Budget and Financial Planning at UMass Boston. Presentation to: Faculty Council February 7, 2011

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1 Budget and Financial Planning at UMass Boston Presentation to: Faculty Council February 7, 2011

2 Three Year Investment Scenario

3 Investments in UMass Boston: New Resources in Recent Operating Budgets Through its operating budget, UMass Boston has invested nearly $46M of new resources over past 3 years, including $19.2M in FY11. FY09 FY10 FY11 $ $ $ Chancellor's Office 1 $450,000 $0 $0 Academic Affairs 2 $4,247,552 $4,584,708 $5,839,326 A&F $943,500 $300,000 $1,126,284 Athletics & Recreation $350,000 $0 $323,303 Enrollment Mgt $45,000 $0 $84,480 Govt Rels & Pub Affairs $246,000 $385,000 $265,000 Student Affairs $550,000 $0 $273,665 University Advancement $300,000 $170,000 $173,518 Central 3 $3,694,000 $10,368,897 $11,154,758 TOTAL NEW RESOURCES $10,826,052 $15,808,605 $19,240,334 NOTES: $ amounts are annualized 1 $450,000 of FY09 new resources in Chancellor s Office represent one time campus wide initiatives and were allocated to other units. 2 Includes new faculty hires 3 Includes financial aid, debt service, annualization of prior year s decisions, and reserves 3

4 Breakout of New Resources for Academic Affairs and Central Academic Affairs FY09 FY10 FY11 $ $ $ CNHS $67,000 $50,000 $100,000 CM $150,000 $25,000 $80,000 CPCS $0 $0 $25,000 CSM $147,000 $0 $127,000 CLA $298,767 $41,535 $161,550 CEHD $90,285 $21,000 $0 MGS $15,000 $13,500 $30,000 CCDE 1 $0 $0 $1,845,460 New Faculty Hires $1,800,000 $1,400,000 $1,547,745 AEP (add'l sections, TAs) $500,000 $1,138,897 $1,089,023 All Other Ac Affairs $1,179,500 $1,894,776 $833,548 Total Academic Affairs $4,247,552 $4,584,708 $5,839,326 Central FY09 FY10 FY11 $ $ $ Financial Aid & Waivers $1,615,000 $2,100,000 $4,500,000 Debt Service $1,400,000 $2,000,000 $2,000,000 Grad Asstships $229,000 $268,897 $254,758 Upgrades & Reallocs $450,000 $0 $0 Non Unit/0.5% Barg Inc $700,000 Annual New FY10 Positions $1,000,000 Increase in Fringe Rate $1,100,000 Annual Op'g Exps/Inflation $1,000,000 Bayside $600,000 Reserves $6,000,000 Total Central $3,694,000 $10,368,897 $11,154, Resource allocation decisions for CCDE occurred outside of operating budget process in FY09 and FY10

5 Cost per Student Using IPEDS Methodology, with Comparison to Revenue per Student Cost per IFTE decreased from FY07 FY10 as result of enrollment growth exceeding rate of increase in expenses 5 1 Excludes Auxiliary Enterprises expenses FY07 FY08 FY09 FY10 IFTEs 9,250 10,333 10,903 11,523 EXPENSES (in $ millions) IPEDS Defined Core Op'g Exps 1 $243.2 $253.9 $251.4 $263.5 Auxiliary Enterprises $8.0 $8.0 $8.1 $8.3 Total Op'g Exps $251.2 $261.9 $259.5 $271.8 REVENUE (in $ millions) Tuition & Fees $86.4 $96.3 $106.5 $115.5 State Appropriaton $100.8 $109.3 $93.2 $71.7 Federal Stimulus $0.0 $0.0 $0.0 $25.6 Other Rev Excluding Auxiliaries $62.8 $60.1 $61.3 $79.0 Total Rev Excluding Auxiliaries $250.1 $265.7 $260.9 $291.8 Auxiliary Revenue $8.8 $9.0 $9.4 $10.1 Total Operating Revenue $258.8 $274.7 $270.4 $301.9 EXPENSE AND REVENUE PER IFTE ROUNDED TO NEAREST $100 IPEDS Defined Core Operating Expenses/IFTE $26,300 $24,600 $23,100 $22,900 Exps Including Auxilaries/IFTE $27,200 $25,300 $23,800 $23,600 Student Revenue/IFTE $9,300 $9,300 $9,800 $10,000 Tot Revenue Excluding Auxiliaries/IFTE $27,000 $25,700 $23,900 $25,300 Total Operating Revenue/IFTE $28,000 $26,600 $24,800 $26,200 Tot Operating Rev Excluding Fed Stim/IFTE $24,000

