Financial Overview 3 - BOT Focus... · 2016. 2. 24. · Summer College Faculty Salary & Dept Support 3,397,700 Vp For Academic Affairs 3,055,000 Vp For Academic Affairs - Reserves

Addendum 3

Financial Overview

Northern Michigan University1

Addendum 3

Presentation Summary

• Understanding of overall university finances

• Overview of size and scope of the University operations

• External financial review and responsibilities

• Need for net revenues and long-term sustainability

• Budget allocations and changing trends in enrollment, revenue, and staffing

• Early stages of Fiscal Year 2015-16 budget considerations

• University fund balance and its composition

• Future university budget process goals

Projected Budget 2

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Northern Michigan University Total Operations

Operating Budget

Financial Overview of University Operations3

Addendum 3

Total Operating Revenue BudgetFY 2014-15 ($187.8 Million)

State Appropriations23.6%

Tuition and Fees41.0%

Room & Board11.1%

Federal, State, and Private Financial Aid

10.8%

Federal, State, and Private Grants and

Contracts2.7%

Other Auxiliary Income (Bookstore, Health

Center, etc.)6.3%

Sales and Services of Educational Activities

4.5%

Total Operations 4

Addendum 3

Total Operating Expense BudgetFY 2014-15 ($187.8 Million)

Personnel Costs50.0%

Supplies, Materials and Services12.0%

Utilities4.8%

Equipment, Library Acquisitions, Reserves

and Maintenance5.2%

Debt Service4.2%

Cost of Goods Sold4.5%

Scholarships19.3%

Total Operations 5

Addendum 3

Total Operating Budget by FundFY 2014-15 ($187.8 Million)

General Fund65.3%

Designated Fund3.9%

Other Auxiliary Services

3.7%

Dining and Residence Life

13.7%

Federal, State, and Private Grants/Contracts

13.5%

Total Operations 6

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Facts and Figures

That Drive the NMU Budget


Addendum 3

FACTS AND FIGURESFiscal Year 2013-14

Number of Students – Fall 2014

8,781Number of Full-Time Employees

938

STUDENTS AND STAFFING

8

Addendum 3


Annual Expenses (FY 2013-14)

$185.2 MillionAverage Monthly Expenses

$15.4 Million

FINANCIAL FACTS

Note: Expense totals include scholarships9

Addendum 3FACTS AND FIGURESFiscal Year 2013-14

Replacement Cost of University Buildings and Equipment

$938 Million

Original Cost of University Buildings and Equipment

$413 Million10

Addendum 3


BUILDING SPACE TO MAINTAIN

SQUARE FOOTAGE

Campus Facility Maintenance

ROADS TO MAINTAIN

SIDEWALKS TO MAINTAIN

PARKING SPACES

6,875SEWER LINES

43,332 Feet

LAND

685 Acres3.4 Million

3.6 Miles

13.5 Miles

NUMBER OF BUILDINGS TO MAINTAIN

63

11

Addendum 3

Financial Health of NMU

External Measures and Review


Addendum 3

Financial Health of NMU is Reviewed by Outside Agencies

Purpose: Measure important for future access to funding for capital projects and assurance to holders of currently issued University bonds. University currently has $99 million in outstanding bonds.

Moody’s Bond Rating -- NMU’s rating of ‘A1’ was affirmed; outlook stable (February 2015)

• Outlook

– The stable outlook reflects our expectation of continued operating surpluses and stable student demand. The outlook also incorporates our expectation of no material spend down of flexible reserves.

• What could make the rating go up

– Increased student demand leading to strong net tuition revenue growth

– Substantial increase in flexible financial reserves

• What could make the rating go down

– Sustained operating deficits

– Significant decline in flexible financial reserves

External Measures and Review 13

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Financial Health of NMU is Reviewed by Outside Agencies

Purpose: Measure important for future access to funding for capital projects and assurance to holders of currently issued University bonds. University currently has $99 million in outstanding bonds.

Standard and Poor’s (S & P) Bond Rating – Affirmed ‘A’ rating; outlook negative (March 2015)

• Outlook

– The negative outlook is based on four consecutive years of declining enrollment, a reduced net revenue position and also reflects our future capital needs for projects such as renovation of the Quad I residence halls.

– They noted that supporting the ‘A’ rating was a balance sheet they considered strong for the rating and a solid management team that has proactively implemented cost-cutting strategies to help stabilize operations.


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Financial Health of NMU Overall Financial Health Factors

(HLC – Higher Learning Commission - Accreditation)

FY14 FY13 FY12 FY11 FY10

Primary Reserve Ratio 0.77 0.83 0.84 0.77 0.74

Viability Ratio 1.25 1.23 1.24 1.29 1.11

Return on Net Assets Ratio 9.00% 2.90% 1.30% 4.20% 3.80%

Net Operating Revenues Ratio 3.70% 4.00% 1.30% 4.40% 4.60%

Overall CFI Score 4.3 3.8 3.5 3.9 3.6

Measure HLC uses to look at overall financial sustainability of institution.• To create overall financial health, annual operations need to contribute• Minimum expected Composite Financial Index (CFI) score is at least 3.0.


