Budget Q and A: What You Need to Know

On February 6, the AUC community participated in a University Forum which tackled issues like the budget deficit and AUC's bus services. To address some of the concerns raised at the University Forum, below is a series of answers to frequently asked questions about the budget deficit.

Q. Why are we suddenly hearing more about the budget now? A. The budget deficit has been an issue since 2011. Last year, the University managed to make significant progress and in fact nearly closed the budget gap in the 2012 -2013 (fiscal year 2013) if it is considered a full 12-month year (the University switched its fiscal year from September 1 to July 1 last year, making FY13 in effect a 10-month year). After the events of the summer, and the placement of the travel advisory, the University was confronted with a new set of parameters that were not in place at the time of the creation and approval of the budget. Q. How long is this budget deficit expected to continue? A. It is difficult to predict when exactly all of the factors creating budget pressures will be resolved. Factors like the return of international students or stabilization of the foreign exchange rate are not completely predictable. In the current budget forecasting for the fiscal year 2015 and 2016, the University is expecting that these pressures will continue. While efforts are being made to plan and adjust for these variables, it is reasonable to expect continuing austerity in the next couple of years. Q. Wasn't a drop in international students expected? A. The University expected and planned for a reduced number of international students. Since the budget for each academic year is set and approved in March of the previous year, the budget for this academic year was set in March 2013. At that time, no travel advisory was in place for Egypt and the number of international students, while less than the numbers before 2011, were significantly more than they are now. Q. Is the drop in international students alone the only cause for the deficit? What other reasons are there? A. The drop in international students is a significant cause for the deficit that also impacts things like the occupancy level at the Zamalek Building. But it is not the only factor. Other contributors to the deficit include the foreign exchange rate, the unexpected increases in the costs goods and services, a drop in the expected gifts as a result of fundraising and a drop in executive or adult education programs. The foreign exchange rate has resulted in the weakening of the Egyptian pound, which also has an impact on the budget because most of AUC’s revenues are in pounds, while some of its expenses, like salaries and supplies, are in dollars. Those are the external pressures that have an impact on the deficit. Q. As an employee or student at AUC, how will I be most affected? A. Members of the community should expect increased austerity measures. For employees, this means finding new and more efficient ways to do provide the services the University needs. In this regard, AUC is not alone. In universities throughout the world, the need to do more with less is a common mandate. Given that resources are finite and limited, there must be tradeoffs. The University is committed to preserving the academic quality of its programs as a first priority. It is also committed to preserving valuable staff who are critical to the quality of the service. As a result of these two priorities the University must be a willingness to accept tradeoffs in limited services and other reduced expenditures. Q. How much of the bus issue would be resolved by the fees for bus passes? A. The fees alone for faculty and employees above level 9 will result in $100,000. The purpose of the fees is to move closer to a situation that is more equitable for all bus riders, since currently only the students pay for the bus. The increasing costs of the bus also make the level of service unsustainable in the long run. This is why additional changes to the service, like limiting routes or departure times, are necessary. Q. Didn't the administration know the buses would cost more? A. Since the move to the New Cairo campus in 2008, the annual cost in the bus service has been at an expected rate. In the next academic year, due to expected increases in the cost of fuel, the need to upgrade buses in poor condition and move to more reliable service providers will all result in a substantial increase. The main cause of that increase is that the cost to replace those buses that are in poor condition is substantially higher today than it was several years ago. Q. How come there is a buyout if we have a deficit? A. The buyout will result in additional expenses in this current year and will in fact make the deficit in fiscal year 2014 worse. The University’s Board of Trustees, however, has authorized a separate amount of deficit, which has not yet been determined, for the purpose of a buyout with the understanding that in the next academic year (fiscal year 2015) and beyond, the result will be a continuous long-term savings as result of the reduction of the salary budget due to the buyout. In other words, the University would be accepting to make the budget problem worse this year, in exchange for a permanent savings in the long run. Q. Does that mean that a buyout will only be accepted if the position is being closed? A. No, it is possible that the position will remain, but that a buyout will still be considered. There are many ways to envision how a unit can organize itself to function effectively and efficiently. In some cases, the tasks of one job could be distributed among several other positions. It may be the case that another person from within the unit could be promoted to take on additional responsibilities. Finally, it’s possible that the position needs to be filled. The purpose of the buyout is to provide the flexibility and freedom for members of the community who would like to pursue this alternative for any number of reasons, while at the same time serving the long-term interest of the University. There are cases of excellent, dedicated employees who have requested the buyout because they are having a difficult time with the extended length of the commute after a recent move of their residence, for example. Photo caption: Lisa Anderson, Amr Shaarawi, Brian MacDougall, Khaled Dahawy and Dina Abulfotuh at the University Forum held on February 6 للإطلاع على الأسئلة والإجابات باللغة العربية ،اضغط هنا