Budget Planning Council Meeting Notes February 14, 2014, 10:00 AM 12:00 PM Baker Center Multi-Cultural Center Multi-Purpose Room

Transcription

1 Budget Planning Council Meeting Notes February 14, 2014, 10:00 AM 12:00 PM Baker Center Multi-Cultural Center Multi-Purpose Room In attendance: Steve Golding, Ryan Lombardi, Dennis Irwin, Ben Stuart, Amanda Roden, Joel Newby, Anna Morton, Josh Bodnar, Jeff Fulks, Elizabeth Sayrs, John Henning, David Thomas Absent: Pam Benoit, Randy Leite, Scott Titsworth, Julie Paxton, Deb Shaffer, Dawn Weiser Staff: John Day, Chad Mitchell, Tim Davies, Kari Saunier, Tereza Miranda-Branham, Mindy Colburn, Craig Cornell, Rosanna Howard, Jen Kirksey, Katie Quaranta, Barbara Wharton, Shelley Ruff 1. Athens Tuition Discussion a. Revenue Forecast i. There is a need to have a longer-term view of expense growth as investments are made in compensation and the capital plan. We need to determine what part our tuition rates play in this picture. ii. The FY 14 forecasting is portraying a strong financial position. For the revenues, there is a positive variance between our FY 14 Budget and our FY 14 Forecast. iii. Part of this variance is a planned variance due to conservatism. Part of the plan that has been established is such that if more revenues are received than budgeted, then those revenues are utilized by placing them in the $100M Investment Strategy. iv. The additional variance is related to surpassing expectations. This allows us to bring the additional resources into the budget plans next year. v. The FY 15 Budget is a best guess based on where we are today, where we will be, and what we might earn next year. We have modeled a 1.5% tuition increase. It is not being proposed today, it is just modeled for conversation. The FY 14 variance shows that we can bring $15M into our FY 15 Budget. This allows us to invest in debt and other programmatic investments. There is also a variance between the FY 15 Budget and the FY 15 Forecast. This accounts for $20M, of which $10M is planned related to the $100M Investment Strategy. vi. The growth in State Subsidy of $24M from the FY 14 Budget to the FY 15 Forecast is nearly all related to Health Science s Nursing Program. One reason that we are not proposing building that entire surplus into our budget is the RCM Implications. The expenses proposed are related to all units, while the revenue is directly aligned with one planning unit. We want to set up a system within RCM that incentivizes growth and that those that generate resources can invest them back into their unit. We are proposing holding $13M unallocated (part of which is the intended conservatism; part is to hold the surplus both centrally and within Health Sciences). The second reason we are not building this into our base budget is because of the lack of certainty that this is going to be here long-term. Compensation increases are long-term investments. We need certainty that the revenue backing those investments will be there long-term. vii. Discussion around the underlying assumptions 1. This is such a unique situation and there is the question about the long-term sustainability of these resources. 2. Two problems: One is that it is all aligned with one college. It is necessary to ensure that this revenue surplus is treated in a consistent manner to what was

2 agreed upon by the Deans and the University when RCM was established. The second problem is the potential for changes to the formula and the potential significant financial implication. 3. The next part of the question is how much should the university give to Health Sciences since they are the beneficiaries of the surplus. Is there a portion of this surplus that the central university can utilize to benefit the collective university? That is the conversation we are having now. 4. RCM creates a tension between one-time only and base. viii. Question about the Investment Income projection 1. We don t plan for Investment Income. We don t try to predict this because of the variability of the activity. ix. Question about Subvention % of this would be captured through subvention, but that is not what we are discussing. x. Question about State Subsidy and the political ramifications if it is not used entirely per how it was earned 1. We need to be very clear that those dollars are being used to support the academic mission of the university. The subsidy revenue comes to the university and is then spread to all of the colleges through calculations. The institution guarantees a number for enrollment, tuition, and subsidy. The central university is taking a risk if the numbers are not correctly aligned. b. Investing in Priorities Visual i. Sources 1. Modeling a 1.5% tuition increase, which would then require a $2M incremental increase in our scholarship budget 2. Endowment distributions have grown and new endowments have been established. There are restrictions on how the funds can be used, but the dollar amount is substantial and needs to be addressed in the budget conversations. ii. Uses 1. Many of these items have not yet been decided. 2. The compensation item includes the retroactive 1% raise, 2.5% raise increase assumption, and 7% increase assumption for healthcare. 3. The debt service item represents information from the Capital Improvement Plan that has previously been discussed at BPC. 4. The Administrative Investment Hearings item represents all of the funding requests from those hearings. 5. The Academic Investment item represents what academic units requested when they were asked what they would be interested in investing in to advance their unit. 6. The Programmatic investments are related to advising, classroom support and technology investments. 7. This is the collection of all possible investments. Throughout the review process, not everything will be invested in. iii. The purpose of this slide is to show the relative impact of all of these assumptions. iv. We don t want to spend every dollar that we bring in, particularly as it relates to making investments.

