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KNOXVILLE — State funding problems and the need to maintain educational quality are prompting the University of Tennessee to examine ways to reallocate scarce resources to preserve quality.

Acting UT President Emerson Fly said Monday that he has directed chancellors and vice presidents to appoint task force groups that will recommend how 4 to 6 percent of next year’s budget can be reallocated by reducing or eliminating some operations.

Many of the reallocated dollars will go to undergraduate education, he said in an email to faculty and staff at all UT campuses.

Fly told employees the state budget provides for a 2.5 percent pay raise retroactive to July 1, but he voiced concern about this and next year’s budget.

“Just because we’ve gotten salary increases doesn’t mean everything is OK. Far from it,” Fly said.

“We are seriously concerned about the university’s funding for the remainder of this fiscal year and beyond. Until the state can generate additional revenues, our state appropriation will not improve. We are hopeful a solution can be found, but we can’t manage a statewide university with more than 40,000 students and 12,000 employees on hope.”

Fly said UT can no longer be all things to all people and dollars must go to programs with the highest priority.

The current state budget directs the state’s two higher education systems to examine operations and to determine how they can “operate more efficiently and with more limited resources.”

The UT campus and institute budget task forces will report to Fly by mid October and to the General Assembly by January 1, 2002.

“Undergraduate education will be the top priority at Chattanooga, Knoxville and Martin,” he said. “This (reallocation) process will result in clear priorities, show us in what areas our dollars would be best spent, and help us shore up quality in those important areas.”