Colorado School of Mines Board of Trustees Meeting June 18, 2004 Operating Budget for the 2004-05 Fiscal Year The campus Budget Committee met on June 10, 2004 to review and discuss the proposed budget. The Committee unanimously voted to recommend that the Board of Trustees approve the proposed budget, including all the proposed fee changes. In addition, the Committee recommends that the Board submit, as proposed, the unrestricted funds budget to the CSM Foundation for approval. The President has reviewed and approved the recommendations of the Budget Committee. This narrative outlines and discusses the following sections of the proposed FY2004-05 budget as shown in the tabbed section entitled FY2005 Budgets : Page(s) Description 1-2 CSM Unrestricted Budget. 3 Restricted budgets for the CSM auxiliaries; Sponsored Research; and CSM restricted funds. These budgets are provided for informational purposes only. 4 Unrestricted funds of the CSM Foundation. The Foundation Board met on June 8, but took no action on the budget, while awaiting a proposed unrestricted funds budget from the CSM Board of Trustees. 5-6 CSM Foundation budget. Most of the funds are restricted funds. REVENUES Tuition revenues are based upon 800 new entering undergraduate students as compared to the 03-04 budgeted number of 750 new students. Following is a comparison of budgeted enrollment projections for the last three fiscal years. 2002-03 2003-04 2004-05 Undergraduate 2867 2853 2919 Resident 2185 2216 2303 Non-resident 682 637 616 Graduate 442 549 544 Resident 266 342 309 Non-resident 176 207 235 1
CSM TOTAL 3309 3402 3463 Resident 2451 2558 2611 Non-resident 858 844 852 All tuition credit hour rates, for both resident and non-resident students have been increased by 1.1%, which is the projected inflation rate for the State and is the rate increase identified in the State Budget Bill. A major change is proposed in the full-time resident student rate. Current practice is to make the full-time rate equal to what a student would pay for 10 credit hours. This budget proposes that for the 2004-05 fiscal year, the rate would be equal to what a student would pay for 11 credit hours. It is anticipated that the rate for 2005-06 would be based upon a 12 credit hour base. The three year comparison of tuition rates is: 2002-03 2003-04 2004-05 Resident Credit hr. $261 $285 $288 Full-time $2,623/sem. $2,850/sem. $3,168/sem. Non-resident Credit hr. $875 $952 $962 Full-time $8,758/sem. $9,515/sem. $9,620/sem. A significant portion of the cash revenues in the budget are subject to the TABOR revenue limitations. Following is a comparison of the spending authority contained in the budget bill and the proposed revenues contained in this budget. Long Bill - State Budget Proposed Mines Budget Tuition $ 31,444,623 $ 32,613,320 Other Than Tuition $ 1,500,000 $ 327,500 Auxiliary $ 950,000 $ 700,000 TOTAL $33,894,623 $ 33,640,820 A message sent June 3, 2004 from the CCHE Chief Financial Officer states that the JBC staff confirmed a school can combine all three Long Bill cash fund items in estimating how much revenue they can accept. This proposed budget is approximately $250,000 below the appropriated limit. This allows for the possibility to accept revenues from enrollment levels which exceed the budgeted projections. (The auxiliary revenues noted in the budget bill are for the athletic program and are not contained in the CSM Unrestricted Budget.) The only significant growth in revenues is from tuition; which is projected to increase by approximately $2.15 million. The State appropriation is constant and there is just a slight decrease in total revenues from all other sources. This results in a total revenue increase of 3.93%, at a time when the Strategic Plan calls for investments in certain areas and the classified benefit costs are mandated to increase by 3.75%, and insurance and utility costs are increasing by double digit percentages. In order to make the desired investments and 2
provide faculty with compensation increases similar to those being made for classified employees, the proposed budget expends $2 million of funds which have been received from the Petroleum Institute. Proposed operating changes for the 2005-06 fiscal year, such as the College Opportunity Fund and Enterprise Status for the campus, make it very difficult to project a budget for that year. However, current plans call for a reduction in the ongoing use of PI funds for that year by $1.4 million. This would be accomplished by increasing tuition revenues by $1.3 million through the implementation of full-time tuition at the 12 credit hour rate, and elimination of approximately $.1 million of one-time costs contained in the 2004-05 budget. It may, however, be necessary to utilize $.6 million of PI funds in the 2005-06 budget. EXPENDITURES Compensation Increases Classified employees are receiving a 2% across-the-board salary increase. In addition, employees who received the highest of four performance rating categories will receive a 1.5% pay-for-performance salary increase, and employees in the third highest category will receive a.5% salary increase. (The average of the two categories is.755% and most Mines employees are in these two categories.) In addition, mandated employer paid health insurance coverage will increase. It is projected that the cost of this increase is equal to approximately 1% of salary and that the total compensation increase for classified employees is equal to 3.75% of the salary base, at a total cost of $357,413. The budget proposes a 3.75% average salary increase for faculty at a total cost of $973,540. Employer costs for retirement, health insurance, annual leave and sick leave are calculated as a percentage of salary and constitute the fringe rate. The fringe rate for classified employees will increase from 16.6% to 18%, and the fringe rate for faculty will decrease slightly from 26.6% to 26.5%. New Employees The proposed budget provides for the following new faculty and staff positions: 10.5 FTE tenure-line faculty appointments 5.0 FTE lecture appointments 2.0 FTE in academic instruction classified staff 2.0 FTE administrative faculty 0.5 FTE internal auditor position 1.0 FTE custodial position 0.6 FTE administrative classified support position In addition, $130,000 is added to the Instruction Academic Faculty Compensation line item to cover the reduction in support from the CSM Foundation for certain endowed 3
