Financial Administrator Development Series Sources and Uses of Funds: A Planning Perspective

Transcription

1 Financial Administrator Development Series Sources and Uses of Funds: A Planning Perspective David S. Byelich Assistant Vice President and Director Office of Planning and Budgets 1

2 What is your profession? Financial Control Planning Innovation Management Building Value 3

3 Spartans Will. Over Arching Values Quality Inclusion Connectivity Boldness By Design Enhance student experience Enrich community, economic and family life Expand international reach Increase research opportunities Strengthen stewardship 4

4 Financial Control A Beginning Assure consistency between planning and financial outcomes Continued refinement of institutional information systems Deployment of OOI and additional financial control elements sub org, sub account Decentralization of fringe benefits Improving budgetary systems and processes to reduce redundancy, consistency, and planning certainty Development of dashboard and all funds perspectives 5

5 Financial Framework Long Term Needs Item Current 10 Yr. Need Unfunded Notes JIT $376 (NR) $0 (NR) Needs and availability of projected investment income remain balanced over ten years Administrative Computing Implementation Finance/HR Administrative Computing Augmentation (FY12 and FY13) $104.5 (NR) $0 (NR) Project went live in January 2011, completed $18M (NR) $0 (NR) Funding identified, project enters augmentation phase July 1, 2011 EBS Operations $9.7 (R) (Implementation) $3.2M (R) (Augmentation) $0(R) (Implementation) $0(R) (Augmentation) Funded 6

6 Financial Framework Long Term Needs Item Current 10 Yr. Need Unfunded Notes Administrative Computing Research Administration $20M (NR) $0.7M (R) $0 (NR) $0(R) Preliminary Stage Projected cost unchanged Student Information $68.4M (NR) $7.5M (R) $68.4M (NR) $7.5M (R) No change, evaluation stage only Specialized Research Space $13.2M (R) $4.4M (R) Financial Aid $35M (R) $17M (R) Approximately $13.2M in critical needs identified. $8.8M funded through Future increments under consideration Continued need for augmented budgets. Funding from a combination of donor supported scholarships and general fund increments. Monitor Pell availability 7

7 Financial Framework Long Term Needs Item Current Projected 10 Yr Need Next Steps Healthcare $141 (R) $29(R) FRIB $94.5M (NR) $94.5M (NR) State Commitment Quality Academic, Research & Outreach $32.0M (R) $32.0M (R) Energy/Other Regulatory N.A. N.A. Notes 10% reduction negotiated for , increases through FY14 capped at 5% and funded through general fund allocation. Discontinued funded postretirement health care benefits for new hires Spending schedule accelerated. $2.3M included in FY13 state GFGP budget for debt service. Proposing that state carry debt directly Provides funding to enhance the undergraduate & graduate student experience. Initiation/scope determined by resource availability Campus capacity needs, commodities prices and conservation efforts under review 8

8 Long Range Budget Planning $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $ Operating Expenses Framework 0% App Revenue 2% Approp 4% Approp 9

9 Long Range Budget Planning 10

10 Financial Framework Long Term Needs 11

11 Long Range Budget Planning $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $ Operating Expenses Framework 0% App Revenue 2% Approp 4% Approp

12 Challenges Increasing Reliance on Tuition 77% 63% 61% Appropriation Support 56% 52% 64% * Tuition 32% 32% 19% 38% 41% 27% Other Revenues 4% 5% 8% 7% 7% 8% * * * Reflects Budget 13

13 Fall 2012-Entering Students Actual 2011 Actual 2012 Projected 2013 Projected 2014 Projected 2015 Projected 2016 Freshman* 7,782 8,154 7,700 7,500 7,300 7,300 Transfer* 1,535 1,449 1,500 1,500 1,500 1,500 Graduate 1,771 1,812 1,800 1,800 1,800 1,800 Total Enrollment 47,954 48,906 49,300 49,400 49,100 48,800 *Non-resident admissions anticipated in range of 25% of freshman and transfer enrollment; with domestic non-resident students representing approximately half of the total. Projections represent the mid-point of planning range, plus or minus 200 students. 14

14 Challenges Tuition and Fee Rates $14,000 Tuition History- University of Michigan & Michigan State University $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 University of Michigan Michigan State University $5,

15 8,500 Challenges Resident First Time Enrollment 8,000 7,500 7,000 6,500 MSU Resident Entering Class MSU Resident Entering Class & Resident Transfers 7.2% of MI High School Graduates 6, % of MI High School Graduates 5,500 5,000 4,500 5% of MI High School Graduates* 4,000 Projected Values

16 Big Ten Entering Undergraduate Enrollment by Residency 100% 80% 60% 9% 6% 8% 12% 36% 33% 29% 45% 5% 7% 5% 7% 15% 34% 29% 31% 13% 8% 2% 18% 9% 10% Big Ten average: 65% resident 40% 20% 46% 59% 59% 60% 61% 63% 65% 78% 79% 80% 81% International Non Res Enrollment Resident Enromment 0% IPEDS fall 2010 reporting 17

17 Fall 2012 Non Resident Students Actual 2008 Actual 2009 Actual 2010 Actual 2011 Actual 2012 Domestic International ,025 1,248 Total 1,406 1,516 1,407 1,910 2,211 18

