SOUTH DAKOTA BOARD OF REGENTS. Budget and Finance ******************************************************************************

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1 SOUTH DAKOTA BOARD OF REGENTS Budget and Finance AGENDA ITEM: 7 D DATE: March 27-29, 2018 ****************************************************************************** SUBJECT FY19 Budget Summary CONTROLLING STATUTE, RULE, OR POLICY SDCL Legislative adoption of financial plan for each year. BOR Policy 5:19 System Funding BACKGROUND / DISCUSSION The 2018 legislative session concluded with the passage of the FY19 General Bill HB1320. The Board of Regents received an overall increase to the general fund base of $2,894,336, representing a 1.4% increase. That does not include the 1.2% employee compensation package that was passed by the Legislature appropriated in a statewide pool that has yet to be allocated. IMPACT AND RECOMMENDATIONS A summary of the general fund base changes are as follows: An increase to general fund M&R base funding of $796,691, bringing the general fund amount for M&R to $8,596,636. An increase of $614,038 for growth in the South Dakota Opportunity Scholarship and additional funding for home school students of $9,076. A $12,775 increase to the Post-Secondary Scholarship fund, resulting from proceeds of the endowment. A fund shift from other funds (endo-ecto parasiticide tax) to general funds for the veterinary student tuition program. Other fund authority was reduced by $652,000, and $642,768 was appropriated in general funds. The amount will be adjusted annually according to the difference in resident and nonresident tuition in Iowa. A reduction in general funds of ($370,656), resulting from reduced REED Network costs billed by the Bureau of Information and Technology. A $300,000 general fund appropriation to the newly created budget center for the USD Law School. The USD proper budget was also cut by $300,000 and placed in the new budget center, bringing the total increase to the Law School to $600,000. A reduction in general funds of ($250,000) from SDSU Extension for the Precision Ag bond payment. (Continued) ****************************************************************************** INFORMATIONAL ITEM

2 FY19 Budget Summary March 27-29, 2018 Page 2 of 3 A fund shift from other funds (endo-ecto parasiticide tax) to general funds of $250,000 for ADRDL used to support operations. An increase in general funded utilities of $893,832; this increase is based on utility rates and usage projections for FY19. A decrease of ($4,188) for lease payment adjustments. The FY19 budget included two fund shifts from other funds to general funds. These fund shifts are not new dollars to the system, just a change in how the funds are given to the Board of Regents. The first of these is the veterinary student grants that pay for the difference between the in-state and out-of-state tuition at Iowa State University for the South Dakota veterinary student slots. This was traditionally funded from proceeds from an endo/ecto parasiticide tax. Due to an audit finding noting the amount of the tax could not be tracked, SB 55 was passed changing the flow of the funds to the general fund. We will now need to request an adjustment in the appropriation each year to account for increases or decreases to the tuition. The second piece of this fund shift moves $250,000 from the endo-ecto tax to general funds for ADRDL support. As mentioned above, a new budget center was created for the USD Law School. $300,000 was cut from USD proper and moved to the Law School and new ongoing general funds of $300,000 were appropriated, increasing the Law School budget by $600,000. In the creation of the new Law School budget center, FTE were transferred from USD proper to the Law School, plus an additional 5.0 FTE were appropriated. The Law School budget was set at a total of $4,913,577 and 33.3 FTE, which is detailed below: General Funds $ 1,775,946 Federal Fund Authority $ 72,527 Other Fund Authority $ 3,065,104 Total $ 4,913,577 FTE 33.3 The FY19 budget has a total federal fund expenditure authority decrease of ($130,000) and a total other fund expenditure authority increase of $8,021,114. The other fund expenditure authority increase is a result of increases in tuition and student fee revenue, increases to research grants and contracts and the increase in spending authority of $1,375,000 for the Precision Ag bond payment. These changes result in a 0.2% decrease in federal fund spending authority and an increase of 1.7% in other fund spending authority. FTE for the system also increased by 14.0, which is a 0.3% increase. DSU requested 3.0 FTE for expansion in Research Grants and Contracts, USD proper requested 6.0 FTE for increases in instructional support and student fee funded areas. The Law School also requested 5.0 additional FTE that will be used for a Director of Sioux Falls Experiential Learning, student outreach, director of admissions, admissions counselor, career services and student support.

