The Annual Budget Process And Unclassified Compensation Plan

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1 BUDGET SUBMISSION DUE DATE Large Schools & Colleges (A-07, A-17, A-19, A-34, A-40, A-48, A-53, A-55, A-87) April 11 Other Budget Units April 5 (Via Only) MEMORANDUM TO: FROM: SUBJ: Deans and Directors John Torphy The Annual Budget Process And Unclassified Compensation Plan The final version of Chapter 1 of the budget instructions contains our current estimate of when the major events of the budget preparation process will occur. Most of the Timetable dates listed are the same as the draft version that was issued in January. (Items B, C, D, E, F, G and L reflect corrected dates.) You should proceed with your budget preparation using these dates; you will receive notification of any required schedule changes. Chapters 5 and 6 contain the detailed instructions for processing the Unclassified Compensation Plan salary increases. Additional budget material will be provided as it becomes available. There are several general items regarding the budget that should be mentioned. These will affect initial allocations and your budget planning. Some of the items listed here will be the subject of separate memos and will be discussed in future budget instructions; however, a brief summary may provide a context for these future communications. 1. Base Budget Reductions. The governor s budget proposal anticipates a 4.5% GPR budget cut in for the UW System. UW-Madison s share of that could be in the range of $16 million. As previously indicated, a portion of such a reduction would come from reductions in the new funding for the second phase of the Madison Initiative and a portion from base budgets of campus units. As was the case in the permanent budget cut of $2.5 million that was part of the approved biennial budget, the cuts will be applied to or assessed against all units and funding sources. An initial allocation of the reduction will be included in the first planning allocation scheduled for late February. It will be subject to change and adjustment as the budget proposal is addressed and amended through the legislative process. You can anticipate that the first allocation will include a budget cut of approximately one percent applied to Fund 101 and program revenue/auxiliary accounts. 2. Assessments/Charges. The budget process will include assessments and chargebacks to divisions/schools/colleges for several campus-wide costs. These include, but are not limited to, the following: a. Microsoft Software Contract

2 Page 2 b. Central Mainframe Transition Costs c. Remission Costs Not Funded by the 25% Tuition Remission Surcharge Notification of the respective assessments/charges for each division (actual or estimated) will be provided this spring, independent of the planning allocations. The sources or method(s) of payment in will be up to each division to determine (e.g. Budget reduction, return of carryover balances, capital exercise funds, gift funds, etc.). The timing of payments will be identified at that time. 3. Other. Because of the anticipated budget reductions, and the unfunded priorities included in UW-Madison strategic plans, the budget will include some fund source shifts and assessments for central services to more accurately and permanently reflect appropriate funding for operations and services/activities on campus. These will be addressed and discussed in future and separate memos, as well as in related planning allocations. Also, the initial planning allocations will include continuation funding levels for those initiatives included in the budget for the second phase of the Madison Initiative. In most, but not all, cases, the funding will be at the same amount as provided in The Annual Operating Budget will be completed in one step this year. By the due date listed at the top of this memo, you should complete the entry of your annual budget request. That entry includes updating the budget file for all classified and unclassified staff appointment changes as well as entering programmatic changes made necessary by allocations. This also includes merit increases for faculty and academic staff. All classified staff increases will be handled through batch updating of the appointment system. Our target is to have an initial planning allocation to you by the end of February. That allocation will reflect the biennial budget changes, anticipated budget changes based on the Governor s Budget Reform Bill, some internal reallocations and some of the more routine allocation adjustments. Additional adjustments will be made to the allocations as the Legislature, UW System and campus administration complete work on the budget. The compensation plan that was approved October 3, 2001 by the Joint Committee on Employment Relations (JCOER) provides authority to increase salaries for faculty and academic staff by 4.24% in The 4.24% increase is fully funded by a combination of state funds and tuition. The Fund 101 allocation (see attached) is based on 4.24% of the annualized October 2001 payroll. That payroll file was adjusted to include the unclassified merit increases. Other GPR funds are limited to the allocation determined by UW System which is based on the October 2000 payroll rolled up to adjust for the actual pay plan allocation. Extension funds are listed on the schedule but the final supplements will be determined later by

