Extension Update: Budget Archives

Staff seeking reimbursement for travel and other expenses through the BSC must do so on a quarterly basis. If you haven't submitted for January, February and March, please do so immediately. This includes grant-sponsored programs. Timeliness enhances management of our budget. Please mark your calendars now for the remainder of the year - expenses would be due no later than June 30, September 30 and December 23. Thanks for observing these important deadlines.

An April 30th Biweekly Update article outlined new expectations for staff revenue generation. Since then, questions have arisen on implementation of these expectations. An answer list on the most frequently asked questions, assembled by the Leadership Team, is now available on our intranet under "Policies and Procedures". Feel free to contact Program Leaders for more information on the implementation process.

Cost reduction strategies, as announced in the January 9th Biweekly Budget Update, remain in effect. This includes a ban on out-of-state overnight travel on state or federal funds unless you are serving in a leadership role at the event. Feel free to contact members of the Leadership Team for more information on these procedures.

In the past few months, I've received many questions about funding issues facing UNH Cooperative Extension. Questions range from what our funding issues are, to how we're financed at the state, county and federal level. To help keep everyone informed, please review the following background statement I developed. It describes our state, county and federal funding partnership: http://www.ceinfo.unh.edu/SSCFFI.htm

Attached are the budget narratives submitted for our Fiscal Year 2006-07 state budget request for Program Appropriation Units (PAUs) 9 (UNH Cooperative Extension) and 11 (Extension Work in the Counties).

The Extension Educator Council represents UNH Extension Educators in UNH Administrative affairs. The Council examines issues affecting Extension Educators as employees of the University of New Hampshire . Members of the Council serve on the System Personnel Policy Committee and on UNH committees of importance to Extension Educators.

One goal of the Extension Educator Council this year is to improve communication between the Council and Extension Educators. The Council minutes are posted on the website . Here are highlights from the most recent meeting:

Update from System's Policy and Procedure Committee (SPPC)- A survey was developed and distributed to PAT/OS staff to determine acceptable benefit cost containment measures for employee health insurance. Because of quick turn around time, this survey was distributed to EE council members only. The recommendations were presented at SPPC and will be voted on by the Board of Trustees. Recommendations included increases in specialist visit co-pays, prescription co-pays and hospitalization co-pays. A Family Friendly policy similar to the Faculty policy was tabled, but will be discussed in the fall.
Update from President's Staff meeting - UNH launched its new website. The new Academic Plan can be viewed on the site. According to the Granite State Poll, over 50% of those polled recognized UNH Cooperative Extension. This was mentioned in the bi-weekly update. UNH is offering a separation incentive to qualifying employees. They were notified by mail. PAT/OS/EE councils are working on an employee suggestion plan and a total quality management/continuous process improvement initiative.
CE Staff Recognition plan was presented to the council. The plan contained great ideas but the council was concerned with the amount of time needed to implement the plan.
UNH is anticipating a $1.8 million loss in FY05. This results from lower-than-anticipated admission acceptances, increased financial aid needs of students, and increasing oil prices. To achieve savings, operational costs will be cut, class size increased and possibly a cut in staff. Salary increases have not been determined.
Discussion continued on the amount and rapid rate of change the organization is experiencing; the amount of administrative reporting and the need to make it as efficient and relevant as possible; the need for better communication on the reasoning behind the changes we are making; and the continuing concern about doing more with less resources. Charlie French will work on applying total quality management to our reporting system. Alice Mullen has discussed the council’s concerns with Nancy Franz.
Any questions about these highlights or issues related to UNH should be discussed with members of the council.

The Board of Trustees met yesterday, June 24th and approved salary increases for UNH including exceptions for Cooperative Extension and NH Public Television in recognition of the financial strain experienced by each of these units. Effective on September 25, there will be a salary pool of 4% for all non-unionized employees at UNH with 3% distributed as an "across-the-board" increase and 1% for institutional needs (e.g., merit, equity, etc.). I want you all to know that the FY 05 salary increase for Cooperative Extension staff will be 3% (three percent) across the board effective September 25. The rationale for not going with an increase beyond 3% is simply because CE is heavily dependent on state appropriations and the state budget increase for the university system in FY 05 is 3%. We also need to be very mindful of the deficit situation we experienced this past year coupled with the state government deficit that may be looming on the horizon as reflected in the following article:

http://www.theunionleader.com/Articles_show.html?article=38666&archive=1

As you know this has been a very challenging year as we have reduced our budget base through a combined salary and associated fringe reduction of $780,000. This action was taken as a result of level state funding, increased fringe benefit rates, declining federal appropriations, salary increases, and increases in overall operating expenses. The reduction was accomplished through a salary separation incentive plan (SIP) equal to six months of salary for any Extension employee with a minimum of five years of service. The net result of the budget reductions were to effect a balanced budget in FY05 providing no additional reductions in state or federal revenue occur.

