Budget UpdateBudget UpdateMarch 5, 2010March 5, 2010

Today’s Presentation

• State of the State (FY 2012)

• Impact on Southern’s Budget

• Next Steps

*Presentation Prepared for the Appropriations Committee and the Finance, Revenue, and Bonding Committee by the Office of Policy and Management November 18, 2009

Drivers for FY 2012SUMMARY *

• Based on the enacted budget, the state is projected to experience significant deficits at the end of FY2011-12, FY2012-13 and FY2013-14 that are unprecedented in our history.

• The use of one-time revenues including federal ARRA dollars to support on-going programs and projects adds over $2.5 billion to these projected deficits.

• The budget reserve fund balance will be exhausted during FY2011.

• Debt service will continue to grow and consume a significant portion of the budget.

• The state faces significant long-term obligations including debt, unfunded pension liabilities and unfunded post-employment retirement benefits that are estimated to exceed $61 billion in total.

• Budgeted “below the line” savings targets may be difficult to achieve.

• Stagnant economic conditions and low-growth revenue projections will continue to be the most significant challenges facing the State.

* Presentation Prepared for the Appropriations Committee and the Finance, Revenue, and Bonding Committee by the Office of Policy and Management November 18, 2009

PROJECTED DEFICITS FOR THESTATE OF CONNECTICUT

FY 2012 $ 3.28 Billion

FY 2013 $ 2.6 Billion

What are the challenges to Southern’s financial situation in FY 2012 ?

FY 2012 Challenges: Declining Revenue

State Appropriation as percentage of Southern’s E & G Budget:

2010 2009 2008 2007 2006

43.3% 44.7% 46.3% 46.0% 46.6%

FY 2012 Challenges: Increasing Expenses– 27th payroll $2,894,945– Salary Increases 3,426,000– Inflationary increases 549,585– CSUS 2020 Public Safety 347,465– No Furlough Days (3 Days) 750,000TOTAL

$7,967,995

– Deferred Payout, RIP TBD

The CSUS Universities are to plan for a projected 5, 10, 15 and 20% reduction in their State Appropriation and how it may impact the institution.5% 10% 15% 20%

$3,820,928 $7,294,386 $ 10,767,850 $14,241,311

Is this just Southern?

NO

All of Higher Education

One Scenario of a 20 % State Appropriation Reduction

Full TimeFringe

BenefitsLecturer-Teaching

Lecturer-Non

TeachingPart

Time PS UA GAStudent Worker OT OE

Total Reduction

$ (2,764,032) $ (2,434,855) $ (3,135,193) $ (886,626) $ (33,640) $ (1,035,973) $ (33,900) $ (253,097) $ (10,690) $ (3,686,305) $ (14,241,311)

State Appropriation reduced 20% or $14,241,311 also reduces other revenues

• The $14,241,311 provides state support for 1,512 full time students.

• If we reduce the number of students, our budget is reduced by over twice that amount.

• Total Impact of a 20% Reduction in Southern’s State Appropriation

• 20% Reduction $14,241,311• Loss of Tuition/UGF 10,647,492• Loss of Auxiliary Revenue 4,670,860

• Total Impact $29,559,663

Unacceptable

• There is no silver bullet.

• There is no one fix.

• The reality is that closing the gap will be with positions and programs.

How do we make these decisions?

Guiding Principles (March 2009)

• Support and enhance the student academic experience • Support and enhance the student life experience on campus• Provide for sufficient qualified faculty and staff and an academically sound

faculty/student ratio to support the teaching-learning mission of the university– Prevent lay-offs of full-time faculty and staff– Address budgetary gaps caused by vacancies (e.g., early or scheduled retirements) in

a manner consistent with advancement of the USP• Maintain enrollment to reflect appropriate mix of students (11,800 and 12,300 students

–distributed through retention, transfer students, part-time students and a growing graduate student population, with a maximum enrollment of 1,350 for full-time entering freshman)

• Maintain a healthy (both physical and psychological) campus environment• Maintain appropriate student, faculty, and staff access to the campus and University

services, such that student success and learning are not impinged• Ensure that University assets are safeguarded• Comply with all governing laws, policies and procedures set forth by governing bodies

