Dear Friends,

In order to ensure a balanced state budget on June 30, 2009, Governor Perdue yesterday morning signed an executive order mandating unpaid furloughs for all state employees. Under the plan, all teachers and state employees will have their compensation reduced, on an annualized basis, by 0.5% for the remainder of the fiscal year.

In return, full-time employees are to be credited with 10 hours of flexible time off between June 1, 2009 and December 31, 2009. Part-time employees will receive time off on a prorated basis.

This furlough mandate applies to all state employees, including faculty, regardless of funding source. Employee benefits funded by the state (health, retirement, etc.) will not be reduced and the governor has pledged to work with the General Assembly to pass legislation that would hold these benefits harmless. The Office of State Personnel is expected to distribute formal policy and guidelines regarding the administration and use of the 10 hours of furlough time to state human resources directors by May 25.

In the meantime, Appalachian continues to follow the specific guidelines required by the Office of State Budget and Management (OSBM) that were explained in my email of April 20. To review those guidelines, go to www.chancellor.appstate.edu where that communication and other recent statements concerning the budget are posted.

As of today, we do not know if the restrictions will remain in effect after June 30. If they do remain, any expenditure not related to payroll, utilities, or direct classroom expenses will continue to be disallowed.  We are allowed to request exceptions from the OSBM but they will be rare.

The information we have at this point is that we will be permitted to offer contracts on July 1 to faculty already in the queue to teach classes in the fall. I know that has been of great concern within Academic Affairs, so this is very good news.  Faculty contracts and course offerings for Summer School will continue as planned.

Understandably, there has been confusion on campus as to why some expenditures continue to be allowed despite the restrictions on state funds. The reason is that different areas and activities of the campus are funded from different sources of revenue. We can continue with some types of construction, for example, because funds for housing, steam repair, athletics and some other types of construction come from housing receipts or other auxiliary funding, not from state-appropriated dollars.

It is also important to know that we cannot move funds from one area to another to cover disallowed expenses we might wish to incur, just as we cannot carry forward any funds for the 2009-2010 fiscal year. While it might seem logical to stop some construction and use those funds to fill open faculty lines, the state does not allow us that flexibility.

The administration will continue to carefully manage the resources of the University and will monitor spending from non-state funds to ensure they are being spent wisely. The situation we are facing is unprecedented in recent times, so we will be extremely cautious and conservative in regard to any spending on campus. Because of this abundance of caution, several student, faculty and staff functions have been cancelled. While we regret each cancellation, we believe it is in the best interests of the University at this time.

Finally, I continue to be impressed by the way students, faculty and staff are handling this difficult situation. I am grateful to each of you for the calm and practical approach you are taking to the daily frustrations caused by the budget situation. Appalachian continues to move forward because of the wonderful people on our campus who are passionate about this institution and our mission. I will provide you timely updates as we learn more about our budget.  Thank you for your hard work and forbearance.

Sincerely,

Kenneth E. Peacock
Chancellor