USF’s administration is scrambling to balance the need to hire more teachers with a shrinking budget.
As a way to alleviate this pressure, the University decided to tap into a special $53-million fund of one-time cash to employ more adjuncts and part-time teachers, Provost Ralph Wilcox said.
This rainy day fund of sorts — which, unlike many other forms of University revenue, has no restrictions barring how it’s spent — cannot be used to hire tenured faculty, who can only be paid with money the University receives year after year, such as state funding.
Tapping into this one-time fund, however, could harm the University’s high bond rating, or credit score.
“Our pool of unrestricted funds is a strong reason why we have such a high rating,” Wilcox said. “If we are overzealous in drawing down these funds, we can expose ourselves to prohibitively high interest rates on future and much-needed construction projects.”
Higher interest rates could make it harder for the University to obtain loans to complete new buildings or renovate old ones.
This money is different than restrictive funds, or money the University is required by the state to save. USF must save 5 percent of its state-allocated money, plus an additional percentage put in place by the Board of Trustees. For the past fiscal year, which ended on June 30, this totaled about $30 million. Data for this fiscal year are not yet available.
USF plans to draw from its unrestricted reserves for the next two years, Wilcox said. It is not clear how much of it USF will spend, but Wilcox said the University does not plan to use the full $53 million.
“At the end of 2008-2009 school year, we need to have some of that left in the bank,” he said.
The $53 million comes from carry-forward money. When departments do not spend their entire budget, the University pools the unused portions into a reserve fund.
To rebuild the reserve, the University could continue to pool unused monies, or it could use specific saving strategies to build it more quickly. At this time, it is not clear what USF will do to rebuild its reserve, Chief Financial Officer Trudie Frecker said.
Dipping into the reserve is a temporary solution, and Wilcox said he hopes the state progresses economically, or all Florida universities could suffer.
“If the Legislature doesn’t appropriate more to our base budget to replenish some of what we lost, then we are going to be in a very troubling situation,” he said.