Budget and Planning Update February 14, 2001 8:30

Budget and Planning Update February 14, 2001 8:30

Budget and Planning Update February 14, 2001 8:30 10:00 AM David K. Scott, Chancellor University of Massachusetts Amherst 374 Whitmore Administration Building Amherst, MA 01003 413-545-2211 [email protected] Agenda Meeting to discuss next steps: March 13, 2001, 8:30 10:00 AM Campus Center Auditorium 8:30 AM Welcome 8:35 8:50 Background 8:50 9:30 Financial Projections FY02 and FY 03 9:30 10:00 Questions 2 Budget and Planning Update Agenda Background Strategic Action FY96-01 was designed to identify key areas for investment and to realize funds for those investments through new revenues and planned reallocation and restructuring of the base budget. For further information, please see: Strategic Action -Towards a Commonwealth of Learning - A Six Year Retrospective FY 1996-2001 http://www.umass.edu/chancellor/vision In addition, a variety of investments were made in the long-neglected campus infrastructure, in financial aid to increase access, in information technology to maintain competitive advantage and in other major programmatic initiatives. The overall institutional budget has not been reduced and we do not anticipate reductions in the near future. While the state appropriation to the campus has increased on average 5.8% per year over the past five fiscal years, it is unlikely to do so in the immediate future. Budget and Planning Update 3 Background Revenue Factors Leading to Ongoing Need for Reallocation and Restructuring The state appropriation to the campus has increased an average of 5.8 percent over the past five fiscal years. The anticipated increase for FY02 is 3.5 percent. The anticipated increase for FY03 is 3 percent. Fees have been held level or have been increased minimally in past six years. While some increases are expected in overhead from grants and other activities, no major increases are expected from distance learning or licensing/patents in the next several years, beyond the initial investment needs. Continued increases in private fund-raising are expected, but much of this revenue is earmarked to specific areas or projects and, as such, will not help address the shortfall for at least several years. 4 Budget and Planning Update Revenue-based Factors UMA State Appropriations Projection UMass Amherst State Appropriations Projection (in $ millions) Based on History of State Tax Revenues and UMass Amherst Appropriations Includes all state appropriations Base INCREASE

Salary Other FY2000 FY99 FY98 FY97 FY96 FY95 5.2 5.6 4.9 4.9 3.2 0.0 4.6 9.7 8.9 6.3 4.9 7.6 UMASS STATE % state 6-YR %Amherst 6-YR Compare TOTAL AMHERST TAX REV change AVG change AVG UMA w/State 9.8 15.3 13.8 11.2 8.1 7.6 228.8 219.1 203.8 190.0 178.8 170.7 15,688 14,291 14,026 12,861 12,050 11,165 FY89 - FY94 FY83 - FY88 FY77 - FY82 9.8% 1.9% 9.1% 6.7% 7.9% 5.3% 6.8% 4.4% 10.3% 9.9% 4.5%

7.5% 7.2% 6.3% 4.7% 4.7% 5.8% -1.0% -0.9% 9.8% 7.3% -5.3% -0.5% -2.6% 5 Budget and Planning Update State Appropriations State Tax Revenue and UMA State Appropriation Estimated Change in Tax Revenue - FY2002 Governors Office 3.5% Massachusetts Tax Payers Association 0 to 2% UMass Presidents Office 3.5% 14% 12% P e r 10% c e n t 8% I n c r e a s e $30 State Tax Revenue UMA State Appropriation Salary Expenditures Other Expenditures $25 $20 $15 6% $10 4% A p p r o x . M i l l i o n s $5 2% U G MU M O TM P

V FA O 0% FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 $- FY 02 Projection 6 Budget and Planning Update State Appropriations General Operations Budget BASE REVENUE Sources and Uses FY01 to FY03 3.5% State increase= 3.0% FY01 FY02 FY03 289,070 303,678 313,882 12,658 8,081 7,169 900 923 978 1,050 1,200 1,000 303,678 313,882 323,029 292,443 306,845 313,882 INCREASE IN BASE REVENUE State Appropriation (3.5%,3% in FY02,FY03 ) Research Indirect Recovery (6%) Curriculum Fee/ other TOTAL BASE REVENUE BASE USES INCREASE IN BASE USES Major Initiatives

