The Aggie Approach to Budget Reductions a Texas Higher Education Human Resource Association Austin, Texas

1. DIVISION OF FINANCE The Aggie Approach to Budget Reductions aTexas Higher Education Human Resource Association Austin, Texas Texas A&M University, Human Resources January 24, 2011

2. Introduction • Have you heard that Texas has a budget problem? • We’re all facing budget issues • The problem is a moving target • Budget won’t be finalized until June or later • Planning for the worst, hoping for the best

3. Presentation Overview • Budget planning and action steps • People Impact • Reduction in Force • Faculty Voluntary Separation Program

4. Budget Reduction Plan—FY 2010 and FY 2011 • November 2009 – State Comptroller announced that revenues have “weakened substantially” • January 2010 – State requested each state agency to submit a plan for 5% appropriations reductions for the 2010-11 biennium • Summer 2010 – Budget reversions for FY 2010 sent to the State; budget reductions implemented for FY 2011

5. Budget Reduction Plan—FY 2010 and FY 2011 • Texas A&M University (CS)--$28M reduction • No across the board cuts—each Vice President and Dean provided with a reduction target • Flexible hiring freeze—All vacant positions must be approved by Vice President or Dean • No merit or pay plan programs for FY 2011—exception for faculty promotions, equity increases • Expansion of procurement/processing efficiencies—bulk purchases of computers, electronic document delivery

6. Budget Reduction Plan—FY 2010 and FY 2011 • Texas A&M University (CS)--$28M reductions (continued) • Elimination or consolidation of low producing programs—non-degree, certificate programs • Targeted operational budget reductions—Travel, printing, postage, etc. • Position savings—job sharing

7. Proposed Budget Reduction & Reallocation—FY 2012 & FY 2013 • May 2010—Received Legislative Appropriations Request (LAR) instructions • Starting point reflected 5% reduction implemented for FY 2010 and FY 2011 • Submission should reflect an additional 10% reduction

8. Proposed Budget Reduction & Reallocation—FY 2012 & FY 2013 • Summer 2010 • Memo distributed to VPs and Deans • $39M potential state reduction • $21M reallocation for strategic priorities • Targets established and plans developed for TAMU units • Open forums held • Working group provided reallocation recommendations to President in November 2010

9. Budget Impact on People • Significant budget cuts were made to operations, capital and programs • Budget cuts impact people • Reductions in Force • Faculty Voluntary Separation Program

10. Reduction in Force (RIF) The overarching theme—Treat employees with dignity and respect. • RIF Business Plan • Identify the business reason • Provide the timeline • Tailor the plan (positions, employee selection, reassignment of job duties) • Include documentation • Submit for review and approvals

11. Reduction in Force (RIF) • RIF implementation • Supervisory training • Employee Notification—packet with FAQs; 60 day notice period, benefits continuation • Assistance for RIF’d employees • Support for supervisors • Support for coworkers

12. Reduction in Force (RIF) • Post implementation • Access to • Benefits/Retirement Counselors • Training classes • Employee Assistance Program • Email • RIF support meetings • Hiring preference • HR assisted supervisors to tailor a transition plan

13. Reduction in Force (RIF) • Since Summer 2010 • 27 departments • 125 individuals • Salary savings of over $5M. • 25 RIF’d employees have been reemployed on campus

14. Faculty Voluntary Separation Program (VSP) Administered through the Dean of Faculties Office • Purpose: To help offset the budget shortfall • VSP was not an entitlement and approvals were consistent with the needs of the University. • If approved, required to sign separation agreement

15. Faculty Voluntary Separation Program (VSP) • Eligibility • Tenured faculty members • Based on criteria set by the college • Tenured faculty who have been in current faculty rank at the University since September 1, 1995; or • Tenured faculty members who have been employed with the University for 15 years or more

16. Faculty Voluntary Separation Program (VSP) • Application Procedures • Began August 15 and ended September 24 • Faculty could withdraw application at any time before the Separation Agreement was executed • Accepted faculty were required to execute their Separation Agreement by 10/6/2010 or they were no longer eligible to participate in the program • After Separation Agreement was executed, faculty member had 7 days to revoke it • Voluntary separation date no earlier than December 15, 2010 and no later than August 31, 2011

17. Faculty Voluntary Separation Program (VSP) • Limited University funding for VSP so Colleges prioritized applications differently. Examples: • Priority given to those meeting TRS Rule of 80 • Length of service to University • Order of receipt of applications • Based on budget impact and program mission

18. Faculty Voluntary Separation Program (VSP) • VSP Payment • Accepted faculty will receive one lump-sum payment based on college criteria. Examples: • 2 years of their 9 month University salary • 1 year salary (based on current faculty appointment period) • Payment will be made within 45 days of the employee’s voluntary separation date

19. Faculty Voluntary Separation Program (VSP) • VSP Payment (continued) • All federal and state taxes and other deductions will be withheld as required by law • VSP payment does not count as “earnings” for TRS or ORP purposes and is, therefore, not eligible for TRS or ORP contributions

20. Faculty Voluntary Separation Program (VSP) • Additional information • Accrued and unused vacation payments due at the time of separation will be paid in accordance with Texas law • Any other pay and benefits will terminate or cease upon separation in accordance with Texas law, as well as System Policies, and University Regulations and Rules • Tenured status is relinquished

21. Faculty Voluntary Separation Program (VSP) • 104 tenured faculty approved for VSP • Savings of slightly more than $15M

22. Faculty Voluntary Separation Program (VSP) • Lessons learned • Different eligibility requirements and payout amounts based on the College provided flexibility but problematic to administer • Verifying eligibility was challenging (15 years in same rank; or 15 years as tenured faculty) • Need enhanced communications • Difference between separation and retirement • Instructions for process to be rehired

23. Questions? Reduction in Force http://ppr.tamu.edu/rif/Default.aspx Voluntary Separation Program http://provost.tamu.edu/voluntary-separation-program Janelle R. Ramirez Executive Director of HR Operations janelle@tamu.edu 979.862.1723