6 Future Year Forecasts

7 Outlook for Future Multi year modeling done for 12/8/10 Board of Trustees meeting using assumptions provided by President s Office illustrates future financial challenges (in millions of dollars) PROJECTION FY2011 Bud FY2012 FY2013 FY2014 FY2015 ENROLLMENT 15,454 16,072 16,715 17,384 18,079 REVENUES Operating Revenues Tuition and Fees $134.9 $145.1 $156.7 $170.0 $184.5 State Appropriations $75.2 $75.9 $76.7 $80.8 $85.1 Federal Stimulus Money $6.5 $0.0 $0.0 $0.0 $0.0 Grants & Contracts. Gifts & Endowment $82.8 $88.2 $93.5 $99.7 $106.1 Sales & Service, Educational $3.0 $3.1 $3.2 $3.3 $3.5 Auxiliary Enterprises $10.2 $10.6 $11.0 $11.4 $11.9 Other Operating Revenues $2.8 $4.7 $5.0 $4.4 $3.4 Total Operating Revenues $315.4 $327.6 $346.1 $369.6 $394.5 EXPENSES Operating Expenses Educational and General $278.7 $303.2 $325.4 $357.8 $383.2 Auxiliary Enterprises $9.8 $10.1 $10.5 $10.8 $11.2 Depreciation $15.6 $16.1 $23.2 $26.9 $27.4 Interest Expense $10.5 $14.7 $16.4 $18.7 $18.7 Total Operating Expenses $314.6 $344.1 $375.5 $414.2 $440.5 OPERATING INCOME/(LOSS) $0.8 ($16.5) ($29.4) ($44.6) ($46.0) 7

8 Multi Year Modeling: Key Drivers of FY12 FY15 Projections Key assumptions: Model incorporates no major revenue enhancements, cost reductions or expense reallocations in FY12 FY15 4% annual increase in enrollment Revenue Assumptions 3% annual increase in student fees & retained tuition for outof state students beginning in FY12 State appropriation increases 1 2% annually, with state funding collective bargaining increases in FY11 and FY14 and FY15, but not in FY12 and FY13 No federal stimulus money after FY11 8

9 Multi Year Modeling: Key Drivers of FY12 FY15 Projections (cont d) Expense Assumptions Includes expenses related to strategic goals, including 4% annual enrollment growth New tenure stream faculty Additional financial aid related both to enrollment growth and 3% fee increase Unspecified strategic initiatives Collective bargaining increases Opening of new academic and research buildings 3% general inflation and 1% annual increase in fringe benefit rate 9

10 Solving the Financial Problem

11 Solving the Problem Options Revenue Options: High fee High Aid Reconcile University College and State Tuition and Fees Use of grant overhead/overhead charged Use of reserves Other Concerns: Loss of ARRA Decrease in State Appropriation Collective Bargaining Supplements 11

12 Appendix

13 FY10 Operating Revenue by Source FY10 Operating Revenue totaled $301.9M, increase of $31.5M (11.6%) compared to FY09. 3 largest FY10 revenue sources were Student Revenue, State Appropriation, and Grants & Contracts. $ % $ % $ % $ % $ % $ % $ % $ % $ % State Appropriation Federal Stimulus $ Tuition & Fees Grants & Contracts Auxiliary Services Gifts Invests & Endow Ed'l Sales & Srv Other State Appropriation and Federal Stimulus Funding combined accounted for 32.3% of FY10 operating revenue. In $ millions 13

14 Understanding FY10 Operating Revenue Categories 14 State Appropriation: Grossed up to include value of fringe benefits paid by state; net of tuition remitted to state. Federal Stimulus Funds: Non recurring federal funds that UMass Boston used for personnel expenses. Tuition & Fees: Charged assessed to students for educational purposes, net of student aid that is applied to tuition and fees, rebates, refunds and bad debt. Grants & Contracts: Includes sponsored research and program revenue, and externally funded financial aid. Auxiliary Services: Revenue generated by non academic operations that furnish services to students, faculty, staff and others and that charge fee for those services, (e.g., Campus Center rental revenue, contracts for Food Services and Bookstore, etc). Gifts: Revenue received from private donors. Investment & Endowment Returns: Revenue from interest, dividend, rental or royalty income; income from endowments or similar funds. Educational Sales & Services: Revenue from educational activities that are related incidentally to conduct of instruction, research and public service (e.g., payment for departmental work for CCED, revenue from running workshops, selling publications). Other: Miscellaneous revenue not included in above categories.

15 In FY10, Federal Stimulus Funds Helped To Offset Additional Loss of State Support. 100% 90% 80% 70% 60% 50% 40% 30% Other Rev Auxiliary Rev Fed Stimulus Grants & Contracts Tuition & Fees State Approp 20% 10% 0% FY85 FY90 FY95 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY85 FY90 FY95 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10F Tot Rev $ 66.6 $ 93.5 $ $ $ $ $ $ $ $ $ $ $ $

16 FY10 Operating Expenses by NACUBO Category FY10 Operating Expenses totaled $271.8M, increase of $12.3M (7.8%) compared to FY09. $ % $ % $ % $ % $ % $ % $ % $ % $ % 16 $ % In $ millions

17 Understanding FY10 NACUBO Expense Categories Instruction: Activities directly related to teaching, including faculty salaries and benefits, administration of academic departments, and proportion of faculty salaries going to departmental research and public service. Research: Expenses for sponsored or organized research. Public Service: Activities that provide non instructional services to external groups. Academic Support: Activities that support instruction, research and public service, ranging from libraries to academic computing to dean s offices. Student Services: Non instructional student related activities, including enrollment management, student organizations, and intramural athletics. Institutional Support: Expenses for central, executive level and administrative activities. Operation & Maintenance of Plant: Includes cost of service maintenance of physical plant and grounds, utilities and property insurance. Depreciation & Amortization: Non cash accounting transactions that record loss of value in long term assets. Scholarships & Fellowships: Cost of residual student aid after financial aid is applied to tuition and auxiliaries. Auxiliary Services: Expense of user fee activities that do not receive general support from university. 17

18 FY10 Operating Expenses by Natural Classification Personnel accounted for 65% of UMass Boston s FY10 expenses. $ % $ % $ % $ % $ % $ % $ % 18