Athletics 354 Programmatic 1,682 Waiver Loss 1,130 Tech Administrative Systems 1,443 2,500 1,300 Infra General Operations share of capital plan 1,200 1,300 1,800 Cost of new space Fin Aid Need/Merit Salary * Increase Academic VC Research:Faculty start up; matching funds and * FY01 and FY02 salary increases (COLA/Merit): Includes annualization from prior year 475 960 250 10,144 9,200 7,250 1,520 1,877 593 Research investment Other Utilities Central Univ Assessment & mandatory increases TOTAL BEFORE RESTRUCTURING RESTRUCTURING TOTAL BASE USES Net (use one-time funds) 300 150 1,542 982 1,000 309,606 325,816 326,700

(2,761) (11,934) (3,671) 306,845 313,882 323,029 (3,167) ? ? Financial Projections FY02 and FY03 Estimated Combined FY02 and FY03 Shortfall -15,605 (In Thousands) Steps Taken Executive area reductions 5,667 Academic Affairs - $2.4M/1.5% Other Areas, except UA - $3.2M/5.0% Increase Administrative Overhead Rate Steps Under Consideration 600 3,507 Financial Aid, Athletics, charging curriculum fee waivers to grants and contracts, University Advancement Total Reductions Remaining Shortfall 9,774 -5,831 Other Possible Actions Elimination of President's Reserve Athletic Waiver Reinstatement Budget and Planning Update 1,000 1,130 8 Proposed Reallocations Summary Key points It is anticipated the overall state allocations will increase by smaller percentages in FY02 and FY03 than in preceding five years. Currently, the approximate shortfall for FY02 and FY03 is $15M. A more precise number will be known in late spring. Over the course of FY02 and FY03, the reallocation for Academic Affairs will be $2.4M/1.5% and for other executive areas* it will be $3.2M/5.0%. It is possible that the percentages will be increased in FY03 depending on state appropriations and other factors. *University Advancement still under review 9 Budget and Planning Update Summary Fiscal Management Summary 10 Year Financial Plan FY2001 to FY2010 Financial Plan New Base Revenue Sources New Base Uses These Uses Will: (In Millions)

11.4 RTF Research Overhead 3.0 Fundraising Tax 7.6 Entrepreneurial 3.1 Athletic IA programs 16.1 Lifelong Learning 18.5 Student Fee Increases 82.4 State (3.0% inc) 45.8 State Special Ask Over Nine Years 63.5 Restructuring 4.9 Fund Balance Raise financial cushion to 12% Faculty renewal and Living and Learning Invest in curriculum, advising, faculty renewal and five departments to rankings 8.1 Library Increase ARL ranking from 87 to 50 1.6 Athletics Maintain current program thru FY04 5.5 Technology Fund PeopleSoft implementation and instructional technologies Support new revenue activities 13.3 16.1 Cost of new activities 127.5 Salary/ other inflation 42.8 Infrastructure 8.3 Financial Aid 20.0 3.3 251.3 Total New Revenues

251.3 Research support Fund inflationary and mandated cost increases Fund the general operations share of capital plan Maintain current level of met need for in-state students Support 6% / yr growth in awards Address FY01 deficit Total New Uses 10 Budget and Planning Update Summary 10 Year Plan Key Performance Indicators Strategic Action Reference Point 1994 1996 1997 1998 1999 2000 2001 FY96-01 Change Enrollment (including Continuting Education) Undergraduate Graduate Total 19,164 6,103 25,267 19,467 5,955 25,422 19,065 5,819 24,884 18,752 5,793 24,545 19,372 5,659 25,031 19,061 5,355 24,416 -0.5% -12.3% -3.4% 18,375 5,859 24,234 ALANA % First-Year Undergraduate 17.2% 14.8% 20.7% 16.3% 20.8%