3 FY19 Budget Summary March 27-29, 2018 Page 3 of 3 Also addressed during this legislative session was the funding for the new Precision Ag classroom building at SDSU. The total cost of the project is estimated to be $46.1 million. The legislation also provided authorization to renovate Berg Hall at $8.9M using other funds. The funding plan passed by the Legislature to fund the new building follows: One-time General Fund Appropriation - $2.0 million Private Funding - $16.6 million SDSU Funding - $7.5 million o $7.5 million SDSU Research Infrastructure Investment Funds While the initial plan was to fund this over 25 years through bonding, SDSU will now be required to transfer $7.5M to the fund during the construction phase. Bond - $20.0 million, estimated payment of $1,375,000 per year o $650,000 per year Expiring Ethanol Fund o $475,000 per year Fertilizer Inspection Fee Increase of $0.25 per ton o $250,000 Ongoing General Fund cut from Coop Extension ATTACHMENTS Attachment I shows the changes from the FY18 to the FY19 General Fund Base by campus. Attachment II show the Board s original request and the final legislative action.

4 SD Board of Regents FY19 General Fund Base Changes SDOS for Home School Students Post- Secondary Scholarship Fund Shift for Veterinary Slots REED Network Technology Cost Reduction Cut for Precision Ag Bond Payment USD Funding Match for Law School FY18 General Fund Base M&R Funding Lease Payments SDOS ADRDL Fund Shift Law School Appropriation Fund Shift for Law School Utilities FY18 General Fund Base BOR $25,502,965 $796,691 ($4,188) $614,038 $9,076 $12,775 $642,768 ($370,656) $27,203,469 BHSU $9,552,983 $122,679 $9,675,662 DSU $9,746,276 ($3,023) $9,743,253 NSU $14,639,470 $46,416 $14,685,886 SDSM&T $16,703,197 $82,135 $16,785,332 SDSU $46,382,488 $250,000 $456,596 $47,089,084 Extension $8,643,431 ($250,000) $0 $8,393,431 AES $12,298,631 $0 $12,298,631 USD $36,439,049 ($300,000) ($1,175,946) $151,796 $35,114,899 School of Law $0 $300,000 $300,000 $1,175,946 $1,775,946 School of Medicine $22,794,382 $22,794,382 SDSD $2,842,186 $30,306 $2,872,492 SDSBVI $3,039,750 $6,927 $3,046,677 Totals $208,584,808 $796,691 ($4,188) $614,038 $9,076 $12,775 $642,768 ($370,656) $250,000 ($250,000) $300,000 $0 $0 $893,832 $211,479,144 NOTE: FY19 Salary Policy not included. ATTACHMENT I 4

5 ATTACHMENT II 5 General FTE General FTE FY18 Base Budget $208,584,808 5,155.2 $208,584,808 5,155.2 Priorities The Dakota Promise - Student Aid Model (year 1) General Fund M&R Recovery Student Success Initiatives Mathematics in Engineering & Cyber Initiatives SDSM&T - SD Mathematics for Engineering Institute SDSU - Math Success Initiative DSU - Computer & Cyber Sciences Math Initiative Mathematics Initiatives BHSU - Student Success in Math Initiative NSU - Student Success in Mathematics USD - Mathematics at USD USD Law School Appropration Base Budget Maintenance South Dakota Opportunity Scholarship SDOS Home School Scholarship Post-Secondary Scholarship Fund Shift for Veterinary Students REED Network Technology Cost Reduction ADRDL Fund Shift SDSU - Extension Cut (Moved to Precision Ag Bond) Utilities Lease Adjustment South Dakota Board of Regents FY19 Board of Regents Request and Appropriated General Funds Base Requested Appropriated $3,504, $0 0.0 $1,826, $796, $250, $0 0.0 $254, $0 0.0 $165, $0 0.0 $165, $0 0.0 $165, $0 0.0 $165, $0 0.0 $0 0.0 $300, $614, $614, $9, $12, $0 0.0 $642, $0 0.0 ($370,656) 0.0 $0 0.0 $250, $0 0.0 ($250,000) 0.0 $878, $893, ($4,188) 0.0 ($4,188) 0.0 FY19 Request and Appropriated $216,402,946 5,161.2 $211,479,144 5,160.2 Increase without Salary Policy 3.6% 0.1% 1.4% 0.1% Salary Policy Package (To Be Distributed) $0 0.0 $0 0.0 FY19 Final Base $0 0.0 $0 0.0 Increase with Salary Policy 0.0% 0.0% 0.0% 0.0% REED 100 Gig Network Authority Changes Authority Changes FY19 One-Time General Fund Requests $3,000, $0 0.0 FY19 Federal Fund Authority Requests -$130, $130, FY19 Other Fund Authority Requests $7,548, $8,021,