FAYETTEVILLE, Ark. - Grappling with budget cuts, unavoidable utility increases and decreased state funding, the University of Arkansas announced today that the budget request it will present to the University of Arkansas Board of Trustees on June 6 will include salary increases for fiscal year 2003-04 only for full-time faculty/staff making less than $35,000 annually.

If the UA request is approved by the Board of Trustees, full-time employees earning $21,128 or less will see an increase of $570. For those employees in the pay scale of $21,128 to $34,080, a 2.7 percent increase will be awarded. Those making more than $34,080, but less than $35,000, will have their salaries increased to $35,000. The rate of increase will apply across the board to all classified employees and to non-classified employees using the merit process.

"Clearly, we would like to award salary increases to all of our employees," Chancellor John A. White said. "Lacking the funds to do so, however, we’ve made it a priority to focus on those UA employees most affected by cost of living increases and most vulnerable to falling below a living wage - specifically, those making less than $35,000."

Cost for the salary increases will total approximately $504,000, which will come to the University through a 6.6 percent increase in tuition beginning fall 2003. Additional funding will come through $4.3 million in appropriations from the Arkansas State Legislature for University operating costs and employee benefits. Chancellor White praised the General Assembly for this year’s appropriations during tough economic times.

"Many jurisdictions are experiencing difficult economies, and Arkansas has not escaped what is becoming a national phenomenon," White said. "We are grateful to Gov. Mike Huckabee and the General Assembly for their support, which has allowed us to remain on the lower tier of tuition increases among four-year institutions across the nation."

At the University of Missouri, students will see a 19.8 percent tuition increase when they arrive for classes in the fall while the University of Georgia and the University of Kentucky will raise tuition 15 percent and 14.39 percent respectively. In Oklahoma, the state’s flagship, the University of Oklahoma, has proposed a 16 percent tuition hike and Oklahoma State University has proposed an increase of 9 percent. Finally, both Kansas State and the University of Kansas are looking at proposed 20 percent tuition mark-ups on their campuses to assist with state cut backs.

Despite significantly higher tuition - particularly for out-of-state and new, incoming students - many of these universities have been forced to close class sections, cut student services and, in some cases, lay off staff and faculty. The University may face similar challenges - perhaps as early as fall 2003 - depending on the sluggishness or growth in the state’s economy.

"Though the U of A stands committed to maintaining the research programs and educational services that promote its academic goal of becoming a nationally competitive, student-centered research institution, further budget cuts could jeopardize the University’s progress in those endeavors," Provost and Vice Chancellor for Academic Affairs Bob Smith said. "It is important for us to recognize that our FY03 state allocation was reduced by $8 million due to revenue shortfalls.  While we are most grateful to the Legislature for restoring $3.7 million of the shortfall, we begin FY04 with a more than $4 million deficit."

In addition to cutbacks and decreased state funding, UA faculty/staff must also prepare for a significant rise in health insurance. To help defray the increased cost in benefits for all of its employees, the University has committed to paying the 7 percent increase it customarily covers for its contribution to faculty and staff premiums. For the first half of the fiscal year 2004, the University will also pay the 7 percent increase on the employee’s premium amount in an effort to ease cost of living expenses for all employees, particularly those who will not receive pay increases; the feasibility of continuing to defer increases in medical insurance premiums will be assessed in December.

Additional salary increases might be possible in early 2004; however, such raises will be contingent upon state funding determined in the fall and state appropriations flowing as a result of sufficient tax revenues.

"Not only are we experiencing a rise in the overall cost of health care, we are also witnessing significant increases in the costs of natural gas and other services to maintain campus utilities," Vice Chancellor for Finance and Administration Don Pederson said.

Currently, the University is $23 million behind what the 2010 Commission projected for state revenue at this time and $1 million behind what it anticipated in tuition revenue. In addition, the University has been appropriated $450,000 this biennium for research infrastructure from the General Improvement Funds compared to $7 million appropriated two biennia ago.

In light of such economic pressures, the University of Arkansas is instituting a "hiring freeze" effective immediately for all positions across campus. An appeal process to the Chancellor’s Executive Committee, consisting of all vice chancellors, will be implemented.

In addition to the "hiring freeze," all UA budgets will be reduced by 2 percent in an effort to combat rising costs and to provide reallocated resources to priority programs.

"Ultimately, the future success of the University depends on the quality of its students, faculty and staff," White said. "Although economic drawbacks have caused the University to increase tuition modestly and take a more conservative approach with salary increases, we believe these steps will allow us to move forward with our core mission - providing quality educational experiences to our students and serving as the economic engine for the state through teaching and research."