18 Challenges Total Grants Received Distribution Distribution Federal $136,202 52% Federal $282,413 64% MSU Foundation and U Dev $57,801 22% Other $15,614 6% Association $2,848 1% State $36,376 14% Private Foundation $5,583 2% Industry $7,992 3% MSU Foundation and U Dev $54,832 13% Other $53,745 12% Private Foundation $13,786 3% Total ~ $263.4M Total ~ $438M Association $3,246 1% State $20,606 5% Industry $9,790 2% 19

19 Challenges Sponsored Research Distribution Distribution Dept of Ed, $7,332,807, 7% Dept of Ed, $16,368,846, 7% NIH, $29,520,610, 30% NSF, $40,079,264, 40% NIH, $75,270,474, 34% NSF, $73,081,753, 33% USDA, $16,293,406, 16% DOE, $26,710,350, 12% USDA, $32,320,164, 14% DOE, $7,124,155, 7% Total ~ $100M Total ~ $224M *Represents leading Federal agencies 20

20 Federal Budget Use of Funds 21

21 Federal Budget Source of Funds 22

22 Federal Budget Agency Spending 23

23 Other Considerations Total debt outstanding approximately $887M Long term OPEB obligation approximates $851M Late entry into advancement/development activities annual giving in excess of $110M MSU endowment returns typically approximates top 5 th percentile of peers over 10 year period 24

24 Annual Perspective Budget Overview Budget Item Preliminary State Appropriations 15% 1.4% 0% Tuition & Fees 6.9% Res UG 3.5% Other 5.0% 4.0% Financial Aid 10% 6.5%* 4.5% Graduate Assistants 0% 2.0% 2.0% Faculty Salaries 2.0%** 2.0%*** 2.0%** Utilities 5.0% 4.0% 4.0% Health Care 5.0% 5.0% 5.0% Preliminary budget approved by the BOT in June, 2011 Current planning -- Appropriations and resident undergraduate tuition based upon Governor s recommendation, utilities reduced by 2.1M, entering class assumed at 7,650 *Includes funds committed in prior years **Includes 1.5% general merit, 0.5% college market, and 0.5% provost market pool ***Includes 1.5% general merit, 0.5% college market, plus 1.0% provost market pool 25

25 Annual GF Planning and Development Operating Units Formula based on budget proposal Salary increments Operating support 1% reallocation Separately Reviewed Items Financial aid Utilities Health care Other benefits Differential Financial framework Program allocations Reductions *All funds analysis shared at unit/central level 26

26 Emergence of New Higher Education Model Increase prominence of development Research expenditures funded by grants and contracts Educational programming balanced by level, discipline, cost structure Ongoing re engineering of instructional, research, outreach and support functions 27

27 Background Slides 29

28 Tuition and Financial Aid 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 17.0% 13.3% 13.0% 10.0% 8.0% 6.9% 5.2% 5.5% 4.9% 3.5% 4.0% 4.5% Tuition Financial Aid 1% Tuition = $7.25M, 1% Financial Aid=1.03M Current planning recommends a $15 per SCH (3.5%) increase for resident undergraduates Non resident students recommended at $48.50 per SCH (4.6%), coupled with increased international student fee Most other student groups 5.0% Preliminary planning calls for resident undergraduate tuition to increase by 4.0%, similar for most other student groups 6.5% increase to financial aid, 5.5% planned increment and 1.0% resulting from restructuring of budget 30

29 Faculty Salaries 6.0% 5.0% 4.0% 4.0% 3.0% 2.0% 1.5% 2.0% 2.0% 2.0% 1.0% 0.0% 0.0% Preliminary % = $3.4M Attract and retain internationally recognized scholars % increment includes 1.5% general merit increase, 0.5% college market pool, and an additional 1.0% Provost market pool MSU currently ranks 10 th of 12 Big Ten institutions for faculty salaries Targets Big Ten median Preliminary % increment includes 1.5% general merit increase, 0.5% college market pool, and an additional 0.5% Provost market pool 31

30 Coalition Salaries 5.00% 4.00% 3.00% 2.75% 2.00% 1.75% 2.00% 2.00% 1.00% 0.00% 1.00% * 0.00% Preliminary % = $1.93M 11/12 1% non recurring Recruit and retain staff from local/regional market represents final year of existing collective bargaining agreement Continue to target regional market comparability for support staff positions Ongoing optimization of benefits plan to assure sustainability and employee satisfaction *Includes 1.0% recurring increment and 1.0% lump sum distribution 32

31 Utilities 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 17.6% 10.8% 5.0% 5.0% 4.0% 4.0% Preliminary % = $0.5M increment reduced from 8.0% to 4.0%, saving $2.4M Energy transition plan goals seek to keep year over year utility growth constrained to 4%, inclusive of energy conservation initiatives Longer term capacity and regulatory pressures drive continued evaluation of policy and infrastructure options 33

32 Health Care 10.0% 5.0% 0.0% 6.3% 8.5% 5.0% 5.0% 5.0% Preliminary (5.0%) (10.0%) (5.0%) % = $0.75M represents final year of 5.0% cost cap as negotiated in current collective bargaining agreement 34