2019-21 Budget Planning

December 2018

1

National Higher Ed Environment

• Demographics- fewer traditional age students

• Value, affordability, student debt

• Consolidations

• Mergers and acquisitions

• For profit sector

• Delivery models continue to change

• Moody’s Investor Service sector outlook

2

Moody’s US Higher Education Outlook – Dec 2017

• Higher education sector outlook moved from stable to negative for ensuing

12-18 months

• Growth will slow for most revenue streams- tuition and state appropriations

• The rate of expense growth will outpace softening revenue growth (labor,

facilities and technology)– Revenue growth expected to soften to about 3.5% and will not keep pace with expense

growth

– Sector wide revenue growth is projected to decline to below 3% for the outlook period

• Uncertainty at federal level- policy and funding

• Solid financial reserves add a stabilizing element

• Affordability concerns and limited enrollment growth lead to only modest

increases in net tuition revenue

• Public universities will have lower growth in net tuition revenue, 2-3%, as

they face increasing political constraints, including state limits on raising

tuition

3

Moody’s US Higher Education Outlook – Dec 2017

• Expect modest sector-wide enrollment growth over the outlook period.

– Decrease demographically

– Increase participation rates

– Increase retention

• What could change the outlook

– Aggregate operating revenue growth of at least 3% and above expense growth,

coupled with ongoing solid student demand and strong cash and investment

levels.

• Public universities will experience greater pressure than private

counterparts as it is expected that less than 20% will have total revenue

growth about 3%.

4

State of Washington Environment

• November state economic forecast is up $195.5m over

prior

• State Support to EWU

– Reduction in state support for compensation and benefits

– Historically funded at 100%, current biennium funded at 50%

• Tuition Policy

– Tuition policy maintained at slightly above 2% moving forward

(currently 2.2%)

5

EWU Budget Environment

• Impact of state policy decisions

• Enrollment

– Index 1 enrollment began slowly tapering in FY2016, yet was

generally stable until Fall 2018

– Fall 2018 Index 1 enrollment decreased 1.5% from Fall 2017

• Budget realignment due to state policy and enrollment

environment is necessary to maintain a balanced

budget.

6

Enrollment Overview

7

11,360 11,67812,411

11,300 11,217 11,473 11,410

1,2271,113

1,042

1,061 1,0621,134 1,225

12,587 12,79113,453

12,361 12,279 12,607 12,635

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Total Fall Head CountIndex 1 and self support

Undergraduate HC Graduate HC Total HC

9,428 9,551 9,749 9,733 9,607 9,575 9,431

1,105 971 902 900 922 974 969

10,533 10,522 10,651 10,633 10,529 10,549 10,400

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Undergraduate HC Graduate HC Total HC

Index 1 – Average Annual Head Count

Source: EWU Institutional Research Enrollment Reports, 10th day

Enrollment remains relatively stable. Future goals will consider

access, capacity and fiscal balance within the context of the

strategic plan.

Fall Enrollment- Index 1

8

University Revenues

9

Source: EWU Office of Controller

2013- 2017 Financial Reports

$88.3 $89.3 $94.0 $89.6 $85.0

$55.1 $53.4 $41.9 $53.2 $66.9

$49.4 $51.7 $57.2$55.5

$51.9

$20.2 $20.9 $23.1$29.1

$27.5$6.8 $7.0 $6.6 $5.7 $6.2 $219.8m $222.4m $222.8m

$233.1m $237.6m

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

2013 2014 2015 2016 2017

mil

lio

ns

Student Tuition & Fees State Appropriations Auxiliaries Other Total

discretionary

Between fiscal years 2013 and 2017, revenue grew

by 8%. 2% average growth per year.

dedicated

University Expenses by Type

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Source: EWU Office of Controller

