The University of Idaho administration has found a solution to the $1.4 million budget deficit that doesn’t involve dipping into the reserve budget, according to Keith Ickes, executive director for planning and budget.
“We are lucky,” Ickes said. “It wasn’t a great plan, but it was lucky.”
Due to a 4.9 percent total decline in enrollment in Fall 2013, the university faced a budget deficit for the second consecutive year. But Ickes said there’s no longer a need to worry about the $1.4 million deficit.
“In October, we counted up the tuition of the fall semester,” Ickes said. “We assumed that we would have a flat enrollment — we wouldn’t grow, but we wouldn’t get smaller — but in fact, we got smaller and that means less revenue.”
To solve the $2.6 million deficit in last year’s budget, Ickes was forced to pull money from a reserve fund that has been built up from years when UI had additional revenue.
This year, Ickes went looking for money in unlikely places. He pulled together funds from two parts of the university budget that were overfunded. One was the classification and compensation process.
“We knew in that process that there would be people whose new classification would have a minimum salary that was higher than they were being paid,” Ickes said. “So we budgeted way last March at the start of this process and at that time we just had some very general statistics that gave us an idea of how big that problem could be. So we budgeted $495,000 to cover the likely expenses.”
When it came down to it, Ickes said only about $70,000 was needed to cover the costs of salary increases, leaving nearly $425,000 on the table.
The unexpected funds helped, but there was still a $975,000 hole to fill — that’s when the Retiree Health Program for “Tier I” eligible persons was discovered.
“I was reminded there was a whole section in the Faculty and Staff Handbook about Tier I, Tier II, Tier III, Tier IV eligibility and that’s describing which employees get which benefits in their retirement,” Ickes said.
After Ickes and his colleagues looked closely into the amount of funds UI allocates to the “Tier I” Retiree Health Program, it became evident that the funds were disproportionate to the number of eligible beneficiaries.
According to the UI Faculty and Staff Handbook, Tier I eligible retirees must have been hired on or before Jan. 1, 2002, have been enrolled as the primary subscriber in the active health plan for at least five years immediately prior to retirement and meet strict age and qualified service requirements.
“The group’s not going to get any bigger because all of the eligible people have basically taken advantage of it — there’s a few left but not many,” Ickes said. “It is a shrinking group.”
As a result, Ickes and UI Budget Office were able to retrieve about $975,000 from the “Tier I” Retiree Health Program and effectively resolve the deficit.
Ickes said he was pleased with how the deficit was managed, because otherwise it would have been protocol to pull from the central reserves to fill the hole, which he said the university doesn’t like to do. Last year, the university covered a $2.6 million deficit with funds from the reserves.
Similar deficit issues are foreseeable in future years, Ickes said, because of the reduced number of credits needed to graduate — from a total of 128 credits to 120. Ickes said the requirement change allows students to graduate faster and accounts for some of the enrollment decline.
“This year, we were sort of caught by surprise because it was the first graduation and we didn’t know what to expect,” Ickes said. “It may mean we need to reduce our expectations on tuition coming in, but we’ll know the overall affect the graduation credit change has had on revenue by watching closely the next three years.”
Amber Emery can be reached at [email protected]