3 Page 3 the Division of Continuing Studies and UW Extension. Please keep in mind that the actual control of merit is based on 4.24% of your final all funds continuing staff base. The 4.24% merit component is phased in during the fiscal year with 2.1% effective July 1 (or Semester I) and 2.1% effective January 1, 2003 (or Semester II). The additional 0.04% is due to the rolled-up base that is used for the midyear increase. A single increase, that will be entered in the MERIT field on the Form 2A, will be automatically distributed to the two effective dates when the rate change is copied to the appointment file. Since we are allocating full year funding for the 4.24% salary increases, we will reduce your operating budget during the fiscal year to reflect the amount that will not be paid during due to the delayed effective date. Faculty and academic staff minima and Category A maxima have been increased by approximately 4.24% over the levels that were effective for All budgeted and non-budgeted positions must be at or above these new minima. If an unclassified staff member s current full-time rate is below the minimum, the salary must be at least increased to the new minimum with merit funds unless prior approval is given by the Office of Human Resources. Research Interns have also been increased by approximately 4.24% for The salary minima for Research Associates has not been determined. The new rate will be established as soon as possible. The submission deadline for faculty promotions requires your close attention. Because the promotions will be taken to the Board of Regents at their June meeting, it is imperative that divisional committees process all promotions as early as possible. In order to guarantee that the promotion recommendations are included in the budget, they must be sent to the divisional committees in time for full consideration at the April meetings, if not earlier. The Faculty Senate, with the full support of the Chancellor and Deans, has established the policy that "Colleges, schools, departments, and programs, as appropriate to their respective missions, should allocate at least 20% of the annual merit pool to reward excellence in teaching (Faculty Document 976a dated February 1, 1993). In addition, each college should allocate a portion of the Dean's special merit pool to faculty members who have maintained a record of teaching excellence." You do not have to account, by individual, how much of this total amount each received; however, at the end of the merit process you may need to be able to identify those faculty and instructional academic staff whose performance award significantly reflects teaching excellence. As in past years, you may be required to submit a short narrative that provides justification for large pay plan increases. It is not necessary to submit that information with your budget material but adequate documentation should be kept in the Dean s office or at the department level. The Board of Regents adopted a resolution which includes a guideline that >solid performers= should receive not less than one-third of the total compensation plan. This does not imply or require an across-the-board increase for each individual who receives a "satisfactory" assessment. Rather it reflects a policy that those individuals who have made positive, but not necessarily exceptional, contributions should not be excluded from pay plan increases. This will ensure that exceptional performers are not rewarded exclusively at the expense of the solid performers. This requirement applies only to those who were employed long enough to have

