May 1, 2008

Q&A: Purdue budget and salary process

The conceptual budget for fiscal year 2009 was approved in April by Purdue's Board of Trustees.

Morgan R. Olsen, executive vice president and treasurer, offers answers to some questions about the budget and salary process.

Question: What is the anticipated general fund budget for fiscal year 2009?

Answer: Systemwide, the general fund, which relies primarily on state appropriations and student fees for revenue, is expected to be $1.03 billion. At West Lafayette, the anticipated general fund will be $835.9 million.

Q: What is budgeted for salary increases for fiscal 2009?
A: Our West Lafayette conceptual budget provides a 3.5 percent pool for merit-based salary increases for faculty and staff, regardless of the source of funds. While there are many areas of the University that are supported by the general fund, other areas, such as Housing and Food Services and Intercollegiate Athletics, are self-supporting through revenues that they generate from fees, charges and donations. Those areas, too, must provide an average of 3.5 percent in merit increases. The salary policy also allows units to reallocate existing funds for up to an additional 0.5 percent to recognize extraordinary merit, market and internal equity situations. In addition, faculty members who received promotions to assistant, associate or full professor ranks, receive additional increases based on that change in faculty rank.

Q: Who determines what the salary increase will be for each member of the faculty and staff?

A: Each college, school and support unit is responsible for building its own detailed budget plan, including salary recommendations for each individual. Purdue does not have an across-the-board cost-of-living salary increase. Rather, decisions are based on evaluation of individual merit. It is expected that the higher performers will receive the higher merit increases.

Q: How much will the University's general fund budget increase over the fiscal year 2008 budget?

A: The budget of more than $835.9 million for the West Lafayette campus is 5.1 percent higher than the fiscal 2008 budget.

Q: How much of that increase is for compensation?

A: Of the overall general fund budget increase, 58 percent -- $23.3 million -- is designated for compensation. Compensation includes not only salary and wages but also benefits for all faculty and staff. The increase in benefits alone amounts to more than $7.3 million in next year's budget.

Q: What other increases make up the overall budget increase?

A: Other increases include $5.8 million for mandatory cost increases such as fuel, utilities, repair and rehabilitation, and operations and maintenance of buildings; $5.5 million for overarching initiatives such as supplies and expenses base budget increases, fee remissions, scholarships, and IT infrastructure; $3.5 million for pending strategic plan allocations; and $2.1 million for increased debt service.

Q: What factors are taken into account when developing the budget for the University?

A: Developing the University's budget involves taking a critical look at expected revenues and addressing needs across the colleges, schools and units of University.

We have to assess our income or revenue, just as any business, corporation or family would do, and then take at look at our priorities.

Our first priority is to cover our unavoidable cost increases. Health care costs go up each year. So do the costs of utilities, repair and rehabilitation and operations and maintenance of our facilities, especially as we are adding substantial amounts of new space to campus. Fee remissions and some scholarship monies also fall into this category.

After those unavoidable expenses, our highest priority has always been compensation for our faculty and staff. Our goal is to maintain a competitive salary package for all of our employee groups -- faculty, administrative and professional staff, clerical staff and service staff.

After unavoidable expenses and compensation, investments in new initiatives that will help us meet our strategic goals are evaluated.  Our strategic plans always drive our resource allocation decisions.

Q: Are decisions on budget and salary the same at Purdue's regional campuses?

A: Generally, all campuses use very similar guidelines  when it comes to developing the budget and setting salary increases. The conceptual budget plan, including all Purdue campuses, can be found online at www.purdue.edu/budgetfp/pdf/ConceptualBudgetPlan.pdf