Budget Road MapDecember 2009

Approach

•How much state reduction and how soon?

•How much of that amount can be mitigated with revenue growth and how soon?

•Difference is what we need to approach via expense reductions.

Current Multiyear Fiscal Planning Scenario “Old Plan”

Current Multiyear Fiscal Planning Scenario “Good”

Current Multiyear Fiscal Planning Scenario “Not So Good”

Fiscal Year 2008 2009 2009 2010 2010 2010 2011 2012

      (Revised)   (1st Revision) (2nd Revision)    

State 118 130 100 100 84 55 100 ???

ARRA 0 0 30 30 46 75 20 0

Avoid this situation:“Not So Good” Outcome w/out Preparation –Severe, Rapid Expense Reduction

•We would need to adapt to the negative situation in which we would find ourselves – being unsatisfied with unpalatable choices (even historically unacceptable choices) would not excuse a lack of action

•Many of the choices we would need to consider to emerge financially viable from such a fiscal crisis might, in a variety of ways, be harmful to parts of our university community – but our primary responsibility would be to emerge with a financially viable university that maintained as much quality as possible in our academic programs

Assumptions – Mission/Vision:under any circumstances, what guides us?

•As a Land Grant University committed to public access,we need to try to keep tuition increases limited (affordability)

•As a Land Grant University, we need to maintain quality and excellence so that we are offering access to some of the best education available in the world

•The two above assumptions will conflict and we will need tobalance them

Assumptions – Fiscal

•FY11– 9% Tuition increase for resident undergraduates will be

available to us in FY11– Our non-resident undergraduate tuition is near the top of the

market but VPEA should advise us on setting this rate– Graduate tuition has minimal fiscal impact and

recommendations should be formulated by VPGA

•FY12– If there are additional declines in state support, there will be a

loosening of tuition controls

• Affordability Paradox• Access to Quality Balance

• Affordability Paradox• Access to Quality Balance

Fiscal Assumption Implications:Revenue Growth

•Enrollment incentives for FY11

•Options for major changes in tuition approach for FY12

• By program• Credit hour gap closure to 12• “simplification”• Linked to enrollment incentives

Fiscal Assumption Implications:Expense Reduction

•Salary reduction?•Furlough?•Suspend employer retirement contribution?•Cuts

•Level needed?

"Governor’s Budget"

FY08 FY09 FY10 FY11 FY12

Expenses 118 130 125 115 115

Cuts 0 0 5 10 0

Resources 118 130 130 133 120

State 118 100 55 100 100

New net tuition 5 15

Previous new base tuition 5

Base revenue subtotal 118 100 55 105 120

ARRA 0 30 75 18 0

Furloughs (1X)

FRCR Reserve (1X) 10 0

Institutional Reserve (1X)

1X Subtotal 0 30 75 28 0

FRC Reserve (end of year) 10 23 28

"$80M"

FY08 FY09 FY10 FY11 FY12

Expenses 118 130 125 115 100

Cuts 0 0 5 10 15

Resources 118 130 130 115 100

State 118 100 55 100 80

New net tuition 5 15

Previous new base tuition 5

Base revenue subtotal 118 100 55 105 100

ARRA 0 30 75 0 0

Furloughs (1X)          

FRCR Reserve (1X) 10 0

Institutional Reserve (1X)          

1X Subtotal 0 30 75 10 0

FRC Reserve (end of year) 10 5 10

Tentative Approach•Target $10M FY11 cut while holding mandatory coststo a bare minimum

– Positions well for Governor’s model or worse;adequate for more negative models

•November 31 report from Committees on enrollment incentives and FY12 tuition options

– Categorization of Recommendations• Model for implementation• Hold for future reference• Not supported

•P&B Hearings – January (post-December state revenue forecast)