This has been a very challenging, tumultuous and lengthy budget planning and execution period for our university. So, let me begin by saying thank you for your patience, as well as your commitment and dedication to serving our students during this time of anxiety and uncertainty. Next, I’d like to share with you that we have concluded all FY19 reallocations and cuts to budgets, and the faculty and staff affected have been notified. Please know that our HR team is working directly with the employees impacted to support them through the transition and find alternative NKU placement opportunities.
As you learned in the annual budget address, the cost increases we face in FY19 include fixed costs as well as mandated and strategic investments. As a result of these increases and the resultant need to cut costs elsewhere, 63 positions were adversely impacted, of which most were unfilled.
Investments in our people, investments in the university
Fortunately, the impact on our people was far less than originally anticipated at the start of the legislative session earlier this year. In fact, the final outcome for the session and our FY19 state appropriation was positive. Thereafter, our Board approved a budget that will help ensure that NKU continues to provide the very highest quality education for our students and continues to expand academic programs in areas of greatest demand and need for our region.
As part of the final FY19 budget, we are adding 42 new faculty and staff positions as well as investing in our current workforce with an approved 3% compensation pool starting in January 2019. This compensation pool increase will cost approximately $1.6 million in FY19 and $3.2 million for the following full fiscal year.
You may be asking why we are adding new faculty and staff while otherwise cutting positions. The answer – to meet regional workforce demand by investing more in high-growth areas aligned with those needs. An example is our decision to fund approximately $2.2 million in Informatics and STEM + Health academic programs. This investment adds 21 of the 42 new faculty and staff positions needed to support these high-demand areas. These new positions will allow us to better recruit, retain, and graduate the region’s future leaders in information technology, health care and population health, the sciences and other areas of high need.
In addition, we are investing $1.3 million in mandated safety and compliance areas and other recurring revenue-producing efforts. One of the greatest cost drivers is in cybersecurity to protect our students’ and our university’s private data and records from external threats.
Finally, in order to mitigate more significant cuts that would have been needed to cover the increased fixed costs and investments, the Board of Regents approved a 3 percent tuition increase that goes into effect for the Fall 2018 semester. This increase will generate approximately $2 million in additional net revenue.
What about next year?
As you know, thanks to our General Assembly’s action on our behalf, there will be a one-year freeze in our pension contribution at the current year level, which better positions us to serve our students and our community in the near-term. However, this will continue to be a concern for us for the future if a solution is not found to the rapidly increasing pension costs.
In the legislation that provided for the one-year freeze in our mandated pension contribution, the General Assembly also directed the leadership of the pension system to use this one year to identify means to reduce the adverse financial impact of the system on our university and others similarly positioned. We have already been in contact with our legislative leaders to express our interest in participating actively in these efforts by the pension system leadership.
It is our hope that the Kentucky Retirement System and members of the General Assembly will identify plausible ways to mitigate the adverse impact that escalating pension costs will have on our university. These solutions, coupled with our strategic investments, would most certainly establish a firmer foundation for NKU’s future.
I would be remiss if I did not express my gratitude to our incoming president, Dr. Ashish Vaidya, who was also directly engaged with us during this presidential transition period to help shape our current financial posture, which he will inherit when he arrives here in July. He was a strong advocate for including the compensation pool increase in our budget. Under his leadership, I firmly believe that NKU will continue to be a hub for creating talent and driving economic development. I ask that you give him your full support to ensure that NKU does not simply maintain, but thrives in the days ahead.
Again, I acknowledge and appreciate that the last several months have been very difficult for every one on our campus. The enormous anxiety and stress experienced by our entire workforce during this period of great fiscal uncertainty with potentially dramatic negative consequences has been palpable. Both the depth of the possible consequences and the delay in obtaining certainty contributed to this condition.
But, let me say this about our people. Throughout this period of great anxiety and stress, you have come to work and done your jobs, served our students, and helped our students succeed—all without missing a beat. You have demonstrated a high level of professionalism in the face of adversity. I am proud to have served alongside such a dedicated group of professionals. Thanks to every one of you for your contributions to our continuing success in these most challenging times.
And thank you for all that you do every day to inspire others around you and for supporting our students’ passions and interests. You are helping them unlock their full potential so they become a strong and positive force in the world around them.
As NKU moves into this next fiscal year, I encourage you to look forward and imagine what can be, not merely what has been. And while my time here at the university is coming to an end, I will leave here with full confidence that we will continue to maintain the very highest quality academic and other student services and that NKU’s future remains bright.
With deep appreciation,
Gerard A. St. Amand
Northern Kentucky University
800 Lucas Administrative Center
Highland Heights, KY 41099