(Federal, State, NEASC, CSUS BOT) and accrediting bodies for academic programs/schools within the University

Guiding Principles (March 2009)

• Make budget decisions that are driven by facts, data, and reasonable projections without ignoring core values as identified in the USP– Do not eliminate a function that we think would have to be reinstated in the near future (2 years)– No use of reserves (balanced budget FY2010)– Reduce costs in areas that focus on one time expenditures and can be reinstated quickly when the

economy changes (positively)– Establish alternative revenue streams– Before functions (resources, services, programs) are cut, alternative ways of meeting the needs

those functions provide must be determined as expeditiously as possible

• Support faculty and staff efforts to receive external grants• In dire budget crises where functions that advance the University Strategic Plan are

adversely impacted by cost saving or revenue producing measures (e.g. increased student enrollment with decreased human resources to meet academic and support needs of those students), those functions will be given priority consideration for reallocation/allocation of resources when the economy changes positively

• Continue support for our University’s academic and/or programmatic “unique strengths”

• Maintain efforts to prepare students to meet the workforce needs of the Nation, and particularly the State of Connecticut

These Principles give us guidancebut do not solve (close) the gap.

Closing the Gap (Systemwide Discussion)

Increase Revenue

Increase TuitionIncrease FeesIncrease # of StudentsIncrease Out-of-State StudentsIncrease Summer School

EntrepreneurialIncrease Life Long Learning CEU’s(non-credit)

Mega Class Sections Increase Class Size by 3-5 Students

Revenue Generating CentersLyman Center

Increase Clinic Fees (Marriage,Speech, Hearing)

Adanti Student Center

Athletics Playing Fields, SwimmingPool, Gym

Faculty/Staff Parking Fee

Residence Halls

Closing the Gap (Systemwide Discussion)

ConsolidateSystem Wide – Student AffairsVeteran’s AffairsCareer Services – Joined with AdvisingEnrollment Services(Admissions, Registration, Financial Aid, Cashiering, Student Collections, Etc.)

System Wide - AdministrationPayrollPurchasingAccounts PayableHuman ResourcesAccountingInformation Technology

System Wide - AcademicOn-line Delivery 4 CampusesGraduate Programs

Changes that Require InvestmentsSwipe Card ParkingTelephone ServiceThin Client & Other TechnologiesVoice Over Internet Phone

Reduce Payroll (Contract Negotiations)Salary Increases ($3.2M) Adjust to cost of livingContinue Furlough Days ($250,029 / Day)Close School Campus(Spring Break; Christmas)Centralize Functions10 mos staff instead of 12 mos positionsPT instead of Full Time 4 Day Workweek – replace with on-lineUse Grad Asst rather than FT employees

Closing the Gap (Systemwide Discussion)

Decrease Service/ProgramsStudent Health Services

Athletics

Outsource Email

Copy Center

Eliminate/Reduce Service Contracts

Pre-College Programs

Reduce Landscape Work

Campus Security

Academic ProgramsEliminate Low Enrollment

Programs/Offer at other CSUS’

•Reassigned Time

•Fewer Courses

•Sabbatical Cut

•Tutoring Center

•Cap on Adjuncts

•Reduce Library Expenses

Next Steps

• The University Budget & Planning Committee will go through a budget exercise

HOW?

• Building the University-wide budget from the bottom up.

• A budget starting from zero and systematically adding in dollars to cover those services and costs that we are mandated to support.

Where do we start?1.Current contractual commitments (personnel,

energy, debt service, etc.)2.Required health and safety3.What must all students have access to obtain

a degree (classes, admission, registrar, financial aid, bursar, etc.)

This would be our starting point and we would then build the budget by what we believe the students need using the guiding principles and strategic plan.

• The Budget & Planning Committee will extend an invitation to USPaAC to attend their next meeting on March 16, 2010.

• The budget information developed by the budget exercise will be presentedat a second Town Hall meeting.(Tentatively scheduled on April 30, 2010).

Questions?