chair positions. In addition, 2 positions which were included in the current year budget, but were not properly funded, are correctly funded in the next fiscal year. Financial Aid The proposed budget continues the practice of using 15% of the revenue increases from tuition rate increases, which are above the rate of inflation, to increase financial aid. This results in an increase in graduate student support of $33,559. Undergraduate student financial aid is increased by $208,832 from the 15% set-aside, plus $50,564 to off-set the cut in State-funded financial aid and $58,405 which was added in the current fiscal year due to the enrollment increases above the budgeted amount. Other Significant Budgetary Increases While there are many small changes recommended in the budget, the following is a list of the most significant percentage increases in non-staffing areas of the budget. Investments in the Academic Programs $100,000 (17.5%) increase in start-up funds for new faculty. $261,772 (44.9%) in funds returned to research centers. $179,334 (21%) for adjunct faculty increases. (The actual budget was also reduced by $200,000 since 5 positions were moved to full-time lecture status.) $84,900 increase in funds to the Registrar s Office with the majority of the funds being used to purchase software to assist with scheduling and space management issues. Required Budget Increases $235,635 (26.9%) increase in insurance premiums at State Risk Management $300,000 (17.6%) increase in the utility budget $121,173 (36.4%) increase in payments for the Research Building since the next fiscal year includes the first required debt reduction payment for the building. Investments in Administrative Programs $110,000 to support recruitment efforts for non-resident students $85,000 for improvements in the administrative computing system. $75,000 for one-year funding of the position of Director of the Alumni Relations 4
In addition to the Education and General budget of the School, this notebook also includes information concerning changes in fees, both mandatory fees and fees for service, and proposes a budget for the Board to recommend to the CSM Foundation. Following is a brief discussion of these items. CSM Foundation Budget Each year the Board of Trustees of the School of Mines is asked to recommend a budget for the use of unrestricted funds at the Foundation. The Board of Directors of the Foundation reviewed and discussed potential unrestricted revenues at their meeting on June 8, 2004. The only difference in revenues from what was discussed at that meeting is in the area of income from investments. The Foundation Managing Director presented an estimated 5.0% return on investments in the revenues she calculated and this proposed budget assumes a 6.25% return on investments. This amount is equal to the 5.25% spending limit used by the Foundation plus the 1.0% management fee charged by the Foundation. The largest expenditures in the unrestricted budget are for the support of the Office of Institutional Advancement and that budget is recommended to remain constant. There have been several changes in the way the Office is staffed and, as a result of salary savings from these changes, the Office will be able to provide an average 3.75% salary increase within a continuation budget level. The requested increase in the Foundation Operations budget is included. $100,000 is added to the Legislative Relations budget. A similar amount was reduced from the 2002-03 budget and restorations of the funds will allow either for purchase of services at the Federal level or restorations of funds paid to the School for services provided by employees of the School. Most reductions in the Officers Fund which occurred in the current fiscal year are recommended to be restored. In addition $60,000 is provided to begin efforts to purchase services to assist in marketing the School. Previous budgets had provided $92,000 to the Alumni Association for support of their efforts. In keeping with the Affiliation Agreement, this budget recommends that financial support of the alumni affiliation be moved to the President s Discretionary funds and be increased to $100,000. The Alumni Association had requested a budgetary increase of $222,408 from the School and the Foundation. Included in that request was the salary and benefit cost of the new Alumni Relations Director. That salary is included (for nine months since the search for a director has just began) in the CSM budget. The CSM budget also includes $46,000 for support of the magazine. 5
Fees The Board is also asked to approve the proposed schedule of fees. Page three of the Schedule of Tuition and Fees lists the fees which all students at the School must pay. State law provides that these mandatory fees can not increase by more than the rate of inflation unless the increase is approved by a vote of the students or the fee is in support of a program which pays for bonded indebtedness. The Student Services fee is used, in part, to retire the debt on the Student Center and it is the only mandatory fee proposed to increase by more than 1.1%. The tabbed section entitled Other Charges includes a recommended increase in the employee, unassigned space, parking fee from $35 per year to $50 per year. An increase in the NSF check charge is recommended in order to cover the costs the bank charges to the School. In the current fiscal year, the School does not accept charge cards. It is proposed that, beginning July 1, the School will again accept those cards which permit the School to pass on the credit fees to the customer. In this first year, it is recommended that the fee be set at 2% of the amount charged. Page nine of this section shows the proposed room and board rates for the various housing sites and meal options. The basic double room rate for the traditional dorms is increased 3.6% and the meal plans increased by 4.0%. 6