Fall Budget Forum: 2016 Fiscal Results, 2017 Budget, Revenue, Performance Funding, and Future Prospects

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1 Fall Budget Forum: 2016 Fiscal Results, 2017 Budget, Revenue, Performance Funding, and Future Prospects David L. Eisler, president Sally DePew, director, budgetary planning & analysis November 10, 2016

2 Outline for Today Federal and State economic trends, budget Ferris budget information Look back at 2016 fiscal results; Impact of GASB 68 Information on 2017 budget Revenue Higher education formula funding Looking forward to 2018

3 Federal Budget No Federal Budget for 2017 Continuing Appropriations Resolution through December 9 Includes funding for Zika virus and Louisiana flooding Election impact Continued support for Federal Pell Grants FY 2017 funding of $29 Billion Maximum award $5,815 for 2017 Perkins Loans eliminated after September 2017 Unemployment 5.0 percent in September

4 Michigan Economy & Budget Michigan unemployment rate 4.6% in September State revenues slowly improving September revenues below year ago, but ahead of May projection General fund 4.2% growth estimate for FY17; 4.6% for FY18 School Aid Fund 2.8% growth in FY17; 2.9% in FY18 FY 17 State budget of $54.9B (all sources) General Fund/General Purpose budget $10B (18.2% of total) Higher Education funding $1.58 billion Federal $ 102 million 6% School Aid Fund $ 237 million 15% General Fund $1,244 million 79%

5 Community Colleges Corrections Total K-12 Health and Human Services Higher Education -7.9% Michigan Budget Priorities One-Year (2017) and Ten-Year ( ) Change in State Appropriations from State Resources 59.7% 11.0% 6.6% 6.4% 2.5% 2.1% 1.4% 2.3% 3.2% 3.2% 3.0% 1-yr Change 10-yr Change

6 University Fiscal Results Operating Funds Revenues $299 Million Amounts in Millions General Fund, $213, 71% Designated Fund, $15, 5% Auxiliary Fund, $40, 14% Expendable Restricted Fund, $30, 10%

7 University Fiscal Results $215.5M General Fund Spending Purpose of Expense Amounts in Millions Compensation $ % Operating Support $ % Financial Aid $ %

8 University Fiscal Results General Fund Expenditures $215.5 Million Amounts in Millions State Reported HEIDI Instruction and Academic Support $ % Student Services $16.5 8% Plant $14.9 7% Institutional Support $ % Financial Aid $ % Transfers $16.3 7% Research/Public Service $0.5 0%

9 Michigan Public University Spending Patterns Fiscal year 2015 Percent of General Fund Expenses by Function of Expense 45% 37% 13% 13% 6% 5% 7% 11% 9% 9% 0% 6% 7% 8% 10% 12% 2% 1% Instruction Academic Support Student Services Plant Institutional Support Research/Public Service Transfers Financial Aid Auxiliary FSU Average

10 Net Position Net Position difference between assets and liabilities Accumulated one-time balance June 30 th Includes actual dollars and paper transactions Classifications Capital Assets (net of debt) infrastructure assets Restricted by outside agencies or persons, i.e. Federal and State restricted scholarships and loans Unrestricted without external restriction to use or purpose.

11 University Fiscal Results Net Assets / Net Position $259.6 Million Amounts in Millions Restricted for Nonexpendable Scholarships $24.8 Invested in Capital Assets $179.6 Restricted for Expendable Scholarships, Loans and Grants $25.1 Unrestricted $30.2

12 GASB 68 GASB (Governmental Accounting Standards Board) statement addressing reporting for pensions provided to state employees. Ferris, as a MPSERS university, must abide by this statement. Impact on financial statements $65M of pension liability as of June 30, 2015 June 30, 2016 Increase to $91.9M liability Future statement will require reporting of health liabilities beginning June 2018

13 University Fiscal Results Unrestricted Net Assets Development (including Foundation) Plant projects in progress Maintenance reserve Held for University maintenance needs (all funds) Ferris Facility Condition Index stands at 27.6% - new assessment underway Reserves are 4% of physical plant replacement value Auxiliary operations Student loan funds Fiscal year-end balances (encumbered and unencumbered) Other unrestricted amounts (provision for self insurance, booked unrealized gains, legal contingency, unallocated investment income waiting for distribution) Net pension liability new for 2015; increased for 2016

14 University Fiscal Results Unrestricted Net Asset Comparison Amounts in Millions -$91.9 -$65.2 Maintenance Reserve Plant Projects in Planning Development All Other Divisional Carryover/Encum. Auxiliary Operations Student Loan Funds Net Pension Obligation FY $30.2M $32.4 $28.3 $13.8 $23.0 $37.4 $9.6 $10.6 $9.9 $11.8 $1.7 $2.0 $0.2 $0.2 FY $48.1M $54.5

15 General Fund Budget - $211.1M Amounts in Millions Tuition $ % Other $3.1 2% State $ % Compensation (net of reduction), $147.7, 70% Expense Revenue Student Aid, $24.5, 12% Operating Support, $38.9, 18%

16 General Fund Budget - $211.1M Compared to Amounts in Millions Revenue $159 $155 $149 $148 Expense FY 16 Budget FY 17 Budget $51 $53 $42 $39 $23 $25 $3 $3 State Appropriation Tuition Other Compensation Operating Support Student Aid FY17 Compensation net of reductions

17 Budget - $211 Million General Fund Allocations Amounts in Millions Academic Affairs $109.6 University Advancement and Marketing $4.7 Student Affairs $8.6 Kendall College of Art and Design $19.3 Governmental Relations General Counsel $1.5 General Expenses $36.7 Executive $2.5 Administration and Finance $28.2