The request of going no higher than a 3% salary increase for Cooperation Extension had the support of Alice Mullen, Chair of the Extension Educator Council; Michele Gagne who serves as extension's representative on the PAT Council; and Deb Anderson who has represented Extension in the past as a former member of the Operating Staff Council. If the revenue picture turns out to be greater than projected, we have been advised that we will still have the opportunity to administer the 1% merit at a later date. You'll be interested to know that each 1% in salary increase & associated benefits means an increase in expenditures of approximately $105,000 for Cooperative Extension. Since Cooperative Extension is responsible for balancing its budget, the fiscally prudent measure for us to take is to do all we can to avoid a further deficit situation and personnel reductions in force.

Don't hesitate to contact me or any member of the Leadership Team if you have any questions.

The USNH Board of Trustees will be meeting on June 24 to approve UNH Wage and Salary Guidelines for FY 05. I look forward to sharing the outcome with you in the next Biweekly Update if not before.

The UNH Cooperative Extension Strategic Plan Issue 3, Goal 2, Strategy B, Action 1 states, “Define expectations for staff in the area of competitive funding – then communicate the expectations.” After months of discussion and reflection, the Leadership Team developed the following revenue generation expectations for the organization.
The revenue generation goal includes raising up to 50 percent of revenue from grants, contracts and gifts by July 1, 2007 . The current budget includes 35 percent of revenue from these sources. Growth in grants, contracts and gifts will occur at a five percent increase per year for the next three years, through interdisciplinary issue teams and enhanced staff capacity.

Staff expectations include a three-prong approach. Program Leaders will work with staff to create a program-area revenue generation portfolio by July 1 each year. Every specialist will be required to acquire a minimum of 20 percent of their salary and benefits through grants, contracts (including teaching) and gifts by July 1, 2005 . Finally, all county educators will actively contribute to revenue generation in their program area through their plan of work, under the guidance of their Program Leader and interdisciplinary issue team leaders.

There will be a number of ways to support revenue generation. Job descriptions and job announcements for staff will continue to include revenue generation consistent with the expectations above. The employee’s supervisor also will determine the optimum percent of a specialist’s or educator’s time dedicated to meeting the commitments of grants and contracts. Bonuses or other reward funds will recognize employees who contribute significantly to revenue generation as part of outstanding performance. The Leadership Team will work with COAs and county staff to enhance consistent and effective administration of small grants.

These revenue generation expectations and support systems are important for the sustainability of our organization. I urge any of you with questions or suggestions on these expectations to contact members of the Leadership Team.

The Leadership Team continues to carefully monitor our budget. On January 7th, the Leadership Team reviewed budget deficit plans for each program area, as well as administration. We will achieve our $780,000 budget deficit through staff retirements, other staff separations, voluntary reductions in appointments and reduced budgets from state and federal funds for travel, meals and program support.

In addition to our current budget deficit, a 10 percent reduction in federal Smith Lever funds, and a rescission of state funds, may be on the horizon in this budget year. To address the current deficit and better position us for further budget cuts, the Leadership Team canceled the May staff development conference and encourages everyone to observe the following policies for state and Smith Lever funds:
Travel overnight only for leadership roles or formal presentations (appear in the program). Pre-travel approval by your supervisor is still required for out of state over night travel.

Lodging over $100 per person per night requires supervisory approval prior to travel.

Employees will car pool, share lodging and use inexpensive lodging options whenever possible.

The Assistant Director for Finance must approve purchases over $1,000.

Refreshments and meals will not be reimbursed for employee meetings unless they are written into a grant or the meeting includes volunteers.

Reimbursements and P-card charges are only allowed for purchases critical to successful programming.

Technology and equipment purchases will be made as needed rather than on an ongoing basis.

In the event of a rescission, the soft hiring freeze becomes a hard freeze and some staff may be assigned to grant funded projects.
Three regional staff meetings will take place on April 12-14. Further details will be announced as they become available. Please feel free to contact any member of the Leadership Team with budget questions and concerns.

Staff seeking reimbursement for travel and other expenses through the BSC for October, November and December must submit them by December 31. This includes grant-sponsored programs. Timeliness enhances management of our budget deficit. Thanks for observing this important deadline.

