agreed that they wanted to initiate a multi-year compensation request that would, over a five-year period of time, bring salaries in the four-year institutions into parity with salaries for faculty at peer institutions and up to competitive market levels for staff. In accord with achieving that goal, the institutions requested an 8% compensation increase for FY 1999-00 with subsequent increases of 5% for the next four years. The actual appropriations for faculty compensation increases for FY 1999-00, FY 2000-01 and FY 2001-02 were 4.5%, 3.0% and 7.0%, respectively. Using the peer model, it would require 8% increases for each of the next two years in order to attain the average of the peers (see Table I). Given the financial situation of the State for FY 2002-03, the Council reduced its request to 4.0%, with the hope of at least keeping pace with the peers for this year. The institutions, however, will continue to pursue their goal of bringing faculty and staff salaries up to the average of peers.

Actual salary data for 2000-01 show that average faculty salaries at New Mexico institutions ranged from a low of 82.4% of peers to a high of 95.1% of peers. If comparative peer salary data for 2000-01 are averaged, New Mexico institutions are collectively at only 88.4% of their peers.

Although the same kind of peer data are not available for staff salaries at the four-year institutions, a recent Council of President's analysis of staff compensation and classification showed that staff salaries are at least 8% to 10% behind comparable market salaries. Thus, the above plan would also be applied to staff salaries.

Detail of UNM Legislative Priorities

Priority #1: The "Cost of Opening the Doors"
Maintaining the integrity of the funding formula, even in times of fiscal constraint, is the highest priority for the University of New Mexico. This includes formula workload for Main Campus, the Branch Campuses and Extended Services. Also included in the cost of opening the doors are workload adjustments for the Health Sciences Center which is not on a funding formula. For FY 2002-03, the cost of opening the doors includes correction of a funding-formula inequity that penalizes UNM and all of the four-year universities for offering lower-division courses in summer school. The tuition credit in the formula is greater than any of the formula factors at lower division, creating a funding deficit of some $425,000 for UNM every year. UNM also places a high priority on having no increase in the base amount of the formula tuition credit for FY 2002-03.

Formula Workload
The Main Campus formula workload increase, including the summer school formula correction, is $4,875,300 for 2002-03. This is due primarily to the fact that the three-year rolling average of credit hours (academic years 1998-99, 1999-00 and 2000-01) showed a strong increase. Distance Education/Extended Services formula credit hours are down slightly, showing a workload decrease of $263,600. For the Branches, the net enrollment is down, creating a workload decrease of $1,076,200. Most of this decrease is at the Gallup Campus.

Health Sciences Center
UNM is also requesting $500,000 to compensate Carrie Tingley Hospital for continued revenue shortfalls under the state Medicaid managed care program. While continually making progress in controlling overall expenses, the hospital lost more than $9,000,000 in patient care revenues since 1997. The request of $500,000 is based on the anticipated loss for FY03.

Also, the Health Sciences Center has identified $2,043,100 in basic expenses (utilities, information technology, compliance and group insurance) that have not been funded over the years. These are typical support costs for state-funded programs. The accumulation of these expenses over time has placed an undue burden on clinical revenues and thus, UNM is requesting state support.

Priority #2: Compensation Increases for Faculty and Staff
The University of New Mexico is of the opinion that compensation must still be a high priority. The most recently completed study of salaries for faculty in the UNM peer institutions reveals that UNM faculty salaries are now only 89.2% of the salaries of faculty at the UNM peer institutions. When the University began comparing its faculty salaries to the salaries of this group of peers in 1989-90, UNM salaries were 90.4% of the average of the salaries at the peer institutions. However, over the course of the next five years, thanks in large part to the peer adjustment funding that UNM received from the State of New Mexico, the University was able to make significant progress towards attaining peer parity. By 1994-95 UNM faculty salaries had risen to 95.2% of the average of the peer salaries. Beginning in 1995-96, UNM began to lose ground in comparison to its peer institutions. Table II shows the progression of this decline. Salary increases at less than the rate of inflation in 1995-96 and 1996-97 and no salary increase in 1997-98 combined to negate all of the progress that UNM had made towards bringing faculty salaries closer to the average of the peer institutions.

Although UNM has articulated as its goal that faculty salaries should reach the average of the peer salaries, UNM in fact competes for faculty in a much broader arena than that of the peer institutions. The University is one of only 58 public institutions designated as a Carnegie I Research University. When competing for high quality faculty, all of the public peer institutions are in competition. Table III shows the average faculty salary by rank for these universities and then compares them to UNM. When viewed in this context, UNM is fifth from last in terms of average faculty salaries for public Research I universities.

As mentioned above, identification of peer groups for staff salaries is a more complex process than that for faculty because some staff salaries must be compared to the local market, others to the regional market and even others to the national higher education market. However, a recent Council of University Presidents' survey reveals that UNM staff salaries are at least 10% below market rates.

Priority #3: Recruitment and Retention of Key Faculty
In addition to the base compensation increase of 4.0%, UNM (and the Council of University President's) is requesting that funds be provided to allow the University to offer extra compensation to both recruit and retain key faculty. Using the formula compensation model as the basis for calculating this fund, a 1.0% increase would provide UNM with approximately $2.3 million for this purpose.

Priority #4: Non-recurring Requests
For the first time, UNM has prioritized funding requests that would be of a non-recurring nature. Given the shortfall in recurring General Fund revenue, these priorities could be funded with General Fund "surplus" and still allow the University to proceed with some key initiatives.

· Nursing Enrollment Fund. UNM received $950,000 for FY02 to support year one of increased admissions to the College of Nursing. In order to continue this expansion through the second year of the two-year curriculum, the College requires additional faculty and staff. This request for $1,900,000 in nonrecurring funds, when added to the $950,000 currently in the base, will allow the College to accommodate 79 additional Bachelor's-level students and 24 additional Master's-level students until the funding formula picks up all the credit hours in FY07.
· Geographic Nursing Fund. This funding, in the amount of $2,352,300, would allow UNM to expand the RN/BSN program around the state through formal alliances with San Juan Community College, Western New Mexico University and Santa Fe Community College. The request would provide the necessary funding until the funding formula picks up all the credit hours in FY07.
· Teacher Licensure Fund. This proposal would allow the College of Education to expand its current pilot project that trains mid-career candidates who have already earned a Bachelor's degree. The funding of $1,683,000 would provide 90 new teachers every 15 months until the funding formula fully covers the increased costs in FY07.
· Utility Supplement. With the increase in natural gas prices during FY01, almost all the colleges and universities in the state experienced deficits in their utility budgets. The $1,209,890 in this priority represents the difference between UNM's funding from the state for utilities in FY01 and actual utility expenditures.
· EPSCoR. This program, designed to increase research expenditures in New Mexico, is a statewide priority supported by the Council of University Presidents. The total request is for matching funds in the amount of $3,000,000.
· Endowed Chairs. UNM supports the business sector initiative to provide matching funds for the establishment of endowed chairs, professorships, lectureships and graduate fellowships. A similar appropriation in 1984 was very successful at all the four-year universities.

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