2013-2017 Financial Report

$84.3

$92.7

$100.6

$104.2

$107.9

$36.0

$36.8

$42.2

$39.6

$38.1

$26.1

$28.5

$28.5

$31.8

$33.3

$21.5

$21.9

$22.1

$20.8

$19.6

$10.2

$11.4

$12.1

$12.3

$12.5

$4.4

$4.9

$4.6

$4.4

$4.9

$10.9

$9.6

$10.8

$11.3

$11.6

$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240

2013

2014

2015

2016

2017

Millions

Salaries & Wages

Supplies& Materials

Benefits

Scholarships & Fellowships

Depreciation

Utilities

Miscellaneous

$220.9M

$205.7M

$193.4M

$224.4M

$227.9M

- Other

- Interest Expense

- NC facility Improvements

- Special Items

Between fiscal years 2013 and 2017, expenses

grew by 18%. 4.3% Average growth per year

Salaries and

benefits are 62%

of expenses

Revenue & Expense Forecast

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0%

20%

40%

60%

80%

100%

120%

120,000,000

125,000,000

130,000,000

135,000,000

140,000,000

145,000,000

FY20 FY21 FY22 FY23 FY24 FY25

Revenue & Expense ForecastIndex 1

Revenue Forecast Expense Forecast after Realignment Expense Forecast

Reserves

12

80%

56%

37%

23%

12%

4%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

120,000,000

125,000,000

130,000,000

135,000,000

140,000,000

145,000,000

FY20 FY21 FY22 FY23 FY24 FY25

Revenue & Expense ForecastIndex 1

Revenue Forecast Expense Forecast % Central Reserves Remaining

2019-21 Biennium Planning

• Campus instructions distributed in October

• Each division requested to submit a plan with a 3% realignment

goal. Overall Index 1 goal is approximately $3.6M

• Self support units are encouraged to manage labor costs to slow

overall expense growth

• Slow down for filling vacant positions

• Limiting overtime and travel

• Removal of 1/1/19 non-represented pay increase

• Permanent plan in effect by July 1, 2020.

Looking forward- budgetary realignment is expected to occur more

frequently in future biennia due to market conditions

13

Budget Realignment for Index 1- $3.6 million

• $1.8 million forecasted enrollment decline

impact

• $600,000 unfunded compensation costs

• $200,000 EWU Spokane contract impact

• $1 million financial aid for student athletes

* 2017-19 biennia underfunding for compensation and

benefits is approximately $4 million.

14

Budget Realignment by Division- Index 1

15

FY 2020 Est.

Budget

Realignment

GoalsRevised Totals

Office of the President $1,406,245 $(42,187) $1,364,058

Intercollegiate Athletics 5,794,225 (173,827) 5,620,398

Academic Affairs 72,905,410 (2,187,162) 70,718,248

Business & Finance 30,526,750 (915,803) 29,610,948

Student Affairs 5,658,810 (169,764) 5,489,046

Advancement 3,977,774 (119,333) 3,858,441

Diversity and Inclusion 669,710 (20,991) 678,719

Reserves 3,301,076 0 3,301,076

Indirects FY19 2,396,773 02,396,773

Total $126,666,773 $(3,629,068) $123,037,705

Self-Support Budgets

• Revenue impacts related to programming,

enrollment, fees

• Expense level within annual revenue levels

• Manage labor cost to slow growth

• Use of fund balance- less than 5% annually and

for strategic purposes

• Retain appropriate level of annual reserves to

fund emergent needs

16

Planning Timeline- next 9 months

Fall 2018 Unit level planning started 19-21 biennium

December 2018 Governor’s operating budget released

January 2019 Legislative session begins

January 2019 Divisions submit proposals to Budget Office

March-April 2019 University Budget Committee reviews proposals

May 2019 Board of Trustees, 1st Read 2019-21 operating and

capital budgets

June 2019 Board of Trustees, Approval 2019-21 operating and

capital budgets

June 2019 Legislative approval 2019-21 budget

July 2019 Implement FY20 Budget July 1, 2019

17

Internal Budget Planning Process

Colleges/Departments submit budget request for Division review

Division narrows college/departmental requests based on priorities

Division leaders present to the President

Divisional budget requests submitted

and reviewed by UBC

UBC recommends funding priorities

to President

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Divisions• Athletics

• Academic Affairs

• Advancement

• Business & Finance

• Student Affairs

• Diversity & Inclusion

• President’s Office

https://sites.ewu.edu/business-

finance/university-budget-committee/

Future Economic Impacts

• Demand for higher education

• Tuition policy and state support

• Managing revenue opportunities and expense trajectory to generate

revenue to support a responsive university

• In a crowded marketplace- capture opportunities to create new

demand for institutional strengths

• Anticipating future cost trends and making adjustments to optimally

position the university to respond to the market, students, and

employers

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