Dollars and Sense

A few updates since I emailed this two weeks ago.

Nathan Deal was inaugurated as governor on January 10, and he released his first draft budget on January 12. It includes his proposal for 2012 as well as mid-year amendments for the remainder of fiscal year 2011.

I’ve already been to this year’s first hearing by the State House Subcommittee on Higher Education Appropriations. I’m sure you’re not surprised to find that there are more budget cuts being proposed. It’s easy enough to find, on page 318, a proposal to cut EI2‘s budget by $650,745. (In passing, we’re finally changing the name that the Governor’s Office of Planning and Budget uses for us from “ATDC” to “EI2“… that only took five years of negotiation!)

But it’s more complicated than that.

In FY10 and FY11, we have had a contract with the OneGeorgia Authority for entrepreneurial and small business support. OneGeorgia has been living off reserves this year, but we were pleased to see that almost $20 million has been proposed for them in the FY11 amendment. We don’t yet know what impact that will have on our work for them in FY12.

Before FY11, we received payments from the Research Consortium funds for facilities in Tech Square. Those payments were zeroed out this year, and we had hoped to see them again next year. That turns out not to be the case.

Finally, although not a direct impact on EI2‘s budget, our friends in the Georgia Research Alliance and the Georgia Cancer Coalition are seeing their funding transferred to the Department of Economic Development. This is brand new, and we’re still figuring out what it means for our programs. I’ve met twice now with Chris Cummiskey, the new commissioner, and I think he appreciates the value these two programs have provided for Georgia.

All that being taken into consideration, EI2 is in line for at least an 8 percent cut in our state appropriation.

But look at page 327. Our mix of state dollars with other monies has been changing. From 55 percent only a few years ago, we’re already down to 44 percent reliance on the state budget, and it’ll go below 40 percent in FY12…without a significant drop in our top line. So we’re making up the cuts through diversification with federal, private sector and non-Georgia governmental contracts. Good job.

Also, keep in mind that we have a significant budget allocated in FY11 to move out of the seventh and eighth floors in Centergy; we won’t have to spend that money next year, so it’ll help make up a good portion of the forecasted cuts.

Finally, although we’ve been hiring lately, most of those jobs have been on contract dollars, not directly funded by the Board of Regents. Any open BOR positions will have to be scrutinized carefully, and some may not be filled.

I’m not claiming that the FY12 budget won’t hurt, but we’ve known that for a long time. It could have been worse. And the tea leaves I’ve been reading make me believe that this is the bottom of the curve, and that things will start improving in FY2013.

You know how the legislative process works in this state; things will be in flux until the last day of the session. Hang in there. Keep watching your spending. I know I can count on each of you to help us continue to meet our contract obligations, serve the Georgia taxpayer, and — where possible — continue expanding our services in delivering innovation to Georgia and beyond.