4 Page 4 their performance fairly assessed. Those who cannot be fairly assessed are eligible for increases at the discretion of the department/division. The university has the authority to determine merit and assign increases without regard to fund, but you may not move compensation plan increase authority between the academic staff and faculty without prior approval and only in exceptional circumstances. In addition, it is expected that average salary increase percentages for eligible women as a group and men as a group will be equal across campus as well as in colleges and major budget units. This requirement pertains separately to both faculty and academic staff. Significant variance requires the prior approval of the Office of Human Resources. Chapter 5 provides detailed instructions for awarding the 4.24 percent compensation plan increases for the unclassified staff. The primary limitation, as in previous years, is that the all-funds total of the compensation plan increases may not exceed 4.24 percent of the continuing staff identified in the budget. Please note the merit requirements for appointments that have received a base salary adjustment. The requirements are listed in Chapter 5, Section II.E.3. The requirement for at least an average percent increase (4.24%) includes all faculty promotions, academic staff promotions, market and individual equity adjustments. Merit of at least 1.41% is required for proposed major change in duties and group equity adjustments. Faculty and academic staff should not be informed of their new rates until the review of proposed salaries has been completed. We expect that you will be able to release compensation letters on June 7 th if System Administration and the Regents complete their review of our proposed salaries as anticipated. The Academic Personnel Office will distribute sample salary notification letters and provide the official salary release date. If you have situations where you feel that it is important to inform an individual immediately of his or her proposed rate, or to make a multiyear commitment, discuss the matter with Steve Lund prior to talking with the individual. The updating of the official Tenure Roster and the Faculty Probation Report is normally part of the budget process. New reports will be distributed the week of February 11th. The updated reports are due in the Academic Personnel Office March 22 nd. Agreed upon changes in tenure homes, percentage of tenure splits, and/or faculty relation (may be pending) with effective date in should be indicated on the new Tenure Roster and returned by the due date. Changes in the probationary end date, tenure clock extensions, contract end dates, and change in title (i.e., promotion pending) should be indicated on the Faculty Probation Record. As in previous years, the official roster (Appointment System Data) will govern the entry of tenure splits shown in the printed budget. Most budget entry programs look and operate basically the same as last year. If your staff needs assistance with any budget entry please contact the Budget Office. If you need to make revisions in your UDDS structure for such as additions, deletions, name changes or accounting scheme changes, please contact Al Wang (2-8729) in Accounting Services as early in the budget process as possible. The Office of Budget, Planning and Analysis World Wide Web site is located at ( Click the Budget Policy & Operations-Madison Budget Office line on the home page for budget related information. Currently this contains prior year Red Book budget data, annual budget instructions and other related information. The historical section contains information back to Current budget instructions will generally be available on the WEB site the same day copies are distributed. In most cases hard copies of budget material will not be distributed; you will need to print the documents on your local printer. Since this site is still under construction and will be for some time we would appreciate any suggestions for improvements that you might have. Please Jurgen Patau with your ideas.

5 Page 5 Unclassified compensation increases will be automatically loaded into the Appointment System. In addition, proposed base adjustments including faculty promotional increases will again be loaded this year. Other changes that are contained in the budget (e.g., title, continuity status, percent time and midyear adjustments) will require direct entry into the Appointment System. We are anxious to help you prepare the budget and are ready to do whatever we can to make your job easier. The names and phone numbers of Budget Office staff are on page two of Chapter 1, and I urge you to call them whenever you encounter a problem. If we can do anything to make your budget preparation easier or if you will have difficulty meeting the due dates, please call us. The budget entry programs will continue to be available through the terminal system from 7:00 A.M. until 7:00 P.M., Monday through Friday. If additional time is needed for terminal input on the weekends, please make your requests as early as possible to Mary DeYoung (3-4570). All of the attachments are included with this . If you have problems printing the Word and Excel documents or need hard copies of any budget material please call Mary DeYoung (3-4570). Attachments: 1. Chapter 1 dated (Chap1FY3.doc) 2. Chapter 5 dated (Chap5Fy3.doc) 3. Chapter 6 dated (Chap6FY3.doc) 4 Sample Form 5 (Form5-Sample.doc) 5 Sample Form 6 (Form6-Sample.doc) 6. Appendix A dated (AppendixAFY3.xls) 7. Faculty and Academic Staff Compensation Adjustments - Merit dated (MERITGPRFY3.xls) 8. Associate Professors with Five or More Years in Rank dated (C305yrFY3.xls) (A-07, A-12, A-17, A-19, A-27, A-48, A-53, A-54, A-56, A-87, A-93) c: Chancellor Wiley Provost Spear Vice Chancellor Newby Associate Vice Chancellor Greene Budget Officers Steve Lund Dave Musolf Colleen McCabe Jurgen Patau Al Wang Larry Wold MemoCh1FY3.doc

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