Recommended Budget Assumptions and Projections for FY

Transcription

1 . Recommended Budget Assumptions and Projections for FY The recommended operating budget projections and related assumptions for FY were developed with input and recommendations from the College s Budget Committee. The Budget Committee is composed of 20 faculty and staff members that are representative of the campus community. The Budget Committee held semi-monthly meetings since September 2013 to review various aspects of the College s operating budget and overall finances. The Committee also reviewed over a dozen different budget scenario models before formulating its recommendations. The input and recommendations from the Budget Committee were also reviewed and slightly modified by the President and his Cabinet. The operating budget projections and related assumptions for FY that are provided on the following pages therefore reflect the recommendations of the senior administration as informed by representatives of the campus community. The recommended budget was also reviewed by the Finance Committee of the Board of Trustees in mid-january After considerable review and discussion at the January meeting, the Finance Committee voted to endorse the budget assumptions and projections recommended by the President and his Cabinet. It should be noted that the recommended budget projections and assumptions that follow were developed to reflect the following challenges and opportunities that face the College in the year and years ahead: 1. Growing public concern over the affordability, student loan debt levels and the business model of private higher education. 2. Increasing federal oversight of higher education and of guaranteed student loan programs. 3. An additional 11% decline in Cal Grant support to students that was approved as part of a California state budget agreement two years ago. 4. A mission focused commitment to enroll a new class of undergraduate students in fall 2014 that includes at least 25% of students that are eligible for Pell Grants. 5. An improved outlook for public higher education in the state of California that is beginning to impact undergraduate enrollment at the College; especially in undergraduate transfer enrollment. This has been demonstrated by a 15% decline in very early transfer applications through. 6. A commitment to continue to implement the Board of Trustees approved faculty salary policy including the funding of an additional salary step for senior faculty.

2 Budget Assumptions and Projections Page 2 of 7 7. A commitment to maintain the competitiveness of staff salaries as defined in the Board of Trustees approved staff salary policy. 8. The phase-in of the operating costs of the Alioto Recreation Center that is expected to open midway through FY , as well as possible short-term borrowing costs related to the bridging of pledges for the construction of the Center. This facility is a long-standing strategic initiative of the Board of Trustees and should greatly improve the competitiveness of the College s student recreational facilities. 9. Increased costs associated with efforts to improve compliance with NCAA regulations. The efforts to improve compliance reflect the recommendations of the new Board of Athletic Oversight as informed by an external audit of compliance efforts. 10. The somewhat contradictory slow but steady national economic recovery and an accelerating San Francisco Bay Area economy. 11. Improving College finances with increasing Endowment Fund market values and declining levels of collateral postings that are required under the College s interest rate exchange (swap) agreement. 12. Increased national and regional interest in a Saint Mary s undergraduate education following a listing as one of the Colleges that Change Lives. This has been demonstrated by a 7.5% increase in early action applications for next year s freshman class through the end of December. 13. Improving undergraduate retention rates (freshmen to sophomore increased from 86% five years ago to 89% this academic year) and four year graduation rates (increased from 49% to 60% over the last four years). 14. The impending accreditation of the School of Economics and Business Administration by AACSB that should almost immediately increase interest in Saint Mary s business and economics degrees at the undergraduate and graduate levels. 15. A continuing commitment to strategic initiatives to strengthen library and technology services as well as to provide support for initiatives likely to be generated by the imminent strategic planning effort that will strive to address the College s affordability, competitiveness and sustainability over time. 16. A continuing commitment to reinvest in the College s existing campus facilities through initial budget allocation for Major Maintenance and Transfers to the Plant Fund (funded depreciation) as well as through fiscal year-end transfers of excess operating funds to the Plant Fund.