The Leadership Team continues to address the budget deficit. Most recent clarifications on our budget situation include:

* Staff lay-offs are not being considered this fiscal year due to the number of anticipated staff separations.
* Each program area/unit has approval to fill vacant positions with the excess funds from staff separations or other deficit reduction strategies.
* Paul Bonaparte-Krogh and Program Leaders continue to work with County Advisory Councils to determine how to best deal with open positions. Consideration will be given to filling positions through lateral transfers of staff and/or through county or grant funding.
* Since grant-funded positions cover salary and fringe benefit costs, they will continue to be offered once they have programmatic approval.

I urge you to continue to bring budget deficit reduction questions to members of the Leadership Team

As you know the Biennial Budget for FY 04-05 was signed into law on September 4 and provides for flat funding for the University System of New Hampshire. I am now able to definitively report to you that our deficit is $784,220. This takes into consideration all revenue sources and fixed expenses for Cooperative Extension including the fringe benefit rate in FY04 rising to 40% of salary and salary increases of 3.5%. UNH traditionally covered these increases for non-grant funded salary through the general fund. With no increases to the University budget, this support cannot be sustained in FY 04.

On a positive note, UNH has provided a total of $280,775 from the net tuition revenue that is associated solely with the USNH Board of Trustees decision to increase tuition rates in direct response to a reduction in state funding. This will be the first time Cooperative Extension receives direct tuition support. Without tuition funding our deficit would be over one million dollars. In addition to level state funding, Federal Smith-Lever appropriations have had no significant increase for approximately ten years. Finally, counties have not been asked to increase their level of county educator salary support since 1988. These factors, combined with minimal FY03 savings through staff vacancies, created this budget deficit.

The Extension Leadership Team met earlier this week and a major item of discussion was to review our fiscal situation and agree on a process for reducing the deficit. Since 70% of our total budget covers salary and associated fringe benefits, Cooperative Extension will begin to offer separation incentives to staff. When approved by USNH which we anticipate will happen soon, the separation incentive is proposed as follows:

Separation Incentive
A one time payment equal to six month salary for those status employees who meet one of the following age and service requirements: Age 50 with at least 20 years of service or any age with at least 25 years of service. These age and service requirements are consistent with retirement qualifications under the Civil Service Retirement System (CSRS). Individuals who don’t participate in CSRS and have at least 5 years of service in a benefits eligible position and might want to consider voluntary separation may be considered. Anyone eligible and interested in a separation incentive should formally inform Jim Grady by October 15 of their intent and the separation must occur by April 15.

Prorated Reductions
The shortfall has been prorated for all 5 program areas and Extension administration/operations based on the percent of state funding supporting each unit. The prorated amounts are as follows:

Administration/Operations $184,592
Agriculture $194, 362
4-H $134,548
Family Development $158,720
Forestry $ 76,416
Water Resources $ 35,582
Total $784,220

Each Program Leader/Administrator working with their staff will determine how best to reduce budgets and achieve their prorated goal based on program and staffing priorities. Deficit reduction plans will be submitted by January 1, 2004 and will be approved by the Associate Director in consultation with both Assistant Directors and the Dean and Director and will be effective no later than April 15, 2004.

Questions have been raised by staff regarding the status of vacancies and the process for filling positions. Program Leaders have the authority to determine if vacant positions will be filled upon approval by the Associate Director in consultation with Assistant Directors and the Dean and Director along with a specific budget reduction plan to achieve the program area’s prorated target. When a decision is made to fill vacant positions, the salary and associated fringe benefit costs will be added to the program area’s prorated deficit target.

We will pursue a variety of deficit reduction strategies which you can review in detail at: (http://www.ceinfo.unh.edu/cragin/common/documents/BudgetRD.pdf) The impact of budget and staff reductions to individual counties will be considered in the overall statewide strategy to cover high priority programs as identified through our plan of work and strategic plan. We will work closely with each county developing the new statewide Cooperative Extension budget for FY 2004-05. We look forward to hearing your ideas and reactions around the budget challenges ahead and ways we can continue to strengthen the organization.

Don’t hesitate to contact me or your supervisor if you have any questions or suggestions.

A letter will soon be going out to all County and State Advisory Council members updating them on the overall budget situation for UNH Cooperative Extension. The letter refers to the Deficit Reduction Strategies as outlined in the March 21 Biweekly Update at http://www.ceinfo.unh.edu/cragin/common/documents/bw32103.htm

If you have any concerns or questions from Advisory Council members, please direct them to Paul Bonaparte-Krogh or other members of the leadership team.

