Budget 101

The Budget Process

The Tennessee Higher Education Commission (THEC) coordinates two systems of higher education in Tennessee – the UT system and the Board of Regents.

The UT Board of Trustees is the governing body for the UT system. In the fall of every year, UT submits budget requests and legislative priorities to THEC for approval.

UT Knoxville has the highest undergraduate and graduate enrollment, the largest number and most comprehensive academic programs of all the UT entities, as well as an extensive research agenda.

The Knoxville campus budget process involves ongoing activity throughout the year. Budget proposal preparation for the new fiscal year begins in the fall and continues throughout the winter months when academic departments/colleges and vice chancellor areas submit priorities and requests. Typically, the chancellor will convene hearings in the early spring to discuss the proposals with all campus constituencies.

Due to the anticipated budget reductions for fiscal year 2010, the process started this fall and budget hearings were held in December. The chancellor works closely with the president to submit final budget recommendations to the Board of Trustees in preparation for its annual meeting in June.

The General Assembly convenes in January. The governor submits a budget and provides an overview of recommendations in a presentation to the legislative body early in the session. The legislature considers, debates and approves an annual budget – which delineates the state appropriation to UT – before recessing in late May.

The UT Board of Trustees considers state appropriations and funding from all other sources before setting tuition for all undergraduate, graduate and professional programs at its annual meeting held during in the third week of June.

Revenues & Expenditures

UT's Funding & Comparison to Peers (2 pgs)As a public institution, the University of Tennessee, Knoxville, depends upon a variety of revenue sources for its annual budget, with the largest segments from state appropriations and tuition and fees.

Other revenue sources are:

• grants and contracts
• private support and income from endowments
• funds generated from sales of services, conferences, etc.

The largest percentage of the budget expenditures is dedicated to instruction, student scholarships and fellowships, research and academic support, meaning the functions associated with education, research and public service.

UT's ExpendituresAdditional expenditures include:

• student services
• institutional support (fiscal, personnel, computing services)
• operations and maintenance
• public service and mandatory or nonmandatory transfers

Types of Funds in the UT Budget

Educational and General (E&G) funds account for 85 percent of UT Knoxville’s total budget.

The E&G budget funds the core functions of the university to support the teaching, research and public service missions of the university. The majority of E&G funds are provided by the state of Tennessee and from student tuition and fees.

Along with funding most of the salaries and operating funds for academic departments, E&G funds are used for:

• academic support (libraries, academic computing, academic administration)
• student services (student programming, student services administration, admissions, student health)
• student scholarships and fellowships
• institutional support (fiscal operations, personnel services, administrative computing)
• operating and maintaining of the campus facilities

Auxiliary Enterprises are self-supporting enterprises that furnish services to students, faculty, staff and the public. Students may pay a fee for these services, outside of the cost of tuition, such as housing, dining services, bookstore, parking and transit.

These funds account for approximately 15 percent of the UT Knoxville budget.

Impact of State Budget Cuts

One of the university’s two primary sources of revenue — state appropriations — has been reduced by $17 million in the 2009 fiscal year. The campus began the year with $11 million less and underwent a $6 million recission in October. An additional $25.6 million could be reduced from the 2010 fiscal year budget that begins July 1, 2009.

State appropriations account for 33.3 percent of the total Knoxville campus budget. These cuts to “recurring” or “base” funds reduce permanently the amount of revenue allocated to UT Knoxville from the state.

As operating costs for the university continue to rise, officials are working to identify cuts to accommodate an anticipated $25.6 million reduction. Based on the state’s economic status, and the impact of the federal stimulus package, the reduction may be more or less.

Tuition vs. State AppropriationsWith student tuition being the other primary source of revenue – also 33 percent of UT Knoxville’s total budget – the university seeks to balance the need for additional revenue with its commitment to ensuring UT is affordable and accessible.

See Also:

• five-year budget summary comparison
• history of state appropriations to the University of Tennessee

Restricted or Unrestricted: Why Does it Matter?

Restricted funds can only be used for the purpose for which they are provided.

More than 95 percent of all private donations, such as those collected as part of the university's Campaign for Tennessee, are also RESTRICTED for a specific use set forth by the donor(s).

Unrestricted funds can be used as the university determines, based on needs and priorities.

Whether funds are restricted or unrestricted matters significantly because the university cannot divert funds intended for a certain purpose to accommodate a cut or unanticipated shortfall in another area.

When significant reductions occur in state appropriations or from other sources, administrators are limited in flexibility to preserve core functions and programs due to the restrictions.

 

Learn how groups and individuals across the campus are switching their thinking and helping to save money.