2014/15 Educational and General Budget

Board of GovernorsFinance, Administration, and Facilities Committee

October 16, 2013

Total Budget$2,183.7

Educational and General$1,562.4

Auxiliary$327.9

Restricted$293.4

2013/14 Total BudgetDollars In Millions

Appropriation$412.8

26%

Tuition and Fees$1,019.7

65%All Other

$129.98%

2013/14 E&G Revenue and SourcesDollars In Millions

E&G Budget$1,562.4

Capital/Transfers$1067%

Salaries & Wages$79651%

Benefits$35322%

All Other “Operating”

$30720%

2013/14 E&G Expenditures and UsesDollars In Millions

E&G Expenditures: $1,562

2014/15 Revenue Assumptions

•Enrollment Expectations2014/15 enrollment estimates should be consistent with university’s enrollment trends.

•RevenueState Appropriations – no changeTuition – no rate change; adjust for enrollmentUse of Carryforward – for one-time purposes

or as a transitional step toward structural changes.

AgendaEnrollment ProjectionsAnnualized Full-time Equivalent

5,801 or

5.2% less than

10/11

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/1580,000

85,000

90,000

95,000

100,000

105,000

110,000

115,000

120,000

103,359105,566

109,637112,030

109,741106,975

104,587 103,814

PASSHE Full-time Equivalent Enrollment

7.3% less than10/11

AgendaPercent Change in High School Graduates 2008/09 and 2019/20

5,801 or

5.2% less than

10/11

<-15 -5 0 +5 >+15 Source: WICHE, Knocking at the College Door

2014/15 Cost Drivers

Expenditure CategoriesPercent Increase

$ in Millions

Salary Adjustments* 3.1% $23.9Employee and Annuitant Health Care* 7.0%** 12.6Retirement* 21.4% 18.2 PSERS and SERS Rate Changes Only* 29.5% 13.2Consumer Price Index 3.0%

*Estimated cost of required adjustments based on a static complement. **Varies by health care program.

Projected Retirement Costs20

02/0

320

03/0

420

04/0

520

05/0

620

06/0

720

07/0

820

08/0

920

09/1

020

10/1

120

11/1

220

12/1

320

13/1

420

14/1

520

15/1

620

16/1

720

17/1

820

18/1

920

19/2

020

20/2

120

21/2

2

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

ARP SERS PSERS

32%

27% SERS Rates as % of Salary

2013/14 15.1%2014/15 20.0%2017/18 31.6%

Personnel Complement

• 135 faculty and coaches participated in the Voluntary Retirement Incentive Program

• Some universities are in the process of developing workforce reduction plans that are not reflected above

• PASSHE has 544 fewer permanent employees today than in Fall 2008 192 fewer permanent faculty 352 fewer permanent nonfaculty

E&G FTE Employees 2012/13 2013/14 Change % 2014/15 Change %Faculty 5,362 5,301 (61) -1.1% 5,286 (15) -0.3%Nonfaculty 5,753 5,751 (2) -0.2% 5,754 5 0.1%Total 11,115 11,052 (63) -0.6% 11,040 (10) -0.1%

Expenditure estimates also include the net effect of realignment efforts, which include the following two components: • Reducing/eliminating under-utilized

programs and services• Expanding and/or creating relevant,

high-need programs Includes up-front, transitional,

nonrecurring costs

Restructuring and Realignment

2014/15 E&G BudgetRevenue/Sources FY 2013/14 % Change FY 2014/15 $ Change % ChangeTuition $839.1 0.6% $835.2 ($3.9) -0.5%Fees 180.7 0.6% 180.1 (0.6) -0.3%State Appropriation 412.8 0.0% 412.8 0.0 0.0%All Other Revenue 70.8 -4.2% 69.7 (1.1) -1.6%Use of Carryforward 59.1 557.7% 47.5 (11.6) -19.7%Total Revenue/Sources $1,562.4 3.5% $1,545.2 ($17.2) -1.1%

Expenditures and TransfersCompensation Summary:

Salaries & Wages $795.6 2.3% $822.7 $27.1 3.4%Benefits 353.2 11.6% 384.4 31.2 8.8%

Subtotal, Compensation $1,148.8 5.0% $1,207.1 $58.3 5.1%Noncompensation Summary:Utilities 34.1 3.5% 34.5 0.4 1.3%Services & Supplies 273.2 4.7% 278.4 5.2 1.9%Capital Expenditures & Transfers 106.4 -14.3% 93.8 (12.6) -11.8%

Subtotal, Noncompensation $413.6 -1.0% $406.7 ($6.9) -1.7%Total Expenditures and Transfers $1,562.4 3.3% $1,613.9 $51.5 3.3%

Revenue/Sources less Expenditures/Transfers $0.0 ($68.7)

Excluding One-Time Sources* ($56.0)

Tuition, Fees$1,015.2

Funding Requirement$68.7

*Includes other miscellaneous revenue, and use of carryforward.Note: Numbers may not add due to rounding.

$ in Millions

Appropriation$412.8

2014/15 E&G Budget $ in Millions

E&G Budget: $1,613.9

Other$117.2

Line Item History

Year Line Items Amount2011/12 All line items eliminated2010/11

and2009/10

Programs InitiativesDiversity and Equal OpportunityMcKeever Environment Learning CenterPA Ctr. For Environment Education

Total Line Items

$18.51.60.2

0.4$20.7

Note: Line Items were funded at similar levels in fiscal years 2000/01 – 2008/09.

Possible Line Item Proposal

Align academic program offerings to current and emerging high priority occupations across the Commonwealth that will provide employment opportunities for graduates to remain in Pennsylvania and contribute to the economic, social and cultural vitality of their region.

Possible Line Item ProposalBenefit

• Provide seed money for the expansion and development of programs that are critical to the economic vitality of the Commonwealth.

• Support flexible curriculum design utilizing various delivery methods to attract, retain and graduate traditional and nontraditional students in these key programs.

• Increase the availability of an educated work force that aligns with Commonwealth’s critical-need jobs.

• One-time funding commitment.

Board Action Items

Approval of University E&G Budgets• Page 19 of meeting materials

Approval of Appropriation Request• Page 43 of meeting materials

Need Request$0

$10

$20

$30

$40

$50

$60

$70

Expenditure Increase

$51.54% E&G

Appropriation$16.5

Assume Tuition Increase

Similar to CPI$27.3

Line Item*$18.0

One-Time Sources $12.7

Enrollment $4.5Nonrecurring

Recurring

*Line Item request to provide seed money for aligning academic program offerings with high priority occupations across the Commonwealth.

2014/15 Budget Request Strategy($ in Millions)

2014/15 Appropriation Request Proposal

Appropriation AmountE&G Appropriation $429.3

Increase of $16.5 million or 4.0%Line Item $18.0

High Priority Occupations

To submit a balanced budget, assume a tuition increase similar to the projected CPI.