Purdue trustees' committee reviews budget plan; vote set for May 27

May 16, 2011

WEST LAFAYETTE, Ind. – The Purdue University trustees' Finance Committee on Monday (May 16) reviewed a conceptual general fund operating budget for the next year, which includes a modest merit increase in salary and uses internal cost savings to cover more than 40 percent of the year's expenditure allocations.

The proposal now moves to the board's Executive Committee, which will take a final vote on the plan following a public hearing on Friday, May 27.

"This budget proposal was designed to keep tuition and fee increases to a minimum, ensure the continued high quality of a Purdue education and the value of our degree, and use internal savings and reallocations to fund high-priority programs," said university President France A. Córdova.

"We appreciate what the state Legislature was able to do in an economic climate that challenges all of us. We appreciate the Indiana Commission for Higher Education's considered approach to setting tuition guidance. We will continue to do our part by aggressively working to cut costs and grow sources of revenue beyond state appropriations and tuition."

Purdue's proposed tuition increase is within the commission's recommendations.

The conceptual general fund budget - $1.16 billion system-wide for the coming academic year - was drafted after the state approved its biennial spending plan.

Purdue received a cut of 3 percent in its operating appropriations, or $7.3 million at the West Lafayette campus, said Al Diaz, Purdue's executive vice president for business and finance, treasurer. The new appropriation of $233.8 million is 10.8 percent below the highest level of $262 million in fiscal year 2009 and is close to the fiscal year 2004 level of $233 million.

"Purdue was able to craft a balanced budget largely because of Sustaining New Synergies, a 15-month campus-wide program to reduce expenditures through unit budget reductions and savings in information technology, energy use, retirement incentives, rebalancing benefits and increasing reimbursements from auxiliary enterprises. Funds provided by record levels of sponsored research also increased," Diaz said.

In approving Purdue's general fund budget, which supports educational and base operating expenditures, the trustees endorsed the following spending plans for fiscal year 2012:

* At the West Lafayette campus: A 2.9 percent increase to $933.8 million.

* At Purdue Calumet: A 4.2 percent increase to $85 million.

* At Indiana University-Purdue University Fort Wayne: A 4 percent increase to $112.3 million.

* At Purdue North Central: A 4.8 percent increase to $30.8 million.

Diaz said the spending plans will allow the university to continue funding initiatives outlined in the strategic plans of each campus while also providing the funding needed to offset increased operational costs. For example, staff benefits and unavoidable costs, such as fuel, utilities, insurance, plant expansion, and repair and rehabilitation, are expected to increase a total of $6.4 million on the West Lafayette campus in the upcoming fiscal year. The plan also calls for a 1.5 percent merit salary increase at West Lafayette that will cost nearly $8.6 million. The merit salary increase policy also gives units the option to supplement up to 0.5 percent from their own funding sources. 

At West Lafayette, the proposed budget plan includes a 3 percent decrease in operating appropriations and incorporates elements from the Sustaining New Synergies initiative, including budget reductions to the units, health-care cost reductions, energy savings, early retirement incentive program savings, revenue increases, and flat supply and expense budgets. Funding for more than 40 percent of fiscal year 2012 expenditures will be made with internal budget reallocations, which allowed Purdue to keep tuition increases within state recommendations.

"Purdue continues to offer a world-class education at a cost that is near the bottom among the Big Ten public institutions," Córdova said.

Purdue's undergraduate resident fees this year rank ninth among Big Ten institutions, and nonresident tuition and fees rank seventh.

The general fund, which supports the academic mission of the university, represents only a portion of the university's total system-wide operating budget. The full operating budget totals more than $2.17 billion for fiscal year 2011 and includes the general fund; sponsored programs; gifts; and revenue from residence halls, athletics, other auxiliary income and university-funded financial aid.

The total operating budget fiscal year 2012 is not yet established and will be presented at the trustees' September meeting.

Writer:  Chris Sigurdson, 765-496-2644, sig@purdue.edu

Sources:   France A. Córdova, (765) 494-9708, president@purdue.edu

                    Al Diaz, 765-494-9705, aldiaz@purdue.edu

Related news release:
Purdue to conduct public hearing on tuition, student fees