3 Budget Assumptions and Projections Page 3 of 7 The Budget Projections page that is provided on the following pages provides an overview of the major revenue and expense components of the working operating budget for current FY as well as for the recommended operating budget for FY Although the College s operating budgets are approved one fiscal year at a time, the Budget Projections page includes operating budget projections through FY These longer range projections are provided to show trends as well as the impact of the recommended FY operating budget on future operating budgets. The Budget Assumptions Summary pages that follow the Budget Projections page list the major assumptions used to develop the working operating budget for current FY as well as the recommended operating budget for FY The Budget Assumptions Summary pages also list the major assumptions used to project operating budgets through FY The projections and the related assumptions for the recommended FY operating budget are shaded on the Budget Projections page and the Budget Assumptions Summary pages. The shaded columns are also the focus of the resolution that was approved by the Finance Committee and is presented for approval by the Board of Trustees. Highlights on the Budget Projections page for the recommended operating budget for FY include: 1. A total revenue budget of $128,398,000 that represents an increase of $4,203,000 or 3.4% from the $124,195,000 working revenue budget for FY A total operating expense budget and transfers of $127,928,000 that represents an increase of $4,069,000 or 3.3% over the total working expense budget and transfers of $123,859,000 for FY A positive operating result or net income of $470,000 that is larger than the FY working budget projection of $336,000. The Budget Projections page also provides operating budget projections through FY that are based on the assumptions detailed in the Budget Assumptions Summary pages. The operating budget projections show positive operating results for all years ranging from a low of $374,000 in FY to a high of $1,835,000 in FY Highlights from the revenue portion of the Budget Assumptions Summary pages for FY include: 1. A total fall 2014 undergraduate student headcount enrollment of 2,870. This projected level of enrollment is virtually unchanged from the actual fall 2013 headcount of enrollment of 2,885 and reflects the benefits of efforts to increase undergraduate retention rates.

4 Budget Assumptions and Projections Page 4 of 7 2. New undergraduate students of 775 (615 freshmen and 160 transfers) for fall 2014, which is lower than the actual fall 2013 new undergraduate student enrollment of 803 (628 freshmen and 175 transfers). The lower number of new undergraduate students maintains overall undergraduate student enrollment levels for fall 2013 that are believed to reflect the College s capacity limitations. The slightly lower number of new undergraduate students should also help the College meet its academic profile and financial aid goals for new undergraduate students in fall Finally, the slightly lower number of new undergraduate students should provide a buffer against the impacts of the slow economic recovery and declining or stagnant support of private higher education by the state and federal governments. 3. A 3.75% or $1,490 increase in undergraduate tuition from $39,740 to $41,230. This level of increase is the same as the current year s increase of 3.75% and should allow the College to retain its competitive ranking among California institutions of higher education and among western CTCL institutions (current year tuition and fee rankings are provided following the operating budget exhibits). This level of increase also reflects a decision to not fund the operating costs associated with the new Alioto Recreation Center with a new student fee system. 4. A 3.5% increase in room costs and a 3.5% increase in board costs from $13,660 to $14,132 (current year room and board rankings are provided following the operating budget exhibits). This $482 increase reflects the growing costs of operations in the provision of food service and student housing. 5. A comprehensive fee (tuition, student activity fees, room, and board) increase of $1,972 or 3.7% from $53,550 to $55,522 (current year comprehensive fee rankings are provided following the operating budget exhibits). 6. A $1,690,000 or 4.4% increase in non-athletic institutional financial aid from $38,659,000 to $40,349,000 that reflects efforts to meet the financial needs of new and continuing undergraduate students, to enroll a class with at least 25% of students eligible for Pell Grants, to keep Saint Mary s affordable, to begin to address student debt levels, and to have financial aid packages that are competitive with those offered by peer institutions. This level of increase also addresses in part the planned 11% decrease in Cal Grant spending levels scheduled for FY Finally, this level of increase will boost the fall 2014 new undergraduate student tuition discount rate to 38.0% from the fall 2013 actual rate of 37.0%, and will also provide for a $527 or 2.1% increase in net revenue per new undergraduate student from $25,036 in fall 2013 to $25,563 in fall 2014.

5 Budget Assumptions and Projections Page 5 of 7 7. An $149,000 or 2.5% increase in athletic institutional financial aid that reflects both the 3.7% increase in the College s comprehensive fee and the reduction of one athletic grant-in-aid from a total of in FY to a total of in FY No further decreases in the number of grants-in-aid are projected. 8. A $593,000 or 8.3% increase in net income from graduate and professional programs from $7,113,000 to $7,706,000, which reflects continued revenue growth in most programs. 9. A $350,000 or 5.7% increase in endowment income from $6,100,000 to $6,450,000. This increase reflects the actual increases in Endowment Fund market values that are averaged over the past twelve quarters ended and also reflects the continuation of a 5.0% spending rate. 10. A $77,000 or 3.8% increase in total giving that supports the operating budget from $2,023,000 to $2,100,000. The increase reflects giving patterns that are influenced by an emphasis on capital campaign facility projects rather than giving that supports ongoing operations. The level of increase also reflects the likely positive impact on overall giving that should occur due to the upswing in financial and real estate markets that began in Highlights from the expense portion of the Budget Assumptions Summary pages for FY include: 1. A $1,394,000 or 4.9% increase in the faculty salary pool from $28,608,000 to $30,002,000 that reflects the third year (of four years) implementation cost of the new faculty salary policy, which adds an additional salary step at the full professor level. This level of increase also reflects scheduled step and promotional increases and a 2.50% increase in base salary steps to remain competitive with national peer institutions, to partially offset increased employee funded health insurance costs, and to strive to keep up with the accelerating cost of living, especially housing costs, in the San Francisco Bay Area. 2. A $1,478,000 or 4.8% increase in the staff salary pool from $30,700,000 to $32,178,000 that reflects a 2.5% increase in base salaries to remain competitive with peer institutions, to partially offset increased employee funded health insurance costs, to strive to keep up with the accelerating cost of living in the San Francisco Bay Area, and to strive to recruit and retain staff in the increasingly competitive San Francisco Bay Area labor market. This level of increase also reflects expected levels of promotions, other salary adjustments, and several new staff positions related to planned growth in graduate and professional programs, to enhanced compliance efforts in athletics, and to the opening of the Alioto Recreation Center.

