boards’ fiduciary obligations: building budgets while ... · other state agencies in managing...
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Boards’ Fiduciary Obligations: Building Budgets while Balancing Priorities,
Needs and Realities
SCHEV Orientation for New Board of Visitors’ Members October 25, 2017
Michael Maul, Associate Director Virginia Department of Planning and Budget (DPB)
2016-2018 Budget: Nongeneral fund vs. General fund
General Fund 38.1% Nongeneral
Funds 61.9%
The General Fund (38.1%) From income and sales taxes paid by citizens and
businesses Can be used for a variety of government programs Governor and General Assembly have the most
discretion
Nongeneral Funds (61.9%) Receipts set aside for specific purposes:
• motor vehicle and gas taxes for transportation programs
• student tuition and fees for higher education • federal grants for specific activities
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General Fund revenues for 2016-2018 Economic trends are important because employment, wage gains, and consumer spending account for 92.1 percent of all general fund revenues: 2016-2018 general fund revenues = $37.8 billion
Data from Chapter 836, 2017 Appropriation Act, does not include transfers or balances.
Individual income tax 69.3 %
Sales & use taxes 18.3%
Corporate income tax 4.6%
Other taxes & revenue 7.8%
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Where the state operating money goes-
General Fund 2016-2018
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
39.2% $11.8 B: K-12
$3.9 B: HE
31.1% $9.2 B: Medicaid
12.8% $2.3 B:
Corrections
11.0% $1.9 B: Car Tax
3.8% 1.2% 0.7% 0.2%
Education Health & Human Resources
Other (e.g.,Legis., Judicial,central accounts)
Government (Administration Finance, Technology)
Public Safety, Homeland Security, Vets
Natural Resources
Commerce and Trade/Agriculture
Transportation
Over two-thirds of the General Fund goes to localities and individuals
Aid to individuals 24%
Debt Service 4%
State Programs 28%
Public Education 68%
Car Tax 14%
Local Sheriffs 6%
Other Aid to Localities 13%
Aid to Localities 45%
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DPB’s role:
Increases/decreases in available revenues
Efficiency, effectiveness and economy
Continuing need for programs and agencies
Reconcile agency requests with Governor's priorities
Performance
BUDGET IS A ZERO-SUM GAME: COMPETING DEMANDS MUST BE BALANCED
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Budgetary authorization for higher education involves several major programs Educational and General (E&G)
General fund (GF) and nongeneral fund (NGF) sources (tuition and fee revenue)
Student Financial Assistance General fund and nongeneral fund (federal assistance and tuition
revenue) Sponsored Programs (Research)
General fund and nongeneral fund (federal and private grants) Institution specific initiatives
Auxiliary Enterprises Nongeneral fund only (self-supporting activities such as residential
facilities, dining halls, and parking)
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Support for educational and general is a shared cost
Institution GF Share NGF Share
Richard Bland College 65% 35%
Virginia Community College System 63% 37%
Longwood University 62% 38%
Radford University 62% 38%
Christopher Newport University 60% 40%
University of Virginia at Wise 60% 40%
University of Mary Washington 60% 40%
Old Dominion University 56% 44%
Norfolk State University 55% 45%
George Mason University 50% 50%
Virginia Commonwealth University 49% 51%
James Madison University 49% 51%
Virginia State University 48% 52%
Virginia Military Institute 40% 60%
College of William and Mary 40% 60%
Virginia Tech 39% 61%
University of Virginia 35% 65%
Source: SCHEV
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Both E&G support and FTE students have grown since 2000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
Num
ber o
f Stu
dent
s (F
TE)
Billi
ons
E&G FTE
Notes: Data includes E&G appropriation for 17 institutions, VIMS and extension services. FY 2010-11 includes SFSF appropriation.
Average Funding per FTE Student at Four-Year Institutions (in 2016-17 Constant Dollars)
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Tuition increases surpass inflation in good times and bad
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21.5
19.3
10.5
8.2 9.9
6.3 6.5 5.1
13.1
9.7
4.5 5.1
6.7 7.1
4.6 5.4
2.9 2.2 3
3.8
2.6 3.7
1.4 1 2
2.9 1.7 1.6
0.7 0.7 1.8 2
0
5
10
15
20
25
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Average Percent Change in Annual Tuition and E&G Fees vs Inflation
change in tuition and fees (%) Inflation (%)
Observations
Higher education institutions given more latitude than other state agencies in managing their operations Increased coordination and cooperation is happening
between institutions, but even more is needed given limited resources Most cost savings/efficiency actions have been on the
administrative side of institution operations, while the greatest costs are incurred by the academy
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Possible efficiencies to slow cost growth
Academy Minimize duplication/enhance coordination of programs and
courses between institutions Utilize technology for introductory courses Encourage open source textbooks/materials for classes Stop centers that are not self-supporting
Administrative Institutions sharing automated systems Centralize instead of decentralize administrative functions
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Funding challenges include: Variability of state support Diversity between institutions Relying more on tuition and fees (access) Reductions disproportionate to state support Ability to raise tuition
How much is needed; should we limit the increases? Financial need of student population
Are we increasing access? Balancing in-state and out-of-state students Getting high productivity from our investments
Should we link funding to outcomes?