18 Budget Housing/Dining Budget Revenues Compared to Budget In Millions $33.6 $32.9 $14.6 $14.8 Dining Housing Total $19.0 $18.1 FY 2016 FY 2017

19 Budget Housing/Dining Allocations In Millions Dining $ % Housing $ % $32.9M Total

20 Higher Education Ferris State Funding Formula Supports Ferris Mission Ferris received second-highest percentage increase in appropriations for FY 17 at 3.75% Ferris 17 General Fund budget is $211.1 million $53.2 (24.7%) base funding from state Additional State MPSERS funding of $900k Tuition supports majority of General Fund

21 Higher Education Ferris State University Appropriation FY 11 to FY 17 (Amounts in Millions Includes MPSERS Funding) $48.6 $41.3 $44.3 $46.1 $50.2 $51.3 $53.2 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17

22 FSU Appropriation History Financial Statement Amounts Base Appropriations plus MPSERS In Millions $56 $56 $50 $49 $49 $50 $44 $50 $54 $50 $49 $49 $41 $44 $46 $50 $51 $53 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 07 Paid FY 08 FY 08 Paid FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17

23 Michigan Public University General Fund Revenues 50.7% 47.0% 73.6% 71.1% 46.1% 45.4% 24.0% 21.5% FSU FY02 MPU FY02 FSU FY15 MPU FY15 State Appropriations Tuition and Fees Other

24 Higher Education Performance Funding and Tuition Restraint Higher education budget included $47.9 million increase $39.8 million performance funding $ 5.5 million grants and financial aid $4.5 million of this is Tuition Incentive Program including cap on program $ 1.9 million MSU (Ag Research, Extension, Vet Lab) $.7 million - MPSERS Performance funding Reinstatement of prior State reductions - proportional Critical Skills Undergraduate Degrees/Certificates Research and Development Expenditures Four measures scored against Carnegie Peers Six-Year Graduation Rate; Total Degree Completions; Institutional Support; Percent of Students Receiving a Pell Grant Requirement to not increase tuition more than 4.2%

25 Higher Education FY 16 Performance and Other Funding Increases FY Performance Measures Appropriated FSU Amount FSU %/Total Proportional Reinstatement Critical Skills Degrees Research Carnegie Metrics (FSU 9 of 107 points 8.4%) Total (2.9% University increase) $19,893,700 $4,420,822 $2,210,411 $13,262,467 $39,787,400 $680,972 $356,276 $ 0 $852,835 $1,890, % 8.1% 0% 6.4% 4.75% FSU Increase over FY % Other State Increases Grants and Financial Aid MPSERS MSU (Ag Exp./Ext/Vet Lab) $5,486,000 $730,000 $1,912,600 Total State Increase 3.1% $47,916,000

26 Higher Education Performance Funding Increases FY 13 to FY 17 State Performance Funds FSU Performance Funds FSU % of Total FSU % Increase HE % Increase FY $36,217,000 $2,926, % 7.1% 3.0% FY $21,869,000 $1,351, % 3.1% 1.8% FY $74,637,500 $3,450, % 7.6% 5.9% FY $20,099,400 $1,108, % 2.3% 1.5% FY $39,787,400 $1,890, % 3.8% 2.9%

27 Performance Funding and Enrollment Four of the six performance funding metrics are tied to enrollment Critical skills degrees awarded Six-year graduation rate Total degree completions Percent of students receiving Pell Recruitment and retention of students will be a continuing priority for the University

28 Tuition Rate Increase History Resident Undergraduate Lower Division Tuition Percentage Increase 6.4% 2.4% 3.5% 1.9% 4.4% 5.3% 4.7% 5.1% 2.6% 2.2% 2.2% 2.40% 2.6% FY FY FY FY FY FY FY FY FY FY FY FY FY 16-17

29 Michigan Public Universities Total Headcount Enrollment Change Fall 2011 Fall 2015 CMU EMU FSU GVSU LSSU MSU MTU NMU OU SVSU UMAA UM-D UM-F WSU WMU Totals 1.06% 2.69% 5.40% 2.96% 7.20% 2.19% 3.94% 2.52% -1.16% -4.74% -7.71% -9.49% -8.61% -6.10% % %

30 Budget Balancing Approach September Base budget reduced to match revenues, inputs match outputs Divisions use one-time funds to soften impact during Primary reductions are in positions through attrition No layoffs and no buyouts January Revenue and base budget targets revised to reflect spring semester enrollment

31 Looking Forward Issues to Watch Desire for greater legislative control Performance funding formula stability Measures Political pressures Perceived inequity General Fund Support for Roads Community College Baccalaureate MPSERS Strong pressure to restrain tuition Competition in the School Aid Fund (HJR SS) Federal support for Pell grants Tuition Incentive Program Funding and Limits Capital Outlay

32 Questions, Comments, Discussion Thank you Thank you for your continued efforts for our students and to move Ferris State University forward David L. Eisler

Fall Budget Forum: David L. Eisler, president Sally DePew, director, budgetary planning & analysis November 20, Thank you, dave eisler

Fall Budget Forum: David L. Eisler, president Sally DePew, director, budgetary planning & analysis November 20, Thank you, dave eisler Fall Budget Forum: 2014 Fiscal Results, 2015 Budget, Performance Funding, Enrollment, and Future Prospects I have placed explanatory comments throughout this slideshow using the Adobe "sticky notes" feature.