Legislators will vote on the budget on September 4. See the following link for an article regarding today's meeting http://www4.fosters.com/News2003/August2003/August_07/News/reg_nh_0807n.asp. The House and Senate Joint Budget Advisory Group continue to move in the direction of level funding for USNH. If the University receives level funding, the projected budget deficit for Cooperative Extension will be $780,000. This deficit takes into account a reduction in revenues as well as an increase in fixed expenses. The fringe benefit rate in FY 04 has risen to 40% of salary and projected salary increases are budgeted at 3.5%. UNH traditionally covered these increases through the general fund. With cuts to the University, these costs cannot be sustained. On a positive note, UNH has extended tuition reallocation to Cooperative Extension. This will be the first time a non-academic department receives direct tuition support due to the proposed 6.8% student tuition increase. Without this additional funding, our deficit would exceed one million dollars.

In addition to the above, Federal Smith-Lever appropriations have been level funded for ten years. Counties have also not been asked to increase their level of county educator salary support since 1988. As 70% of our total budget is personnel related, with minimal flexibility in support budgets, we have begun the process of offering early retirements for employees in Civil Service Retirement, as well as separation incentives. It is our hope that we begin to offer early retirements by October 1, 2003. If you have questions regarding early retirement or salary separation incentives please get in touch with Jim immediately.

We will be communicating the financial situation to all our County Advisory Councils and will share that letter with all of you in the August 22 Biweekly Update.

On Wednesday, July 23 the Governor met once again with the House and Senate Joint Budget Advisory Group and they now appear to be moving in the same direction. The current continuing resolution/budget USNH is operating under provides "flat funding". The Governor had been advocating for a 5% cut ($8.7 million). There was no discussion at Wednesday's meeting about further cuts below flat funding and we all hope that is the eventual outcome for USNH. The next meeting to discuss further budget details is scheduled for Thursday, August 7.

If the University receives flat funding the projected deficit for Cooperative Extension will be $780,000. It is important to note that flat funding or a 5% cut will have a dramatic impact on our budgets. Under either scenario Cooperative Extension will need to implement the budget reduction strategies. I will provide you with the latest information in the next update on Friday, August 8.

On Thursday morning Governor Benson vetoed the $8.8 billion state operating budget approved by the House and Senate earlier in the week. The Legislature is scheduled to meet Monday, June 30, for an override vote that requires two-thirds to prevail over a veto. While the outcome is uncertain, it's believed there is a good chance an override will be successful. If the override fails, Legislators could enact a continuing resolution, also requiring a two-thirds vote, to appropriate funds to keep state business going. If a continuing resolution is not passed, it's unknown what will occur on July 1 when the state technically will have no money to run the government.

Please continue to remain updated on this matter through the media. If we have further information to share on Monday, June 30, we will do so. Once the FY04 state budget is confirmed, I'll provide details about the impact on Cooperative Extension.

The following information is an update to budget information that appeared in the last Biweekly Update (May 2). I refer you back to that Update if you have not read it since the information remains current (http://www.ceinfo.unh.edu/common/documents/bw5203.htm). I urge you to rely on the Biweekly Update for current and accurate funding information rather than react to speculation and rumor. Please know we are not planning to implement the total budget cut, once known, on July 1. Yes, we will have to reduce our FY04 budget. However, we plan to use some of our financial reserves to give us time to make good, informed decisions. Additionally, program leaders will involve their respective staff for input, especially as it affects programs.

The 5% reduction in current state funding as proposed by the Governor and House is still being considered by the Senate. Once voted on, the budget will likely move to a "Committee of Conference" sometime in June for reconciling the differences between the Senate and House versions of the budget bill. At that point, it may be signed, vetoed or permitted to become law without signature.

We are still developing our UNH FY 04 budget based on the 5% reduction model with a 3.5% salary increase to take effect in September. The new freshman class size has come in slightly lower than what was budgeted and the mix is more heavily weighted toward resident vs. non-resident students which results in lower overall budgeted tuition revenue. Cooperative Extension, however, is still being considered to receive a percentage of this revenue if the increase in student tuition is higher than the FY04 budget proposal.

We are still actively pursuing approval for Voluntary Early Retirement Authority (VERA) for staff in the Civil Service Retirement System, and hope to make it available in the new fiscal year. Again, I remind you to contact Jim Grady if you are interested or want more information. I do need to emphasize that once we know our final budget amount, we will offer retirement incentives only until the budget is balanced. Retirement incentives exceeding the value of six months salary will not be offered now or in the future.

The UNH Alumni Association recently sent the following web link to its members with encouragement to contact legislators regarding the need to maintain affordable tuition and high-quality academic programs at USNH institutions: http://www.alumni.unh.edu/volunteer/networks/advocates/ . This site provides biennial budget background information and details about the importance of maintaining UNH programs and services.