6 Budget Assumptions and Projections Page 6 of 7 3. A $972,000 or 5.6% increase in employee benefits that reflect the maintenance of the employer pension contribution at 8.25% as well as an 8.0% increase in the employer health insurance contribution in order to strive to keep-up with actual and projected increases in health insurance premiums. It should be noted that the blended increase in health insurance premiums was 13.2% for calendar year 2014, with the College only increasing its employer contribution by 8.0%. 4. Allocations totaling $1,332,000 for strategic initiatives comprised of continued increased library support ($98,000), continued increased support for technology ($300,000), partial support for the operating costs related to the new Alioto Recreation Center ($467,000), and an allocation for new strategic initiatives ($467,000) that will include initiatives expected to be identified in the upcoming strategic planning process. 5. A $100,000 or 5.0% increase in the cost of utilities from $1,994,000 to $2,094,000 that reflects projected energy usage trends. It should be noted that unexpended utility funds at fiscal year-end are utilized to fund energy conservation measures. 6. Level funding of $1,900,000 for the major maintenance of facilities. 7. A $2,000,000 allocation for the transfer to the Plant Fund (funding of depreciation expense) that is used for the renewal of the College s existing facilities. This level of allocation represents a $1,000,000 decrease from the $3,000,000 level of funding in the current FY working budget. It is planned that excess net income identified during or at the end of FY would be used to increase the $2,000,000 allocation, as has been done in most prior fiscal years. 8. A $4,202,000 allocation for debt service which represents a $137,000 or 3.4% increase to reflect the possible need for short-term borrowing to bridge the receipt of donor pledges for the construction of the Alioto Recreation Center. The increased portion of this allocation may not be expended if swap agreement collateral requirements remain at current or lower levels and/or if additional donor funds are pledged and received. 9. A new allocation of $789,000 that represents the operating costs of the Alioto Recreation Center for a portion of FY with an additional expense allocation of $666,660 scheduled for the FY operating budget. As noted previously, $467,000 of the new $789,000 expense allocation will be offset by strategic initiative funds in FY An allocation of $175,000 that represents the full-year continuation of expenditures that will begin to be incurred in current FY for enhanced NCAA compliance efforts as recommended by the Board of Athletic Oversight.

7 Budget Assumptions and Projections Page 7 of 7 In summary, the budget assumptions and projections that form the recommended operating budget for FY address both the challenges and the opportunities faced by the College. They also provide a foundation for an imminent strategic planning effort that will strive to address the College s affordability, competitiveness and sustainability for the year and years ahead.

