Presented to the Board of Trustees

Transcription

1 Presented to the Board of Trustees 0 July 5, 2016

2 CSPP Budget Decision-Making Principles & Process The budget planning and development will be guided by the following Board of Trustees approved resource allocation principles in order of importance: 1. Preserve the health, safety and security of our students, faculty, staff and visitors. 2. Preserve the integrity and excellence of the educational programs and services through which the College realizes its mission. 3. Preserve the institutional integrity of the College, including our obligations to staff, faculty, and students (e.g., scholarships). In implementing these principles, decisions will also be guided by the institutional strategic priorities, in particular, the need to preserve and enhance the College's long term financial well being. Updated April 9,

3 TCNJ s Strategic Plan TCNJ s Strategic Planning Strategic planning at TCNJ involves a need to make disciplined, informed decisions about the goals that we will and will not pursue. TCNJ s Strategic Priorities Priority I: Attract and retain talented students, faculty, and staff into a diverse, inclusive, and healthy campus. Priority II: Enhance Signature Experiences Priority III: Promote the college s distinctive identity to enhance institutional and program recognition at the national level. Priority IV: Build, operate, and maintain a safe, sustainable, and accessible physical and technological infrastructure that supports high-caliber learning. Priority V: Achieve a sustainable financial model that allows the college to realize its vision while maintaining quality and affordability for the students it serves. 2

4 Linkage to the College s Strategic Plan Strategic Financial Planning Investment in technology to provide better decisionsupport metrics Campus-wide communication of financial health and performance Multi-year financial plans to manage and track various financial strategies Debt capacity assessment to guide future planning and long-term sustainability SUSTAINABLE FINANCIAL MODEL Comprehensive Enrollment Plan Enrollment management strategies Winter Term and freshman provisional students Enrollment growth within targeted programs and establish targets for growing net tuition & fees revenue Strategic Summer Term scheduling (including blended and online) Expand international initiatives Strategic Reallocation of Resources Clarify TCNJ s strategic budget priorities Resource allocation to areas most critical to institutional success Increase transparency through campus-wide resource reallocation discussions Examination of recurring budget savings Revenue Enhancements & Cost Containment Diversify revenue streams (contracts, facilities rentals, camps & conferences) Solicit campus-wide input for sustainable cost savings strategies Incentivize collaboration for revenue enhancements and cost savings 3

5 Multi-Year Budget Planning Process Strategic Resource Allocation Grow Revenues Control Expenses PRIORITIES Access & Excellence TCNJ S FINANCIAL STRATEGY REALITIES Economic & Political 4

6 FY2017 Budget Challenges The key budget challenges that need to be addressed in FY2017 are as follows: Due to the lack of vacant positions plus the addition of new positions over the past four fiscal years, the entire budgeted salary savings ($1.5M in FY2016) will not be available to help balance the budget in FY2017. Additionally, 14 new faculty and staff positions are reflected in the FY2017 budget plan, offset by 7 vacant positions held. Limited enrollment growth. An enrollment plan that accounts for the core undergraduate and graduate student population was developed and incorporated into the budget planning assumptions. The union contracts are under negotiations with the State so TCNJ will not know the actual cost of the negotiated salary program (increments and cost of living adjustments) until the contracts are finalized. Identifying sustainable revenue enhancements and cost containment initiatives. Increasing demand for institutional scholarships and student support services. Constraints on tuition and fees increase to address TCNJ s strategic priority of maintaining quality and affordability for its students. 5

7 Tuition, Room & Board Pricing Mandatory Charges (Academic Year) FY 2012 FY 2013 FY 2014 FY 2015 FY 2016* Undergraduate Tuition & Fees (In State) $ 13,867 $ 14,357 $ 14,710 $ 15,004 $ 15,446 Undergraduate Tuition & Fees (Out of State) $ 23,676 $ 24,509 $ 25,115 $ 25,617 $ 26,378 Room & Board $ 11,230 $ 11,748 $ 11,932 $ 12,227 $ 12,570 Annual Tuition Increase 4.5% 3.5% 2.5% 2.0% 3.0% Annual Fees, Room & Board Increase 3.4% 3.2% 2.9% 2.3% 2.8% Overall Annual Increase 3.9% 3.8% 2.3% 2.1% 2.9% For every 1% increase in Student Charges Amount per student Undergraduate Tuition & Fees (In State) $ 154 Undergraduate Tuition & Fees (Out of State) $ 264 Room & Board $ 126 * In FY2016, the net state appropriation was reduced by $2.1 million, or 7.3%, to offset state-funded fringe benefits. 6