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Revenues Over/(Under) Expenses


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Revenues over/(under) Expenses (Net Revenues)

• Why should you have net revenues?– Indicate that we are fiscally living within our means

– Need to have funds to cover future unseen costs

– A financially healthy public institution should have a net operating income that is 2% - 4% of operations based on industry standards.

– Long-term need for reinvestment

Revenues over/(under) Expenses 17

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Net Revenues over/(under) Expenses

• Major items that have impact NMU’s net revenues (not all are predictable)– Enrollment variation – enrollments continue downward trend

– State funding

– Investment income

– Utilities – fluctuations in prices, weather, conditions of equipment, supply disruptions, etc.

– Health care costs – inflation rate is continually exceeding CPI

– Capital appropriations


Addendum 3


Why Long-term Need for Reinvestment?

– Original cost of assets is $413 millionwhereas Replacement cost is $938 million

– JXJ is a good example:

• 1969: Built JXJ for $2.4 million

• 2014: Built for $33.4 million

• If only recover depreciation (original cost) it means you are not recovering enough to be viable in the long-term

Jamrich Hall


Addendum 3


$154.1$159.1

$153.3 $156.5 $159.5

$148.3 $152.1 $151.0 $151.1$158.7

2010 2011 2012 2013 2014 *

Total Revenues (000,000's) Total Expenses (000,000's)

• Operating revenues includes one-time capital appropriation for New Jamrich Hall of $19.8 million; Operating expenditures include one-time expenditure of $3.4 million for faculty early retirement incentive program.


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Operations

General Fund Budget


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General Fund Resources BudgetFY 2014-15 ($122.6 Million)

State Appropriations36.1%

Tuition and Fees62.9%

Sales and Services of Educational Activities

1.0%

By Type of Revenue

General Fund Operations 22

Addendum 3

General Fund Expense BudgetFY 2014-15 ($122.6 Million)

Personnel Costs55.5%

Supplies, Materials and Services17.8%

Utilities4.5%

Equipment, Library Acquisitions, Reserves

and Maintenance6.8%

Debt Service3.2%

Scholarships12.3%

By Type of Line-item Expenditure

General Fund Operations 23

Addendum 3

General Fund Operations

General Fund Budget by DivisionFY 2014-15 Balances ($122.6 Million)

Academic Affiars45.0%

Finance & Administration

12.9%

Enrollment Managment &

Student Services6.6%

Advancement0.9%

President's Division5.5%

Scholarships12.3%

General University16.7%

(Utilities, debt service, capital, maintenance,

equipment)

By Division Expenses

24

Addendum 3

General Fund BudgetFY 2014-15 (Academic Affairs - $55.2 Million)

College of Arts & Sciences

41.0%

College of Business7.7%

College of Health Sciences & Professional Studies

22.8%

Academic Information Services

8.5%

Academic Affairs Administrative Departments

20.1%

General Fund Divisional Operations 25

Addendum 3

General Fund BudgetFY 2014-15 Academic Affairs

ACADEMIC AFFAIRS

$55.2 MillionACADEMIC AFFAIRS ADMINISTRATIVE DEPARTMENTS

$11.1 Million (20.1%)

Summer College Faculty Salary & Dept Support 3,397,700

Vp For Academic Affairs 3,055,000

Vp For Academic Affairs - Reserves 1,576,000

Registrar 1,068,100

Learning Resources 537,600

Dean-Grad Studies & Research 434,000

Production & Audio Visual Svcs 381,700

Institutional Research 364,700

Office of Grants and Research 187,400

Continuing Educ & Workforce Dev 80,400


Addendum 3


ACADEMIC AFFAIRS

$55.3 MillionCOLLEGE OF ARTS AND SCIENCES

$22.6 Million (41.0%)

English 3,099,500

Art & Design 2,349,200

Biology 2,268,500

Math 2,001,100

Comm & Perf Stdy 1,816,600

Chemistry 1,637,100

Psychology 1,362,800

Dean - Arts & Sciences 1,071,914

Music 988,300

Earth, Environmental & Geog Sciences 906,800

Economics 820,700

Languages 817,600

History 744,600

Physics 737,000

Political Science 690,500

Sociology & Anthropology 687,700

Native Amer Stdy 315,600

Philosophy 297,600


Addendum 3


ACADEMIC AFFAIRS

$55.3 MillionCOLLEGE OF HEALTH SCIENCES & PROFESSIONAL STUDIES

$12.6 Million (22.8%)

