New reports give UK guidance on buildings, budgeting, faculty

lblackford@herald-leader.comJuly 30, 2012 

UK president Eli Capilouto spoke on Friday, April 20, 2012, at Wildcat Alumni Plaza. Photo by Laura Strange | Staff

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University of Kentucky President Eli Capilouto released a wide-ranging series of reports Monday that he says will help steer Kentucky's flagship university into the future.

The studies look at a variety of other issues, including UK's debt capacity, faculty retention and post-tenure reviews, and they recommend new financial systems and administrative structures.

"They provide the beginnings of a blueprint forward; they also will serve as a reminder of how things fit together," Capilouto said Monday. "If you see ... that teaching is an area where we have to devote more attention, you need to have a budgeting system that values and rewards teaching, you've got to have facilities that further encourage excellence in teaching. You're going to have a sound plan to finance these facilities, and then you have to have a nimble administration that puts in place with faculty and colleges programs that enhance teaching."

Capilouto is asking the campus community to read and comment on the reports for the next 30 days. The board of trustees will hold a retreat on the issues in October.

"I think the faculty and the university community are very pleased that President Capilouto has posted them for everyone to review," said Lee Blonder, chairwoman of the University Senate.

Capilouto set aside $1.3 million to pay Huron Consulting for the four reports. They are supposed to lay the groundwork for what some call the "new normal," a landscape with drastically reduced state funding.

Earlier this summer, UK cut 140 full-time employees. UK officials said the hefty price tag for Huron came from non-recurring dollars and would not have helped keep any employees.

Capilouto said the reports were a continuation of an examination process that started when he arrived last year. The process identified two main themes: strengthening undergraduate education and improving facilities, including student housing and academic buildings.

He already has started to put in place a new administrative structure, which includes eliminating a senior position in commercialization.

The latest report on UK's financial system suggests that parceling out its $2.7 billion budget should no longer be based merely on how much each unit was given the year before. Instead, revenues and expenses should be considered together in a more decentralized process.

The current centralized budgeting system doesn't clearly communicate the priorities that administrators have in mind when allocating resources, the report says.

Capilouto said he thinks a new budgeting system that considers the source of university revenues would be much more transparent and would allow more decisions to be made by the people affected.

"It inherently involves greater trust — that more people understand how revenues are generated," he said. "People will have a deeper understanding of these matters."

Biology chairman Vincent Cassone said resource-based budgeting can work well if the university clearly communicates a set of shared priorities.

"The budget system of this university is completely arcane. Even the provost doesn't know where the money is," Cassone said. "Now at the every least, there's an accounting. But you have to decide on the key values to guide you."

For example, he said, the new system would account for how much the biology department spends for faculty, supplies and facilities, then offset that against how much the department gets in tuition, grants or donations.

Because biology is one of the most popular majors, "it would be in the black," Cassone said. "But let's say the theater department is in the red because it costs a lot and not as many students choose it, but it's important to the life of the university to subsidize it."

Under the system, all units get the same accounting, and "there's great transparency."

Because of the discussion, Cassone said, interim provost Tim Tracy has convened a group of deans and department chairs to discuss the university's key values.

Arts and Sciences Dean Mark Kornbluh served on the budget committee and said there are many decisions to be made before moving forward.

"There are a lot of questions to be answered," he said. "I felt the committee agreed that it's really important to be articulate and explicit about our values ... to facilitate a budget system that fulfills our values."

Faculty issues

In addition, Huron worked with a group of faculty to examine professional development, post-tenure review and faculty promotion. That report found that the way an associate professor advances to full professor lacks uniformity across UK.

Also lacking are professional development guidelines and evaluations for senior-level faculty. The report found that most evaluations are based on those that students fill out at the end of the year.

Lack of money for salary increases further complicates matters.

"Many faculty members at UK are subject to unclear criteria, limited transparency and insufficient professional development opportunities," the report said. "As a result, many faculty members view the current process as unproductive."

Hollie Swanson, a biochemistry professor, led the committee, and she said she favors a reward approach to better teaching.

"I think we need to outline a better criteria of what is excellence and then clearly find ways to give rewards for being excellent," she said. "It's going to be a long process, so we want to make sure we have a good dialogue. This is the first volley; let's get something back."

Debt capacity

Huron also looked at UK's debt capacity, finding that it could support between $450 million and $650 million in new debt to build academic buildings.

In the past, the Kentucky General Assembly has allowed UK to issue bonds for projects that can pay for themselves, such as the new patient care building at UK Hospital, but has not allowed such flexibility for academic buildings, in part because some legislators think UK's debt load adds to that of the debt-laden state government.

Starting this year, UK is putting aside $15 million a year for capital projects. That's a new budgeting practice under Capilouto. That money could finance $200 million in debt for new construction. In the past, most academic buildings have been financed by the state with bonds. Now, UK hopes to self-finance academic buildings.

This past legislative session, UK asked for a $200 million agency bond pool, which would give it flexibility and the ability to match those funds with donations, but the General Assembly turned it down.

That's been a sticking point for the past five years, during which Rep. Robert Damron, D-Nicholasville, has filed a bill that would give the university bonding authority for projects that it can pay back on its own. It has repeatedly passed the House of Representatives but failed in the Senate.

"I think this report adds further credibility to the discussion that they're able to manage their own debt," Damron said.

Linda Blackford: (859) 231-1359. Twitter: @lbblackford.

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