8 Budget Planning Assumptions 7 FINANCIAL MODELING ASSUMPTIONS Growth Assumptions FY2017 Proposed Budget Note: As of 6/30/2015, the Higher Education Price Index (HEPI) was 2.1%. FY2018 Projection FY2019 Projection Operating Budget Operating Revenues 1.50% 2.00% 2.50% Student tuition and fees - tuition increase 2.25% 2.50% 2.50% Tuition Discount - (Institutional Scholarships & Waivers) 12.5% 12.6% 12.6% Student housing and fees - meal plan plus room rate increase 3.00% 3.25% 3.50% Federal grants indirect cost recovery 1.50% 2.00% 2.00% Other Sources 1.50% 2.00% 2.25% Operating Expenses 3.20% 3.20% 3.20% Instruction & Research 3.50% 3.00% 3.00% Upfront Debt Service Savings from Bond Refunding ($ in 000's) $ - $ (2,115) $ (2,060) Maintenance cost increase - new construction ($ in 000's) $ - $ 654 $ 436 Nonoperating Revenues 1.50% 1.75% 1.75% State of New Jersey appropriations 0.00% 0.00% 0.00% State of New Jersey fringe appropriation 0.00% 0.00% 0.00% Investment Income 7.50% 8.50% 9.50% Capital Contribution ($ in 000's) $ - $ - $ - Nonoperating Expenses 3.00% 3.00% 3.00% Enrollment Projection Undergraduate Core Headcount 6,457 6,457 6,457 Graduate Core Headcount Total 6,982 6,982 6,982

9 Budget Planning Assumptions 8 Assumptions ($ in thousands) * Presuming the union contract negotiations are completed FY2017 Proposed Budget FY2018 Projection FY2019 Projection Projected Revenue $ 232,002 $ 229,766 $ 234,784 Strategic Initiative Expenses - One Time (2,924) (1,500) (1,500) Strategic Initiative Expenses - Recurring (2,888) (2,888) (2,888) Projected All Other Expenses (225,146) (225,326) (230,588) Previous Year Projected Budget Surplus (Deficit) $ 1,044 $ 52 $ (191) Budget Planning Assumptions: Operating Revenues Net student tuition and fees 2.25% 2, % 2, % 2,767 Net student housing and fees (Meal plan plus room rate increase) 3.00% 1, % 1, % 1,706 Other sources 1.50% % % 276 Strategic Reserve Allocation 1,500 1,500 1,500 Operating Expenses 4 new faculty (salary and fringe) (483) new staff (salary and fringe) (804) - - Salary increase - faculty and staff* 1.75% (1,635) 1.75% (1,664) 2.00% (1,821) Upfront Debt Service Savings from Bond Refunding - 2,115 2,060 Savings from 7 vacant positions held (salary and fringe) Reduction in projected salary savings (750) - - Strategic investments in excess of recurring base budget allocation (1,500) (1,500) (1,500) Increase in Other Expenses, net (2,806) (5,852) (7,702) Nonoperating Revenues State of New Jersey appropriations (operating and fringe) 0.00% % % - Additional Investment income 2, Net Transfers for Capital & Strategic Reserves (2,459) (244) (248) Projected Budget Surplus (Deficit) 52 (191) (2,750) Surplus (deficit) as a percent of the total base expenditure plan 0.02% -0.09% -1.20%