8 Saint Mary's College of California Budget Projections Current Year Plus Five (000 omitted) REVENUES Working Recommended Projected Projected Projected Projected Budget Budget Budget Budget Budget Budget Undergraduate Tuition and Fees 112, , , , , ,383 Institutional Financial Aid (non-athletic) (38,659) (40,349) (42,651) (45,227) (47,608) (49,957) Athletic Grant in Aid (5,896) (6,045) (6,262) (6,488) (6,720) (6,962) Net Tuition Revenue-Undergraduate 67,522 69,246 71,347 73,865 77,201 80,464 Graduate and Professional Programs Revenue 26,737 28,002 30,002 31,093 32,270 33,270 Net Student Fees 94,259 97, , , , ,734 Gifts 2,023 2,100 2,193 2,290 2,392 2,498 Endowment and Interest 6,100 6,450 7,000 7,500 8,000 8,600 Sales and Services of Auxiliary Enterprises 19,721 20,400 21,113 21,851 22,616 23,408 Other 2,092 2,200 2,330 2,385 2,439 2,439 Total Revenue 124, , , , , ,679 EXPENSES AND TRANSFERS Operating Expenses: Academic 57,508 58,849 61,016 62,785 64,879 67,019 Information Technology 5,902 5,689 5,782 5,893 6,007 6,127 Administration 19,742 19,883 20,679 21,498 22,335 23,194 Student Services 9,171 9,196 9,406 9,624 9,848 10,080 Athletics 6,557 7,359 8,172 8,339 8,510 8,687 Auxiliary Services 9,733 9,974 10,290 10,617 10,954 11,303 Physical Plant 8,898 8,890 9,121 9,363 9,616 9,880 Debt Service 4,065 4,202 4,211 4,210 4,159 4,097 Other Expenses Strategic Initiatives (cummulative) 768 1,804 2,617 3,446 4,290 Subtotal Operating Expenses 122, , , , , ,385 TRANSFERS /OTHER Plant Fund/Depreciation Funding 3,000 2,000 2,000 2,500 3,000 3,000 Unexpended Budget Funds Carried Forward (1,892) Unrestricted Athletic Fundraising Subtotal Transfers/Other 1,499 2,410 2,422 2,932 3,447 3,459 Total Expenses and Transfers 123, , , , , ,844 REVENUE, LESS EXPENSES AND TRANSFERS ,009 1,835

9 Saint Mary's College of California Budget Assumptions Summary Current Year Plus Five Working Recommended Projected Projected Projected Projected REVENUE (000 omitted) Traditional Undergraduate Enrollment and Tuition Enrollment-New Freshmen Enrollment - Transfer Enrollment-Returning 2,082 2,095 2,103 2,123 2,152 2,173 Total Enrollment 2,885 2,870 2,878 2,898 2,927 2,948 Tuition Increase 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% Tuition Rate $39,740 $41,230 $42,776 $44,380 $46,045 $47,771 Room and Board Occupancy Assumptions (adjusted for revenue yield) 98.0% 98.0% 98.0% 98.0% 98.0% 98.0% Rate Increase- Room 2.5% 3.5% 3.5% 3.5% 3.5% 3.5% Rate Increase- Board 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Average Rate (double occupancy, carte blanch meal plan) $13,660 $14,142 $14,642 $15,161 $15,696 $16,250 Student Activity Fee $150 $150 $150 $150 $150 $150 Comprehensive Undergraduate Rate $53,550 $55,522 $57,568 $59,691 $61,891 $64,171 Percentage Increase in Comprehensive Undergraduate Rate 3.5% 3.7% 3.7% 3.7% 3.7% 3.7% Institutional Financial Aid (non athletic) $38,659 $40,349 $42,651 $45,227 $47,608 $49,957 Institutional Financial Aid Increase (non athletic) 6.8% 4.4% 5.7% 6.0% 5.3% 4.9% New Student Discount 37.0% 38.0% 39.0% 39.0% 40.0% 40.0% Net Tuition per New Student (before athletic aid) $25,036 $25,563 $26,094 $27,072 $27,627 $28,663 Overall Undergraduate Tuition Discount 39.8% 40.1% 40.7% 41.2% 41.3% 41.4% Athletic Grant in Aid $5,896 $6,045 $6,262 $6,487 $6,720 $6,962 Cumulative number of grants in aid Graduate and Professional Programs School of Education - Net Income $1,978 $2,349 $2,598 $2,856 $3,072 $3,328 Graduate Business - Net Income $4,084 $4,082 $5,022 $5,261 $5,420 $5,489 School of Liberal Arts - Net Income $1,051 $1,275 $1,476 $1,616 $1,747 $1,845 Total Net Income $7,113 $7,706 $9,096 $9,733 $10,239 $10,662 Endowment Income (Assumes Expected Growth) Spending Rate 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Spending Amount $6,100 $6,450 $7,000 $7,500 $8,000 $8,600 Expected Market Value Growth Level $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 Gifts Unrestricted $1,350 $1,406 $1,476 $1,550 $1,628 $1,709 Athletic Grants (5.1) $276 $286 $296 $307 $318 $330 Unrestricted Athletic Fund Raising $397 $408 $421 $433 $446 $460 Total Gifts $2,023 $2,100 $2,193 $2,290 $2,392 $2,499 Other Income Income from New Recreation Center $0 $25 $100 $150 $200 $200

