Northern Arizona University will implement furloughs this fiscal year only for the president, vice presidents and academic deans while deferring campuswide furloughs until fiscal year 2010, according to the final FY09 budget plan announced today by NAU President John Haeger.

Haeger said that he and the university's vice presidents and academic deans will take three furlough days between now and June 30. In FY10, which begins July 1, university employees making $40,000 per year and higher will take up to seven furlough days during the year. Employees earning less than $40,000 per year will take up to two furlough days. The FY10 furlough program is expected to save the overall university budget about $3 million.

"I have received a tremendous amount of feedback from the faculty, staff and administration and took all that input into consideration in making this furlough decision," Haeger said. "It also became apparent that there are a lot of issues regarding furloughs that must be carefully considered. Waiting to implement campuswide furloughs in FY10 will give us sufficient time to work through the policy issues and the details of the implementation plan."

Haeger said that he has tried to avoid negatively impacting an already lean work force as much as possible, however, "The increasingly dire projections about the university budget mean that furloughs and layoffs are inevitable.

"Furloughs can help mitigate layoffs in the short run, but the truth is that the university must make permanent cuts to our budget next year," the president noted. "The budget cuts next year will impact offices across the campus and force us to stop offering certain services and programs," the president noted.

The daunting task ahead with the FY10 budget is to translate nearly $11 million of one-time cuts from FY09 into permanent reductions to start the FY10 budget year. In FY 10 more cuts to the state budget are predicted.

"We cannot escape the reality that 83 percent of our budget goes to salaries and benefits, and FY10 will force us to reduce our labor force," Haeger said. In consultation with campus leadership, the president and vice presidents will identify services and programs that could be scaled back, temporarily suspended or even stopped altogether.

"We have extraordinarily difficult decisions to make," Haeger acknowledged. "I have appreciated the efforts of campus faculty, staff and administration to work together toward campus solutions that hopefully mitigate the worst impacts of this recession. We will move forward on our personnel decisions with great sensitivity to the needs of affected employees and to provide all the assistance we can."
NAU anticipates its share of the $141.5 million cut to the university system for FY09 will be $21.3 million. Haeger said some issues still remain at the state level that could push this figure higher as state agencies pull back on commitments for research projects.

The university's FY09 budget reduction strategy relies heavily on $6 million in cuts to the major divisions of the university: the President's Office (including Athletics and Capital Assets and Services), the Provost's Office, Research, Administration and Finance, Enrollment Management and Student Affairs, Advancement, Information Technology Services, Distance Learning and Institutional Effectiveness.

The university also will take $5 million from previous and projected tuition collections and apply the funds to the budget cut instead of the institution's educational needs, such as hiring permanent faculty and advisors. The tuition collections include both permanent and one-time dollars.

Another $2 million will come from halting the development of the new health professions programs in occupational therapy and physicians assistant. Additionally, the university will apply $3 million toward the cut from one-time debt-service savings that result from the retirement of debt on several university buildings. The university also will realize $1 million in savings on employee benefits as a result of not filling about 100 positions that were frozen.

The budget reduction plan further includes a one-time sweep of local balances. These accounts include auxiliary services, such as Residence Life, Dining Services, Elderhostel and accounts that every division uses as operating dollars to purchase equipment, supplies, etc. The sweep totals more than $1 million. Auxiliary units are self-supporting and rely on these accounts for all operating expenses, emergencies and bond payments. Finally, the university has a budget-stabilization account of $1 million to $2 million for emergencies and temporary moves of offices as well as furniture.

Because the university will not be implementing campuswide furloughs in FY09, the projected $1 million to $2 million in savings will be made up through additional cuts to the various university divisions, further sweeps of local accounts and the elimination of targeted faculty salary equity adjustments that totaled $1.3 million.

With the FY09 budget reductions completed, the university will begin immediately to address the FY10 budget reductions. That process will begin in Phoenix on February 12 when President Haeger appears before the Senate and House Appropriations committees.