Introduction: UNLV needs to follow the same plan to allow us to fully draw the $2.5M (1.35% of salary allocated to the Board of Examiners) for FY15 as we did in FY14, which is outlined below. This plan basically requires us to maximize all appropriate salary reassignments to state funds, and have this completed no later than the end of October 2014.
Background information: During the last biennium (FY12 & FY13), UNLV salaries reflected a 4.8% reduction to base salary; this was made up of a 2.5% salary cut and 2.3% in unpaid leave (6 days per year).
The Governor’s recommended budget for biennial 2013-2015 (FY14 and FY15) called for each employee to take three days of unpaid leave each year; this equals approximately 1.15% of annual salary, so employees would have seen their salary increase effective FY14 by 1.15% over FY13 by working 3 more days per year.
At the end of the 2013 Nevada Legislative session, AB511 was passed which restored employee salaries to their base amounts by reversing the 2.5% salary cuts, while continuing to require employees to take 6 days of unpaid leave per year. The incremental increase in cost to the state over the Governor’s recommended budget is 1.35% if we ignore the impact of fringe benefits on the calculations. The Legislature did not allocate the additional 1.35% to NSHE and state agencies, but put it in a central pot for draw based upon need justification, an approval process like NSHE had for COLA.
Through AB511, the legislature appropriated ~$16 million for all state agencies for each year of the biennium to the State Board of Examiners to cover the 1.35%. A summary is pasted below showing the amounts included in the UNLV state budgets related to AB511 and displays the NSHE and state totals to put the figures into context:
The fact that the funds have been appropriated to the State Board of Examiners will require institutions to justify actual need in order to draw the funds and the figures noted are the maximum amounts that can be drawn. The previous allocations of COLA to the Board of Examiners came with a requirement that any/all salary savings at the unit level are first netted against any draw of central funds. For example, if you could draw $2M but had $1M of salary savings, you could only justify getting $1M from the BOE. The net effect is that the salary savings benefit is to the State / Board of Examiners and NOT to the institution.
Late in FY14, NSHE reached an agreement with the Nevada state budget staff regarding the procedure to be used to justify the draws, and we assume that the same process will be in place for FY15. This procedure compared the FY14 Board of Regents approved salary and benefits budgets to the sum of the actual commitments through April plus a payroll projection for the balance of the fiscal year. The State’s procedure required payroll commitments to be reduced for certain payroll expense categories (ad hoc salary increases, classified overtime, retirement payouts, and terminal leave, as well as any/all salary savings), so the campus needed to fully commit the salary and benefit budgets within our state appropriations with payroll expenses in order to draw the maximum amounts possible.
Campuses were asked to update their figures and submit a final justification request in June 2014 that was reviewed by the State Board of Examiners at their July 8, 2014 meeting.
UNLV received all of the ~$2.52M general fund revenue included in the FY14 budget for AB 511 by following a plan to fully commit state salary allocation.
Why this is important to each Cabinet area: VP’s have had the ability to use salary savings from their respective divisions as they wished for the last few years leading up to FY14; because there was no COLA allocated and no justification required, VP area budget managers were allowed to transfer salary savings directly to operating lines. For UNLV’s main campus appropriation, this transfer from salary and benefits to other operating totaled approximately $9.8M in FY13, mostly within the Provost’s accounts. If the same thing happens in FY15, UNLV would be unable to justify drawing funds from the Board of Examiners and the budgets would need to be reduced by almost $2.2M for UNLV’s main campus appropriation. To justify the maximum BOE draw for FY15, salary reassignments from the GIF funded Advising account, the UNLV Foundation, and others will need to be processed (as they were in FY14). The majority of the state salary savings occur within accounts reporting to the Provost, since that is where most of the budget resides.
For UNLV to be able to draw the full amount of BOE funding available, there will need to be agreement at the Cabinet level to reassign appropriate self supporting salaries to fully commit the state salary and fringe benefit allocations. Self supporting salary reassignments would need to be processed according to UNLV’s internal policy which does not allow the released self supporting funds to be transferred to other accounts or units for other initiatives; the funds must stay with the self supporting account from which the salaries were reassigned.
Non Formula Appropriations – Professional Schools: The Law School and the School of Dental Medicine each have their own appropriations with specific amounts for the 1.35% salary adjustment that must be justified by actual payroll commitment in order to draw the funds from the State Board of Examiners. For FY15, the amount is $121,922 for Law and $165,530 for the School of Dental Medicine.
The business managers for the professional schools will be responsible for identifying appropriate self supporting salaries that can be reassigned to state funds in order to justify the maximum amounts for their respective draws from the State Board of Examiners.
Additional information for FY15: UNLV was successful in drawing the full amount of our BOE salary restoration funding in FY14, thus avoiding a budget cut. We need to follow the same procedures in FY15 to have the same good outcome.
The 2013 Nevada Legislature allocated funds for professional merit and classified step increases to be implemented effective FY15. Due to NSHE’s pay date shift authorized during the 2011 Legislative session by AB 580, section 54, only 11 of the 12 pay periods for FY15 professional payroll will be expensed during FY15. Similarly, for classified staff, expense for step increases (step increases become effective on the employee’s anniversary date) will not necessarily be committed in the payroll system at the beginning of FY15. In some cases, new positions were created in FY15 using operating allocation as a source.
The FY15 salary and benefit changes over FY14 increased the salary ‘targets’ that must be consumed by payroll commitments for UNLV’s main campus state budget and for both of the professional schools.
Assuming that the FY15 BOE justification procedure is unchanged from FY14, we should plan to fully commit the state salary and benefit budgets to allow for reductions to the commitments for retirement payouts, terminal leave, ad hoc salary increases, and classified overtime.
After the FY15 professional payroll encumbrances are recorded to the financial system in early August 2014, UNLV account managers should review all self supporting salary commitments to determine whether the commitment can be reassigned to the state appropriated funds; the salary reassignments should be processed as early in FY15 as possible, preferably no later than October 2014.
Conclusion: To avoid a budget reduction in FY14, the Provost provided state allocation to other Cabinet areas (primarily VP Student Affairs and VP Advancement) to allow UNLV to draw the full amount of salary restoration funding. This was accomplished by reassigning self supporting salaries and benefits (only for positions that are doing state work) to state appropriated accounts. This action overdrafted the divisional salary allocations which were subsequently covered by the Provost’s Office with academic affairs budget at FY14 year end. The Provost did not have to do this, as he could have had Student Affairs and possibly others use their self supporting funds to cover this deficit, but he chose to cover it for them.
The same process will need to be followed in FY15 to allow UNLV to draw the full amount of salary restoration funds from the Board of Examiners and to avoid a defacto budget reduction in FY15.
If there are questions about the Board of Examiners process or salary reassignment procedures, please contact the UNLV Budget Office, Kathy Adams at x54185.