The following information is an update to budget information that appeared in the last Biweekly Update (April 18). I encourage you to rely on this communique from me for current and accurate funding information, and avoid reacting to rumor or speculation.

As reported in the April18 Update, the Governor and House have proposed biennial funding for the USNH that represents a 5% reduction in current funding. The budget has gone to the Senate and once voted on, will likely move to a "Committee of Conference" sometime in June for reconciling the differences between the Senate and House versions of the budget bill. At that point, it may be signed, vetoed or permitted to become law without signature.

USNH has new budget assumptions that will not be finalized until a final budget is approved by the New Hampshire Legislature, USNH Board of Trustees and the UNH Central Budget Committee. We are currently in the process of budget development for FY 04. We cannot wait until the end of June as the fiscal year begins July 1. Therefore, UNH is proceeding with budget development using the following assumptions:

* A 5% decrease in state appropriations, which translates to a decrease of approximately 10% for Cooperative Extension because state appropriations also fund salary increases and fringe benefit costs for the county and federal portions of salaries.

* The possibility exists for Cooperative Extension to receive some UNH dollars in the event there is an increase in student tuition

* The current budget model includes a salary increase of 3.5% effective in September. The increase would not be retroactive to July 1 resulting in a FY04 increase of 2.92%

The above assumptions, along with level federal funding, will result in a deficit of approximately $1 million for Cooperative Extension. I reiterate that the current projected deficit is based on information we have available to date. The funding models change on a frequent basis. The final results will not be known until a state budget is approved and the USNH Board of Trustees respond accordingly.

Some staff have expressed concerns that if we sustain a cut of this magnitude, we will begin to layoff staff on July 1. Be assured this will not happen in July as we will use reserves to give us enough time to assess the situation and make the best possible decisions for the future of Cooperative Extension. Under Responsibility Centered Management (RCM), UNH units must bring forward either positive or negative balances from previous fiscal years. Cooperative Extension has over $600,000 in current reserves. These dollars are not permanent, therefore careful consideration will need to be taken as to their use. The reserves merely give us the additional time necessary to make the best organizational decisions.

If we do sustain the cuts as projected in the current models we will need to make serious staffing decisions. I again refer you to the March 21, 2003, Deficit Reduction Strategies which will be applied before we even begin to look at any layoffs. Please carefully review strategies 18 through 22. These will have the greatest impact on our budget. Any staff member interested in a reduced time appointment should get in touch with Jim Grady.

We have submitted a request for Voluntary Early Retirement Authority (VERA) for those who are in the Civil Service Retirement System (CSRS). If approved by the Office of Personnel Management (OPM) we will make it available as close to July 1, 2003 as possible. Please note that the federal government does not offer salary separation incentives as a part of VERA. Incentives will need to be approved by UNH and will come from our UNH reserves. Applications will be accepted on a first come/first serve basis. Once we meet our targets we will withdraw the separation incentive offer.

We are currently looking at an incentive equal to six months of salary. Anyone eligible for optional or early retirement should know that we will not offer any incentive greater than six months of salary and it will be offered to those eligible on a first come/first serve basis. If you are interested in applying for this incentive, contact Jim Grady as soon as possible. Once we know the exact amount of the deficit and it's met through any of the strategies identified, we will rescind both the separation incentive and VERA.

The vote the House took yesterday regarding the state budget and USNH specifically, is basically the same as what is reflected in the chart delineated in the attached minutes of our 3/20 Extension Management Team meeting under the section titled: FY04-05 Proposed Biennial Budget and Deficit Reduction Plan.

The Governor and the House have proposed $160,239,626 in biennial funding which is a $22 million reduction when compared to the USNH FY04-05 request of $182,364,828. Funding for the FY02-03 biennium was $162,223,902. If the state budget for the upcoming biennium is approved at these levels it would mean a deficit of approximately $1.4 million for Cooperative Extension in FY04.

The budget process now shifts to the Senate. Once the Senate votes on the budget, there will likely be a "Committee of Conference" formed sometime in June to reconcile the differences between the Senate and the House versions of the budget bill. Once passed by both houses, the bill goes to the Governor for disposition. At that point, it may be either signed, vetoed or permitted to become law without signature.