10 Budget Planning Assumptions Mandatory Fees Analysis General Service Fee/Capital FY2014 Actual FY2015 Actual FY2016 Projection FY2017 Budget Mandatory Fee Revenue $ 18,660,196 $ 19,253,807 $ 19,788,454 $ 20,102,914 E&G debt service (net of Federal Interest Subsidy) (15,785,098) (16,207,450) (17,633,494) (17,807,949) Allocation for E&G Capital Projects $ (2,770,653) $ (2,951,437) $ (2,253,236) $ (2,361,261) Fee Surplus (Deficit) $ 104,445 $ 94,920 $ (98,276) $ (66,296) Approved fee increase by the Board of Trustees 2.5% 2.0% 3.0% 2.25% Student Service Fee Mandatory Fee Revenue $ 4,666,977 $ 4,794,967 $ 4,911,990 $ 5,017,793 Total operating expenses supported by fee (6,017,010) (5,843,488) (6,694,937) (6,909,175) Fee Surplus (Deficit) $ (1,350,033) $ (1,048,521) $ (1,782,947) $ (1,891,382) Fee increase needed to fully cover expenses 28.9% 21.9% 36.3% 37.7% Approved fee increase by the Board of Trustees 2.5% 2.0% 3.0% 2.25% Computer Access Fee Mandatory Fee Revenue $ 2,977,573 $ 3,056,411 $ 3,114,980 $ 3,196,085 Total operating expenses supported by fee (3,969,112) (3,901,458) (4,571,410) (4,717,695) Fee Surplus (Deficit) $ (991,539) $ (845,047) $ (1,456,430) $ (1,521,610) Fee increase needed to fully cover expenses 33.3% 27.6% 46.8% 47.6% Approved fee increase by the Board of Trustees 2.5% 2.0% 3.0% 2.25% Student Center Fee Mandatory Fee Revenue $ 1,649,415 $ 1,695,191 $ 1,717,944 $ 1,766,211 Student Center Operating Expenses (1,398,488) (1,225,586) (1,487,559) (1,316,415) Allocation for Student Center Capital Projects $ (846,845) $ (882,543) $ (553,600) $ (625,000) Fee Surplus (Deficit) $ (595,918) $ (412,938) $ (323,215) $ (175,204) Fee increase needed to fully cover expenses 36.1% 24.4% 18.8% 12.2% Approved fee increase by the Board of Trustees 2.5% 2.0% 3.0% 2.25% Card Service Fee Mandatory Fee Revenue $ 141,883 $ 138,393 $ 140,030 $ 156,475 Total operating expenses supported by fee (233,974) (237,424) (251,295) (253,483) Fee Surplus (Deficit) $ (92,091) $ (99,031) $ (111,265) $ (97,008) Fee increase needed to fully cover expenses 64.9% 71.6% 79.5% 62.0% Approved fee increase by the Board of Trustees 0.0% 0.0% 0.0% 0.0% 9

11 Strategies to Achieve Budget Equilibrium To achieve budget equilibrium, the College considered a variety of actions, including, but not limited to: 1. Holding vacant positions (faculty and staff) based on institutional priorities Financial Flexibility 2. Examine department budgets to reallocate resources to fund institutional strategic priorities (Growth by Substitution) 3. Identify savings from fuel and utility primarily due to energy conservation initiatives 4. Adjust departments non-salary operating allocations based on historical trend analysis Revenue Enhancements & Expense Reallocation 1. Increase net tuition revenue through modest enrollment growth 2. Department contingencies examine departments discretionary funds 3. Enhance Summer School and Winter terms offerings to attract more students 4. Offset the cost of new positions (salary + fringe) to marginal revenue increase, cost savings and/or expenditure reallocations 10

12 Strategies to Achieve Budget Equilibrium Achieving Budget Equilibrium (in 000s) FY2017 FY2018 FY2019 Budget Balance Before Adjustments $ (1,757) $ (1,454) $ (3,630) Vacant positions held Fuel & utility savings Non-salary operating budget adjustments Revenue from enrollment growth Reduction in institutional scholarships & waivers Departmental contingencies reduction Enhanced Summer School revenues Funding new positions from expenditure reallocations Operating Budget Surplus (Deficit) $ 52 $ (191) $ (2,750) Strategic Initiatives Reserves Beginning Balance 2, Strategic Initiatives Reserves Ending Balance (2,166) 11

13 Key Budget Performance Indicators Key Budget Performance Indicators approved by the Board of Trustees: 1. Percentage of the operating budget allocated to direct student support (instruction & research, academic support, student services and institutional scholarships & waivers) should be no less than 67% of the total educational & general operating expenses. 2. Affordability/Access Level of funding allocated for institutional scholarships & waivers (Institutional Tuition Discount) Maximum = 16% and minimum = 10%. 3. Level of funding allocated for strategic investments minimum target = 2% of operating expenses. 12

14 Key Budget Performance Indicators Direct Student Support should be no less than 67% of the total educational & general operating expenses: 13

15 Key Budget Performance Indicators Affordability/Access Institutional Tuition Discount Maximum = 16% and minimum = 10%: 14

