Energy, insurance costs hit budgets

Paprocki

ome extraordinary factors--energy costs and medical benefits, most notably--are increasing pressures on the University budget this year. And those factors are likely to have an even greater impact on next year's expenses across the institution.

Even though increased energy costs were projected for the 2000-01 year, the extent of the increases means that the University will likely spend $1.5 million more than budgeted, and there is no sign that those costs will return to previous levels next year, according to Ronald J. Paprocki, senior vice president for administration and finance.

Natural gas is the chief fuel for the University's utilities plant. Six months ago, the University was able to purchase natural gas for less than three dollars per decatherm. Currently, it's in the neighborhood of ten dollars. (For the winter months, the utilities plant has switched primarily to oil for heating, but the costs still exceed original projections; and natural gas is expected to remain at historically high prices.)

In addition, the costs of health care premiums have risen dramatically. "Just as individuals were hit with large increases in health insurance costs this month, the University's share of the premiums is increasing proportionately," Paprocki said. Premium increases announced recently add about $3.5 million to the University's annual expenditures.

Paprocki said that University and divisional managers are being asked to take steps to manage these extraordinarily large cost increases, as well as other more "localized" variances, within approved budgets. In essence, savings must be found wherever possible to offset the unexpected increases. "Businesses and institutions across the country are taking steps to reduce their expenses, and we face many of the same issues," he said.

"The success of strategic planning initiatives within the various divisions in past years will help us manage these new financial pressures, but there's work that we must do," he said. "We're fundamentally in good shape as an institution, but we can't escape the need to tighten our belts."

He said that the deans and other senior leaders will be asked to look for ways to become more efficient and to identify ways in which costs can be reduced. "Obviously, within some of the divisions, measures undertaken may be felt at the departmental level," Paprocki said.

Maintained by University Public Relations
Please send your comments and suggestions to:
Public Relations.