Here are listings of the members of the Senate and the House:

Senate Members: http://www.gencourt.state.nh.us/senate/members/
Senate Committees: http://www.gencourt.state.nh.us/ns/billstatus/sencommittees.asp
Senate Finance Committee: http://www.gencourt.state.nh.us/ns/billstatus/commdetails.asp?txtcommcode=S07
Senate Districts: http://www.gencourt.state.nh.us/senate/redistricting/senateredistrict.pdf
House Members: http://www.gencourt.state.nh.us/house/members/legdetailstable.asp
House Committees: http://www.gencourt.state.nh.us/ns/billstatus/hsecommittees.asp
House Finance Committee: http://www.gencourt.state.nh.us/ns/billstatus/commdetails.asp?txtcommcode=H34
House Districts: http://www.gencourt.state.nh.us/houseredistrict/plans/houseredistrict.pdf

When extension advocates ask "what can I do to help", I'd suggest you emphasize the need to deliver a simple, clear message to key legislators about the need to increase the funding level proposed by the Governor and House, ideally restoring the 6.4% and 6.2% increase requested by the Trustees over the biennium. The following are some succinct talking points provided to me by Steve Reno, USNH Chancellor, relative to the Operating Budget to assist in delivering your message of support to legislators. These talking points encompass the key messages USNH is attempting to deliver:

Talking Points - FY 04-05 Operating Budget

* We sympathize with the budget challenge faced by legislators and the need to cut unnecessary spending. USNH has requested a FY 2004 operating budget of $88.4 million which is a $5.4 million (6.4%) increase from FY2003 and a FY 2005 budget of $93.9 million, a $5.5 million (6.2%) increase over FY 2004. This funding level is necessary because the budget:
o Provides affordable, quality education to in-state students. It minimizes tuition increases to a few hundred dollars. (ave. of $285/yr UNH; $205/yr KSC and PSC 4.5%/yr. And, no tuition increase for CLL in FY04)

o Maintains a competitive academic edge allowing USNH to attract nearly 10,000 out-of-state students each year. These students pay higher tuition rates helping to keep in-state tuitions low.

o Funds direct services to assist hundreds of thousands of NH residents (i.e, Cooperative Extension) and helps fund some of the 700 collaborative programs that service dozens of NH communities, and thousands of NH small businesses. (The Community Research Center at KSC, The Small Business Institute at PSC; The Center for Family Business at UNH)

o Stimulates the economy. USNH has an economic impact estimated to approach one billion dollars annually. Each state dollar invested in USNH returns $3-5 dollars, a wise investment of state funds in this slower economic period.

The State Advisory Council met last night via interactive video along with members of county advisory councils. Participants were located at Extension's six PictureTel sites and the North Country Education Foundation. Following the welcome and introductions led by council chair, Chris Streeter, the remainder of the meeting was devoted to a review of the FY04-05 biennial funding situation as described above. The Budget Reduction Strategies. were reviewed, and talking points for use in discussions with legislators were also provided (detailed above).

The last issue of Biweekly Update (March 21) included a detailed list of Deficit Reduction Strategies ( http://www.ceinfo.unh.edu/cragin/common/documents/BudgtR03.PDF ) recently approved by the Leadership Team. Based on Governor Benson's proposed reductions in the USNH biennial funding request, and with "level funding" by the legislature speculated to be the likely "best case" funding scenario, we're projecting a deficit on July 1 between $500,000 and $1.3 million. Therefore, all measures outlined to reduce our budget have been initiated.

As directed in strategy #18, please contact Jim Grady if you are interested in or would like further information regarding potential separation incentives. Contact your Program Leader or supervisor if interested in considering a reduced-time appointment as cited in strategy #19.

If all measures taken including separation incentives and reduced-time appointments fail to meet our July 1 deficit, the shortfall will be prorated for all 5 program areas and Extension administration based on the percent of state funding supporting each unit (see strategy #20). Each unit will then determine how best to reduce budgets and achieve the prorated goal based on program and staffing priorities. Contact any member of the Leadership Team if you have questions about any of the Deficit Reduction Strategies.

The House Finance Committee has until April 10 to makes its recommendations and the full House votes April 17. The budget process will then crossover to the Senate for their deliberations.

As a follow-up to the biennial budget item in the last Biweekly Update, I'm sharing the Deficit Reduction Strategies approved last week by the Leadership Team. This plan was reviewed yesterday during the Extension Management Team meeting.

With Governor Benson's proposed 5% reduction in USNH FY04-05 biennial funding, Cooperative Extension faces a potential significant funding deficit on July 1. The Deficit Reduction Strategies describe actions we are taking to prepare for a funding reduction of some portion. I will also be sharing this information during a PictureTel meeting of the State Advisory Council on April 17, 6:30-8:30 p.m. to which all county advisory council members will be invited. It's important for advisory councils to be informed of these strategies and understand the potential impact on programs and staffing. Please contact any member of the Extension Leadership Team if you have questions about the strategies outlined. I will continue to keep you fully informed about the FY04-05 state budget as it is finalized by the state legislature over the next three months.