10 Saint Mary's College of California Budget Assumptions Summary Current Year Plus Five Working Recommended Projected Projected Projected Projected EXPENSES (000 omitted) Salary Pool: Faculty Tenure Track Faculty $19,223 $20,383 $21,482 $22,185 $23,048 $24,712 Adjunct Faculty $3,793 $3,888 $3,985 $4,085 $4,187 $4,291 Lecturers $5,592 $5,731 $5,875 $6,022 $6,173 $6,327 Salary Pool: Faculty, Net of Decreas $28,608 $30,002 $31,342 $32,292 $33,408 $35,330 Rate Increase to Pool 2.00% 2.50% 2.50% 2.50% 2.50% 2.50% Salary Pool: Staff Full and Part-time Staff $30,700 $32,178 $33,311 $34,281 $35,330 $36,341 Rate Increase to Pool 2.00% 2.50% 2.50% 2.50% 2.50% 2.50% Benefits: Pension Contribution Rate 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% Health Insurance Rate Increase 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% Total Benefits Budget $17,235 $18,207 $19,062 $19,895 $20,750 $21,749 Strategic Initiatives Allocation for New Strategic Initiatives: Initiatives Requiring One Year Budget Allocation $234 $485 $499 $514 $529 Initiatives Requiring Permanent Budget Allocation $234 $485 $499 $514 $529 Library $93 $98 $70 $76 $80 $80 Technology Initiative Fund $300 $300 $300 $300 $300 $300 Plant Operations Utilities Budget $1,994 $2,094 $2,198 $2,308 $2,424 $2,545 Utilities Increase 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Major Maintenance Budget $1,900 $1,900 $1,900 $1,900 $1,900 $1,900 Transfer to Plant Fund $3,000 $2,000 $2,000 $2,500 $3,000 $3,000 Debt Service $4,065 $4,202 $4,211 $4,210 $4,159 $4,097 Other Expenses Mandatory Increases $280 $283 $291 $299 $307 $315 Contingency Reserve $500 $500 $500 $500 $500 $500 Operating Budget Related to Recrea $35 $789 $666 NCAA Compliance Expenses $175

11 TUITION AND FEES AT SELECTED CALIFORNIA COLLEGES Tuition and Fees Difference from SMC Occidental College $46,652 6, % Harvey Mudd College 46,509 6, % University of Southern California 46,363 $6, % Claremont McKenna College 45,625 5, % Scripps College 45,564 5, % Pitzer College 45,018 5, % Pepperdine University 44,902 5, % Stanford University 43,683 3, % Pomona College 43,580 3, % Chapman University 43,030 3, % Santa Clara University 42,156 2, % University of Redlands 41,440 1, % University of San Diego 41,392 1, % Mills College 41,382 1, % Dominican University 40, % Whittier College 40, % University of San Francisco 40, % SAINT MARY'S COLLEGE 39,890 University of the Pacific 39, % Loyola Marymount University 39, % Menlo College 37,100-2, % California Lutheran University 35,720-4, % University of La Verne 35,300-4, % Mount Saint Mary's College 33,367-6, % Holy Names University 33,020-6, % Notre Dame de Namur University 31,056-8, % AVERAGE $40,886 Enrollment October 2013

12 TUITION, FEES, ROOM AND BOARD AT SELECTED CALIFORNIA Total Cost Difference from SMC Harvey Mudd College $61,660 $8, % Claremont McKenna College 60,010 6, % Occidental College 59,592 6, % Scripps College 59,570 6, % Pitzer College 59,416 5, % University of Southern California 59,265 5, % Pepperdine University 57,792 4, % Pomona College 57,580 4, % Chapman University 57,460 3, % Stanford University 56,849 3, % Santa Clara University 55,386 1, % University of San Francisco 54,904 1, % Dominican University 53, % Mills College 54, % University of Redlands 53, % SAINT MARY'S COLLEGE 53,550 University of San Diego 53, % Loyola Marymount University 53, % University of the Pacific 52,148-1, % Whittier College 51,790-1, % Menlo College 49,002-4, % California Lutheran University 47,640-5, % University of La Verne 46,470-7, % Holy Names University 44,154-9, % Mount Saint Mary's College 43,897-9, % Notre Dame de Namur University 43,556-9, % AVERAGE $53,839 Enrollment October 2013

13 TUITION AND FEES AT SELECTED CTCL COLLEGES Tuition Comprehensive and Fees Fees Reed College $46,010 $57,780 Whitman College $43,500 $54,400 Willamette University $42,305 $52,685 Lewis & Clark $41,928 $52,656 Univ. of Puget Sound $41,868 $52,648 SAINT MARY'S COLLEGE $39,890 $53,550 Average $ 42,584 $ 53,953