The FY 2006 Budget Request Where We Have Been by icecube

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									The FY 2006 Budget Request:
Where We Have Been and Where
       We Are Going…

  Strategic Planning Study Session
            April 27, 2005



                                     1
                    Agenda

   CU Budget Background

   FY 2006 Budget Strategy
       CU Spending Authority & JBC Action
       CU System Office Budget Goals


   Initial Discussion of Campus peer study

   Next Steps

                                              2
Total Budget--$1.790 B
                Clinical
                                     Gifts,
                 11%
                                    Grants,
                                   Contracts
                                     32%
                                                             Operating Budget
     Other
      9%                                                           $668 M
Indirect                                                       ICR &    State
  Cost                                                         Other   Approp
  6%                                                            13%     18%
                                         State   NRes Tuit
                                        Approp     16%
    Auxiliary              Tuition &      8%
      8%                     Fees
                             26%


                                                                         Res Tuit
                                                                          53%

The Operating Budgets are the primary revenues that the
University uses for educational operations (38% of total budget)                    3
                     FY 2005 Budget
                            $1.79 Billion
    Campus Budgets                               Budget by Fund Type
          System
          Admin                                                       General
           1.3%                                                      Operating
                                            Restricted                 38%
                               UCB            32%
                              45.4%




UCD/HSC                                                  Auxiliary
 48.4%               UCCS                                 31%
                     4.9%



In FY 2006, as a result of the consolidation, the UCD & HSC
Financial statements will be consolidated.                4
Higher Education Appropriations and
   Enrollment Change Over Time
                       200,000                                                                                     $900
                       180,000        $498                                                                         $800
                       160,000                                                                                     $700
                                                                                                           $591
                       140,000
                                                                                                                   $600
Students (Headcount)




                       120,000




                                                                                                                          $ in millions
                                                                                                                   $500
                       100,000
                                                                                                                   $400
                        80,000
                        60,000                                                                             $353 $300
                        40,000                                                                                     $200

                        20,000                                                                                     $100
                            0                                                                                      $0
                                 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

                                                   Enrollment        Constant $        Current $

In Colorado, enrollment has increased by over 40,000 students,
the higher education appropriation is has actually dropped since 1990
 if you factor out inflation.                                    5
         FY 2006 Budget


In order to help the campuses meet some of
  their budgetary challenges, the University
   must develop a revenue strategy that will
      allow for management flexibility.



                                           6
         FY 2006 Budget (con’t)
   This strategy is based on the following guidelines:
      Expenditures:

           CCHE mandated cost model.
           Additional expenses not included in CCHE model.
       Revenues
           Goal of achieving Base Adequacy
           No increases in general fund support.
           Set of system-wide tuition principles:
                Shared Responsibility
                Affordability & Accessibility---more financial aid
                Market based tuition rates, especially for professional and
                 graduate programs
                Implementation of linear tuition structure over time in order to
                 align with concept of College Opportunity Fund
                                                                                    7
Expenditures: JBC Approved Spending Authority

   Decision Item          %            $          %           $
                       Requested   Requested     JBC         JBC
                       Spending    Spending    Approved    Approved
                       Authority   Authority   Spending    Spending
                                               Authority   Authority
Mandated Costs           7.7%        $29.8 M     7.7%        $29.8 M
(CCHE)
Utilities Adjustment     1.1%         $4.4 M     0%             $0 M
Access: Restore          0.4%         $1.6 M     0.4%         $1.6 M
Merit
Capital Initiative       1.0%         $3.8 M     1.0%         $3.8 M
Quality Initiative       1.2%         $5.0 M     1.2%         $5.0 M
HSC Graduate             0.8%         $3.3 M     0.8%         $3.3 M
Investment
Total                   12.2%        $47.9 M    11.1%        $43.5 M
                                                                   8
           Revenues: Achieving Base Adequacy
      CU Expenditures per Student vs. Peer Average
                                                               CU Expenditures per Student vs.
   To Achieve Base                                           Peer Average per student (FY 2003)
    Adequacy, each campus
                                                $25,000
    would need to generate
    the additional revenues to
                                                $20,000
    fill the gap between their
    current levels and their
    peer averages.                              $15,000


                                                $10,000
   For CU, without the
    Fitzsimons campus, this
                                                 $5,000
    would generate a need for
    an additional $202 M
    annually.                                        $0
                                                               UCB             UCCS    UCDHSC-
                                                                                      Downtown
Note: Expenditures per student are the E&G expenditures of the institutions.                 9
    Addressing the Resource Gap:
   Tuition
       Phased increases to market levels; differential school and
        college tuitions.
       Implementation Factors: Resident tuition authority
        controlled outside of University. Approaching price in
        elasticity for non-resident students.
   Fund-raising
       Set new campus targets
       Endowment (academic chairs, financial aid)
       Implementation Factors: CU & CUF control all aspects of
        fundraising. Slower developing resource base.
   Management Opportunities
       Enterprise Status & entrepreneurial activities
       Performance Contracts
       Implementation Factors: Enterprise Status already achieved.
        State will still have oversight on degree of flexibility. 10
 Tuition: Resident Market Pricing
Tuition Compared to Peer Average-UCB
$5,000                  TABOR
$4,000
$3,000
$2,000                                                                                           $3,093
                                                                                               Above Mean
$1,000
    $0
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($1,000)
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      FY

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                  FY

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                                                            FY