With Governor Benson's proposed 5% reduction in the USNH FY04-05 biennial appropriation, Cooperative Extension faces a significant funding deficit beginning July 1. Full details were outlined in the February 7 Update: http://www.ceinfo.unh.edu/cragin/admin/secure/bw2703.htm . Although the final budget will not be approved by the legislature until late June, we are taking steps to prepare for an expected funding shortfall.

I'm working with the Leadership Team to create a deficit reduction plan that will be finalized next week. I'll review this plan with the Extension Management Team during their March 20 meeting, and will share it with all staff in the March 21 Biweekly Update. I have also scheduled an "open" State Advisory Council meeting via PictureTel on April 17 to which all county advisory council members will be invited. I want to provide them a comprehensive update on our funding situation and review the deficit reduction plan so council members fully understand the potential impact on programs and staffing.

You may recall in the 11/22 issue of the Biweekly Update, I indicated the Cooperative Extension request as part of the USNH biennial budget request (04-05) proposes an increase of about 7.5% which also includes covering the cost of salary increases on the county and certain federal portions of our overall salary base. USNH Trustees have requested an overall increase of 6.4% in the state budget for the upcoming biennium. Selected highlights in the USNH request include allowances for a 4.5 percent salary increase in '04 and '05, a fringe benefit cost recovery rate of 39% of salary, and utility and equipment costs expected to increase by 5% and 6% respectively.

The two appropriation requests for Cooperative Extension State and County are as follows:

FY04 Cooperative Extension State - $4,568,000
FY04 Cooperative Extension County - $2,621,000

FY05 Cooperative Extension State - $4,870,000
FY05 Cooperative Extension County - $2,834,000

Our budgets for FY03 and 04 are currently balanced through our state appropriated funds, as well as through attrition, salary offset from grants, indirect cost rate recovery, and private giving. The federal appropriations which directly affect these budgets have been at level funding for many years. If we are going to continue with our program efforts at the current level, we need to continue with the plan for diversified funding. The greatest percentage of our overall $15.3 million budget is State and University funding at 50%.

The governor has requested that all state agencies submit a fiscal 2004 budget equal to 95% of fiscal 2003 funding. Governor Benson's budget will be presented to the legislature next Thursday, February 13. Given the current economic picture in the state and the governor's expressed commitment to a budget cut for the upcoming biennium, it will be necessary for us to begin implementing a comprehensive set of cost cutting measures in an effort to do all that we can to avoid the possibility of reductions in force. It is important for each of us to know that any decrease over our request will impact our organization. For example, if we were to incur a 5% cut it would mean a deficit of $1 million. Flat funding with no increase would mean a deficit of $500,000. The Leadership Team will be developing a cost cutting plan and I will communicate the specifics in upcoming issues of the Biweekly Update. It will be a difficult next few months. Obviously, no one knows with certainty what the final outcome of the biennial budget (July 1, 2003 - June 30, 2005) will be for another 5 months (i.e., June 30, 2003). The timetable for approval of the state budget process is as follows:

1. February 13th, the Governor addresses a joint session of the legislature recommending appropriations for each agency.
2. Between February 15th and June 30th, the house and senate draft and approve the budget bill.

Once passed by both houses, the bill goes to the Governor for disposition. At this point, it may be either signed, vetoed or permitted to become law without signature.

Based on all we've heard about possible reductions in our budgets, it would be prudent for us to begin taking measures to address this within the next few weeks. Anything you can do in the area of external relations as well as seeking non-traditional sources of funding will of course be beneficial. Please don't hesitate to contact me as I welcome your input in the form of revenue generating ideas, suggestions, or questions you might have. I will keep you fully updated as we move through the state budget process.

The $100,000 4-H Centennial Campaign has reached the $78,000 mark and we hope to reach the goal within the next few weeks. Many thanks to those of you who've contributed to the campaign. If you are still interested in contributing, contact Holly Young for a pledge/payroll deduction card.

The Biennial Budget request for the University System of New Hampshire for FY 04-05 was submitted to the State with an overall increase request of 6.2%. Selected highlights in the request include allowances for a 4.5 percent salary increase in '04 and '05, a fringe benefit cost recovery rate of 39% of salary, and utility and equipment costs expected to increase by 5% and 6% respectively.

The two appropriation requests for Cooperative Extension State and County are as follows:

FY04 Cooperative Extension State - $4,568,000
FY04 Cooperative Extension County - $2,621,000

FY05 Cooperative Extension State - $4,870,000
FY05 Cooperative Extension County - $2,834,000

The USNH overall biennial request to the state through the University System is an increase of 6.2%. The Cooperative Extension request is closer to 7.5%. This difference is due to the University covering the salary increases on the county and certain federal portions of our overall salary base. We have been very fortunate that the University has covered this expense since 1988.