3 c. Longer term view of the Higher Education Business Model i. There has been a lot of public discourse related to the cost of higher education. ii. There are many plans at Ohio University to meet the challenge of sharing the burden of the cost of education. This includes developing endowment and annual giving and becoming more efficient with space usage. d. The impact of Moderate Rate Increases graph shows that there is a substantial gap between incremental revenues and incremental expenses over time. Though the university is in a strong financial position today, looming in the future based upon moderate rate increases is a scary environment. Closing the gap becomes a very significant challenge today. i. Discussion: 1. What are moderate rate increases? a. What has been proposed, applied for each year. 2. Does this graph include all revenue options? a. No, everything else we would do would have to make up the gap. 3. How was the expense projection calculated and what does it represent? a. It was calculated using our assumptions and inflating all compensation, inflating benefits, and inflating debt service. There are no miscellaneous inflationary expense increases included in this graph. 4. Does this include the impact of moving to a Tuition Guarantee model? a. At this time, we are not projecting any financial benefit of moving to this Tuition Guarantee model. 5. This highlights why we are not bringing forward a rate proposal increase today and the need to further evaluate this. We have to think through how to meet the longer-term challenge. 6. If our goal is to be ranked third in compensation, then it is something that we will have to annually invest in to maintain that ranking. We are still compiling information from our peer institutions to determine where we need to be and what that investment will be each year. 2. Enrollment projections Craig Cornell a. Spring enrollment update Athens numbers are highlighted for emphasis. Probation rates are going down, which would create higher yield rates for this year. b. FTE is increasing and rebalancing, which is a good sign. c. We often have international students enroll in Spring. d. The Enrollment Funnel for the Freshmen class i. 97% of applications are in, over 20,000 applications. ii. Prospects working with Juniors and Sophomores iii. Admits just under 11,000 iv. Housing deposits are ¼ of the way through v. Sitting nicely with those that are admitted. Still good quality of freshmen students. e. The university is still at the second highest application pool ever. i. Every pool has a personality. Multi-cultural, African American, out of state males are down by 253. f. Enrollment strategies i. Becoming saturated in new markets, so the plan is to target specific efforts. ii. New Sophomore initiative iii. New scholarship program has been established

4 g. Budgeting i. We do not want to base the budget upon last year s phenomenal enrollment increase. ii. We want to budget a more likely, base budget around 4,071. Then within that figure there is the resident/non-resident mix. 3. Student Fee Committee Recommendations Tim Davies a. The committee reviewed course fees and technologies fees b. Deb Benton and Sherry Downs were both unable to attend, but they co-chaired the committee. c. There was an Athens Campus fee freeze in anticipation of the Tuition Guarantee. d. All requested fees were approved and brought forward to BPC. e. Question about the freeze and the implications next year, particularly related to tech fees i. Different models currently between colleges, particularly related to the College of Engineering. f. Question about Nursing fees and consistency across campus i. The Regional Campus fees will be consistent across campuses and in line with the Athens Campus Nursing fees. 4. Graduate Program Fees John Day a. Additional program fees b. College of Business Master of Business Administration, MSA, OMBA i. Instructional Fee and Non-Resident fee is fixed to Athens amount. A program fee can create unique pricing structure. ii. The specialized services and materials fees are related to residency expenses. iii. The proposals are related to changing the program fee. iv. OMBA is changing special fees. v. These programs have to deal with market sensitivity, so if they price themselves out of the market, then they have to compensate. c. MFE program is looking to change program fee by 3.1% 1. They have done benchmarking to compare to other professional programs. d. Off campus Graduate Programs for the College of Education i. They are all going to a premium price included a $15 program fee, 3% increase in external off-campus Master s program ii. They are experiencing increases in demand and need to compensate for the overload contracts utilized to teach these courses. e. Online Bachelor s program in Technical Operations Management i. They want this program to have premium tuition because of the demand and the type of student they are targeting. ii. Current E-Learning fee structure would apply to all courses taken in a program. iii. The program wants to charge the higher rate just for the engineering courses. These students will take other general education courses also, so this change could only be implemented by charging a course fee on those courses. This is not part of the OHIO Guarantee program.

5 5. Board Action Items Voting on Proposed Fee Increases: a. Room 3.5% proposed i. Dennis Irwin made a motion to recommend a 3.5% Room rate increase. Elizabeth Sayrs b. Board -1% proposed i. Shelley Ruff made a motion to recommend a 1% Board rate increase. Ben Stuart c. HCOM 5% proposed i. There was discussion about the combination of HCOM fees being proposed for approval today. ii. Josh Bodnar made a motion to recommend a 5% HCOM Medical Fee rate increase. Dennis Irwin provided a second. Anna Morton and Joel Newby opposed. No abstentions. d. Student Fees i. The list will be amended to include the two fee deletions to pick up the new fees, therefore showing that the offset reduces the total impact. ii. Ryan Lombardi made a motion to recommend the proposed student fees. Dennis Irwin e. Graduate Program Fees i. Dennis Irwin made a motion to recommend the proposed Graduate Program fees. Ryan Lombardi provided a second. Joel Newby opposed. No abstentions. o Next Meeting February 21, 2014, 12:30-2:00, Baker Center 230 DATE TIME LOCATION SPRING F, February 21, :30-2:00 Baker 230 F, February 28, :00 noon Baker 2 nd floor MCC MPR F, March 21, :00 noon Baker 2 nd floor MCC MPR F, April 4, :00 noon Baker 2 nd floor MCC MPR F, April 18, :00 noon Baker 2 nd floor MCC MPR