                                                                   FY

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                                                                                                      FY
($2,000)
                                                                                                            ($2,142)
($3,000)                                                                                                     Below
                                                                                                             Mean
                                                          Res           Nres

                                                                                                                  11
Tuition: Graduate Market Pricing
             School of Dentistry as an example
   Tuition rates are currently      Resident Tuition at Peer Univ.
    35% below the average of         Univ of Nevada           $25,440
    its peer institutions.           Univ of Minnesota        $20,230
                                     Univ of Missouri (KC)    $20,172
   Cost per DDS student is          Univ of Iowa             $17,386
    approximately $47,000,           Univ of Nebraska         $16,358
    while current tuition is         Univ of Oregon           $16,440
                                     Univ of Washington       $13,008
    $12,185.                         University of Colorado $12,185
   Resulting Issues:
                                     Average of Peer Group   $18,433
       Lower faculty salaries
       Faculty recruitment &
        retention
       Maintenance of educational
        and clinical facilities
                                                                   12
            What is a Linear Tuition Structure?
                                           At UCB, currently
          $4,500                           167,288 credit
                                           hours in this area
          $4,000                           that do not generate
                                           tuition revenue. A loss
          $3,500                           of $38.5 M in tuition.

          $3,000
          $2,500
Tuition




          $2,000
          $1,500
          $1,000
           $500
              $0
                    1   2   3 4   5   6   7 8    9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

          Currently, through a non-linear tuition structure, CU is providing 193,328
          credit hours (6,444 FTE) at no additional cost to undergraduate resident
          students. This is a loss of approximately $43 M in revenue to CU         13
        Other State Budget Action
   Long Bill
       COF stipend approved at $2,400 per full-time student ($80 / credit
        hour).
       State Colleges will receive additional general fund as part of floor
        funding legislation.
       Need-based aid was increased by $5.2 M, but the state funding for
        the merit aid program was reduced to $1.4 M.
       Tuition footnote as drafted and approved by the JBC gives flexibility
        to governing boards in setting tuition rates.
   State Budget Proposal (HB 1194)
       For the next five years the State will be able to keep all of the
        revenue collected. This is estimated to be $3.1 Billion.
       If revenues are sufficient, tax rates will be reduced in year six
        from 4.63% to 4.5%.
       Remember: This must be approved by voters!
                                                                                14
        The Peer Benchmarking Study
        How will the Study be Used?
   It will be used to:
       Inform the Board how CU compares in various
        financial areas to our peers


       Help the Board and Administrators understand
        the long-term resource requirements to
        achieve our financial goals


                                                  15
    CU Campus Peers from PwC Study
     UCB                                           UCCS
   University of Colorado – Boulder         University of Colorado –
   Indiana University                        Colorado Springs
   Iowa State University                    Arizona State University – West
   Michigan State University                CUNY City College
   Penn State University                    Florida Atlantic University – Boca
   Purdue University                         Raton
   Rutgers University – Newark              George Mason University
   Texas A&M – Main Campus                  Indiana University–Purdue
   University of California – Berkeley       University – Indianapolis
   University of California – Santa
    Barbara                                  Oakland University
   University of Illinois                   University of Maryland –
   University of Kansas – Lawrence           Baltimore County
   University of Maryland – College         University of Massachusetts –
    Park                                      Boston
   University of Nebraska – Lincoln         University of Michigan –
   University of Oregon                      Dearborn
   University of Texas at Austin            University of Missouri – St. Louis
                                             University of Nebraska – Omaha
                                             Wichita State University       16
CU Campus Peers from PwC Study
    UCDHSC                                    System
   UCDHSC Consolidated Campus
                                             University of Colorado
   Indiana University – Purdue               System
    University – Indianapolis
                                             Indiana University
   Ohio State University
                                             Oregon University
   University of Alabama –
    Birmingham                               University of California
   University of California – Irvine        University of Georgia
   University of California – Los           University of Illinois
    Angeles                                  University of Maryland
   University of California—San Diego       University of
   University of Illinois – Chicago          Massachusetts
   University of Minnesota – Twin           University of Missouri
    Cities                                   University of Nebraska
   University of Nevada – Las Vegas         University of North
   University of Pittsburgh                  Carolina
   University of Utah – Salt Lake City      University of Texas
   University of Washington – Seattle
                                                                         17
Establishing the System Budget
   CU’s Administrative Costs are one of the lowest
    in the State and among our peers.
       Currently around 5% of total costs
       Peer averages range between 7% and 8%


   System Budget is determining by examining:
       Actual usage of services (payroll, benefits, UMS)
       Projected growth of campus budgets
            Over the last 5 years the System office has grown at a
             slower rate than the campuses budgets
       System and Campus Initiatives, Goals & Objectives
            Objectives include: Compliance, security, technology,
             manage risk, cost avoidance.

                                                                      18
Upcoming System-wide Initiatives
   The follow initiatives will be started at
    little or no additional costs to the
    campuses:

       SIS Replacement
       Electronic Grants Automation
       Reporting Software
       Development Activities


                                                19
    FY 2006 Budget: What’s Next?
   Fee-for-Service Contract Negotiations with CCHE will
    begin in May
   Governor signs Long Bill– early May
   Campuses to develop detailed revenue and
    expenditure budgets within approved spending
    authority guidelines.
   Regents Budget Retreat—June 2nd to 4thrd
        Campus budgets and tuition rates are discussed
        Student Fees are approved
   June Regents Meeting – June 29th & 30th
        FY 2006 Budget & Tuition Rates are approved


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Questions?



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