Our budgets for FY03 and 04 are currently balanced through funds mentioned above, as well as through attrition, salary offset from grants, indirect cost rate recovery, and private giving. The federal appropriations which directly affect these budgets have been at level funding for many years. If we are going to continue with our program efforts at the current level, we need to continue with the plan for diversified funding. The greatest percentage of our overall $15.3 million budget is State and University funding at 50%. The current governor-elect has reported through the media that he will not accept state budget requests over 3% of the FY03 level. If we were held at a maximum of 3% increase, we could be looking at a budget shortfall in the vicinity of $300,000. While it is too early to speculate, it is important for you to know that any decrease over our request will impact our programming efforts. Anything you can do in the area of external relations as well as seeking non-traditional sources of funding will be beneficial. I will keep you updated as we have more information.

The great news is the USNH budget which includes specific appropriations for Cooperative Extension received a 5% increase for each year in the 2002-03 biennium.

You'll recall this past winter I apprised you of two bills in the legislature pertaining to 1) the Teen Assessment Project (HB 734), and 2) Forestry funding (HB 539). UNH Cooperative Extension was successful regarding both bills.

The bill proposing to eliminate the Teen Assessment Project was not supported by the House Education Committee by a vote of 17 to 2 and House Floor Action concurred by a vote of 218 to 103.

Regarding forestry funding, the NH Timberland Owners Association and the Society of the Protection of NH Forests sought legislative sponsors for HB 539 which was later ""merged"" into HB 1 (NH State Operating Budget Bill). Part of the proposed legislation provided funding ($230,000 per year) for UNH forestry and wildlife education programming throughout NH. There has been a memorandum of understanding between the Department of Resources and Economic Development/Division of Forests and Lands and UNH Cooperative Extension since 1925 whereby UNH CE provides forestry education programming. Over the last decade, state funding for this has declined from $158,000 annually to $42,000. DRED has relied heavily on federal dollars to keep the extension program running at its current level. Many of the these federal funds are competitive and of short duration and do not provide the security needed to maintain current core staffing levels. While the Governor's budget had only $42,000 per year included, the House Finance committee added $188,000 (and the Senate left it in). The annual appropriation through DRED to UNH CE for forestry and wildlife educational programming therefore is $230,000 which is the amount originally requested in HB 539.

A tremendous debt of gratitude is owed to all of our staff, clientele, and friends of extension that helped us achieve phenomenal success in the legislature this year.

This week the Governor and Executive Council approved a contract agreement between the NH Department of Health and Human Services, Division of Family Assistance and UNH Cooperative Extension from July 1, 2001 to June 30 , 2003 for the amount of $1,466,464 to conduct the Family Lifeskills and Job Readiness Training for participants of the New Hampshire Employment Program. The Lifeskills for Employment, Achievement and Purpose (LEAP) and Lifeskills Impacting Families Today (LIFT) are taught by 12 Family Lifeskills Program Coordinators statewide. They provide skills to assist TANF recipients to make the transition from public assistance to employment. Congratulations to Suzann Knight and Debbie Luppold, Co-Project Directors, and the local Family Lifeskills Program Coordinators.

In the last update I provided you with a status report regarding our attempt to secure additional funding for extension forestry through a state appropriation to the Division of Forests and Lands. I'm pleased to report that we continue to make progress as the House Finance Committee has recommended that we receive $188,000 in each year of the biennium. There is still a long way to go before the state biennial budget for fiscal years 2002-2003 is finalized but this is definitely a move in the right direction.

HB 539 was favorably and unanimously voted out of the Resources, Recreation and Development Committee (18 to 0) on 3/14 and it's gone from the House floor favorable voice vote on 3/22 to the House Finance Committee (no hearing date set yet). I've included a one page attachment to this update that provides background information regarding the extension component of the proposed bill. You may find this useful in the event anyone is seeking further information regarding the proposed legislation. The bill still has a long way to go against some tough odds given the state deficit but so far so good. The bill can be found at: http://gencourt.state.nh.us/legislation/2001/HB0539.html

The USNH biennial budget presentation was made to the House Finance Committee (HFC) last Friday, February 23. Various sub-committees of the HFC will continue to meet with USNH officials for further discussion. The FY02-03 total biennial request for Cooperative Extension is nearly $13 million. The next step in the process after the HFC has acted on it will be with the Senate Finance Committee in a few weeks.