16 Key Budget Performance Indicators Level of funding allocated for strategic plan investments minimum target = 2% of operating expenses: Amount FY2017 Strategic Investment Allocations Recurring One-Time Total Priority I: Attract and retain talented students, faculty, and staff $ 400,000 $ 150,000 $ 550,000 Priority II: Enhance Signature Experiences 1,023, ,000 1,223,618 Priority III: Promote the College's distinctive identity 330, , ,000 Priority IV: Physical and technological infrastructure 1,084, ,000 1,834,231 Priority V: Achieve a sustainable financial model 50, , ,000 Total Strategic Investment Allocations $ 2,887,849 $ 1,500,000 $ 4,387,849 Allocation as a % of Base Expenditure Plan 1.40% 0.72% 2.12% 15

17 Appendix A FY2016 FY2019 Budget Projections 16

18 Appendix A: Budget Projections OPERATING FINANCIAL PLAN SUMMARY ($ in 000's) FY2016 Revised Budget FY2016 5/31/16 FY2016 Projection 6/30/16 FY2017 Proposed Budget FY2018 Projection FY2019 Projection Operating Budget Pro-Forma Operating Revenues Student Tuition and Fees 120, , , , , ,724 Less Institutional Scholarships (14,594) (14,500) (14,506) (15,476) (15,863) (16,260) Net Student Tuition and Fees 106, , , , , ,464 State of New Jersey Base Appropriations 27,177 24,912 27,177 27,177 27,177 27,177 State of New Jersey Fringe Benefits 32,731 23,550 24,984 32,732 32,732 32,732 Net Student Housing and Fees 46,068 45,407 45,400 46,974 48,741 50,447 Auxiliary Activities 3,509 2,193 2,899 3,562 3,633 3,724 Other Revenues 8,506 5,920 7,939 7,416 7,564 7,750 Total Base Financial Plan 224, , , , , ,294 Investment Income & Capital Contribution 21,740 17,976 17,977 3,908 4,240 4,643 TOTAL FUNDING AVAILABLE 245, , , , , ,937 17

19 Appendix A: Budget Projections OPERATING FINANCIAL PLAN SUMMARY ($ in 000's) FY2016 Revised Budget FY2016 5/31/16 FY2016 Projection 6/30/16 FY2017 Proposed Budget FY2018 Projection FY2019 Projection Instruction & Research 73,939 64,930 68,245 76,345 78,635 80,994 Academic Support 17,561 15,585 15,671 17,046 17,591 18,154 Student Services 20,390 18,815 18,816 20,776 21,441 22,127 Operation and Maintenance of Plant 22,193 21,270 21,372 22,551 23,927 25,129 Institutional Support 17,855 19,607 17,556 18,611 19,207 19,821 Auxiliary Expenses 31,448 29,087 30,721 32,158 33,187 34,249 Operating Budget Reductions (1,809) (1,263) (880) Debt Service (Principal & Interest) 30,014 29,667 29,667 30,109 28,080 28,674 Total Base Expenditure Plan 213, , , , , ,268 BSC Capital Contribution 17,000 17,000 17, Asset Renewal Funding 9,209-9,209 9,520 9,687 9,856 Transfers to Operating & Strategic Reserves 5,843 3,075 2,701 4,407 4,484 4,563 TOTAL EXPENDITURE PLAN 245, , , , , ,687 BUDGET SURPLUS (DEFICIT) 473 5,643 1, (191) (2,750) Strategic Initiatives Reserves Beginning Balance 1,179 1,179 1,179 2, Strategic Initiatives Reserves Ending Balance 1,652 6,822 2, (2,166) 18

20 Appendix B Strategic Plan Implementation 19

21 Appendix B Strategic Plan Implementation Priority 1: Attract and retain talented students, faculty and staff into a diverse, inclusive, and healthy campus. #.#.# Prioritized Actions Start Date End Date Assessment Goals Recurring Costs- Base Budget Adj. One-time Costs - Funded from Reserves Total Financial Impact $ Funding Allocation $ - $ - $ - Cabinet Accountability Key Assessment Metrics Priority II: Enhance Signature Experiences #.#.# Prioritized Actions Start Date End Date Assessment Goals Recurring Costs- Base Budget Adj. One-time Costs - Funded from Reserves Total Financial Impact $ Funding Allocation $ - $ - $ - Cabinet Accountability Key Assessment Metrics 20