17.3% 19.1% 17.8% 16.8% 17.8% 16.7% 17.3% -0.5 pts. +2.5 pts. 15.3% 12.6% Academic Indicators of First-Year Students One-Year Retention Acceptance Rate Honors Students/Commonwealth College 77.0% 78.5% 1,245 78.3% 74.4% 1,510 79.3% 73.0% 1,642 79.4% 74.5% 1,805 80.6% 68.9% 2,227 83.6% 67.3% 2,479 +6.6 pts. -11.2 pts. 99.1% 76.6% 86.0% 701 -5.5% $5,467 Fiscal Year Ugrad In-State Tuition & Fees Consumer Price Index (CPI) Index (FY 1996=100) Change Higher Education Price Index Index (FY 1996=100) Change Financial (in thousands) Total Operating Budget (Revenues) State Appropriation Financial Aid as % of General Operations Budget Sponsored Activities Financial Cushion Campaign UMass Library Acquisitions Expenditures Employees Faculty Tenure System Non-Tenure System Staff Graduate Assistants Total Salaries of Full-Time Employess Faculty Salary Increases - % Average Faculty Salary Professional Staff Salary Increases - % Average Professional Staff Salary Classified Staff Salary Increases - % Average Classified Staff Salary Campus Network Ports (Internet) $5,514

$5,413 $5,329 $5,229 $5,212 $5,212 100.0 2.7% 102.9 2.9% 104.8 1.8% 106.5 1.7% 109.5 2.8% - 9.5% 2.3% 100.0 3.0% 103.0 3.0% 106.6 3.5% 110.3 3.5% 114.4 3.7% - 14.4% 3.4% $473,405 $170,937 5.1% $69,500 12.8% $16,400 $492,740 $182,200 4.9% $69,500 11.8% $26,700 $511,345 $196,707 5.7% $72,100 11.9% $23,100 $526,916 $211,245 6.4% $75,800 12.2% $23,900 $555,102 $219,826 7%* $79,300* 12.4% $19,800 $557,893* $232,219* 6.8%* $90,000

$24,000* 17.8% 35.9% +1.7 pts. 29.4% $133,900** $428,391 $156,437 4.5% $57,200 7.8% - $4,108 $4,434 $4,269 $4,541 $5,272 - - $3,327 1,364 1,070 294 3,897 2,615 7,876 1,391 1,058 333 3,919 2,591 7,901 1,393 1,065 328 3,956 2,633 7,982 1,395 1,038 357 4,079 2,614 8,088 1,454 1,048 406 4,098 2,650 8,202 1,431 1,032 399 4,046 2,543 8,020 +67 -38 +105 +149 -72 +144 1,390 1,101 289 3,939 2,539 7,868 $60,275 $40,840 $23,901 6.5%

$64,195 7.5% $43,917 5.5% $25,207 5.2% $67,546 5.4% $46,274 1.9% $25,682 -1.0% $66,894 -0.8% $45,901 3.5% $26,574 4.5% $69,902 3.0% $47,287 6.2% $28,224 6.8% $74,658 7.7% $50,912 4.3% $29,430 23.9% 24.7% 23.1% $60,680 $41,172 $23,918 2,100 3,321 5,148 3,554 5,887 3,363 20,010** - * Projected or preliminary. ** Cumulative Includes faculty with administrative (e.g., Associate Deans) and research responsibilities; includes part-time faculty; excludes faculty on leave without pay. Decreases are likely due to retired employees being replaced by new hires at junior level. Annual increases fluctuate due to delayed increases and, among classified staff, step raises. Excludes Executive, Administrative, and Managerial positions. Change in Resources and Investments FY 1996 - 2001 $120 $100 Reallocation - $11.6M Restructuring - $15.5M Program Investments $11.6M Info Technology - $8.9M Infrastructure - $8.7M $80 One-time Strategies - $3.1M) Millions Other Revenue - $11.0M Major Initiatives - $13.0M Financial Aid - $8.8M $60 $40

Development / Athletics - $2.6M State Appropriation $67.0M Central / Mandated $11.3M Salary Increases - $43.3M $20 $0 Change in Resources ($108.2M) Change in Investments ($108.2M) 12 Budget and Planning Update APPENDIX Financial Model Options Ex. 1 - Current funding Ex. 2 - Maintain FCI Ex. 3 - Reduce FCI to .10 $80,000,000 FCI = = Annual Funding $60,000,000 = total cost of existing deficiencies current replacement value 0.35 0.25 at UMass Amherst 0.30 $ 431 million $ 1.69 billion $50,000,000 0.25 $40,000,000 0.20 $30,000,000 0.15 $20,000,000 0.10 $10,000,000 0.05 $0 0.00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Fiscal Year Budget and Planning Update APPENDIX Facility Condition Index (FCI) $70,000,000 0.40 13

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