General Fund Divisional Operations

Nursing 2,895,600

Education 2,152,700

Health & Human Performance 1,772,900

Technology and Occupational Studies 1,655,600

Clinical Sciences 1,165,000

Engineering Technologies 886,300

Criminal Justice 788,200

Dean - Health Sciences & Professional Studies 511,307

Social Work 520,900

Seaborg Center 144,500

Military Science 79,400

28

Addendum 3


ACADEMIC AFFAIRS

$55.3 MillionCOLLEGE OF BUSINESS

$4.2 Million (7.7%)


Business 3,640,500

Dean - Business 599,300

29

Addendum 3


ACADEMIC AFFAIRS

$55.3 MillionACADEMIC INFORMATION SERVICES

$4.7 Million (8.4%)


Library operations 2,148,400

Library Acquisitions 933,400

Instructional Design & Technology 558,300

Computing Help Desk 515,300

Academic Information Services, Dean 272,500

University Archives 237,000

30

Addendum 3

General Fund BudgetFY 2014-15 Finance and Administration

FINANCE AND ADMINISTRATION DIVISION

$15.9 Million

Plant Operations 4,879,200

Information Technology & Services 3,571,300

Controller Office-Financial Services 1,805,200

Network, Servers, Insurance, Software, and Maintenance1,496,000

Human Resources 965,400

Finance & Administration 845,300

Engineering, Planning & Facilities 691,100

Business Services 406,000

Finance & Planning 363,900

Facilities 359,500

Health Center-Athletic Training 233,900

Internal Audit & Risk Management 137,600


Addendum 3

General Fund BudgetFY 2014-15 Enrollment Management and Student Services

ENROLLMENT MANAGEMENT AND STUDENT SERVICES DEPARTMENTS

$8.1 Million

Admissions 2,419,600

Identity, Brand & Marketing 1,172,300

Financial Aid Office 866,300

Academic & Career Advisement Center 712,800

Center for Student Enrichment 648,000

Dean of Students 534,700

International Affairs 512,000

Counseling Center & Consultation Services 409,300

Enrollment Management & StudentServices 344,800

Multicultural Education & Resource Center 193,700

Career Services 171,400

Disability Services 144,300


Addendum 3

General Fund BudgetFY 2014-15 Advancement

ADVANCEMENT DEPARTMENTS

$1.1 Million


Foundation 766,100

Alumni 305,000

33

Addendum 3

General Fund BudgetFY 2014-15 President’s Division

PRESIDENT DIVISION DEPARTMENTS

$6.8 Million

Athletics 2,544,500

Recreational Facilities & Services 1,793,100

Public Safety & Police Services 1,419,000

President's Office 1,029,900


Addendum 3

General Fund BudgetFY 2014-15 General University

GENERAL UNIVERSITY ACCOUNTS

$20.5 Million


Utilities 7,106,900

Depreciation, equipment, & maintenance 6,264,500

Debt service 3,015,800

Computers and warranty (student, faculty, staff, labs) 2,397,800

University reserves 1,704,000

35

Addendum 3

General Fund BudgetFY 2014-15 SCHOLARSHIPS

SCHOLARSHIPS

$15.0 Million

Scholarships 15,044,800


Addendum 3

Changes in Enrollment and Staffing


Addendum 3

Reporting and Calculations• FTETF: Full-time equivalent teaching faculty

• SCH: Student credit hours

• FY: Fiscal year consists of summer, fall and winter semesters

• HEIDI: State of Michigan’s Higher Education Institution Data Inventory, where all Michigan colleges and universities receiving state of federal funding must report required data

• FTETF & SCH – reported to HEIDI on FY basis– Courses not associated with an academic department are not included

(Honors, Military Science, Library, Registrar or University Studies courses)

• FTETF = definition includes only FTE associated with credit hours TAUGHT during entire FY– Full-time faculty – includes overloads– Part-time faculty – contingents, adjuncts and graduate assistants– Department heads – teaching portion only

• By HEIDI definition, FTETF does not include:– Release or reassigned time for department administration– Release time for research, public service or academic support– Release time for student support service or institutional support

Changes in Enrollment and Staffing 38

Addendum 3

Student Credit Hours by Department History


Department FY2014 FY2010 FY2006 4yr Chg 4yr %Chg 8 yr Chg 8yr %Chg

Art and Design AS 13,098.0 15,006.5 13,544.0 -1,908.5 -12.7% -446.0 -3.3%

Biology AS 16,468.0 15,629.0 12,870.0 839.0 5.4% 3,598.0 28.0%

Chemistry AS 8,739.0 7,739.0 6,990.0 1,000.0 12.9% 1,749.0 25.0%

Commun/Performance Studies AS 6,538.0 7,805.5 9,357.0 -1,267.5 -16.2% -2,819.0 -30.1%

Earth/Environ/Geographic Sci AS 9,163.0 8,763.0 7,479.0 400.0 4.6% 1,684.0 22.5%

Economics AS 5,335.0 5,132.0 5,605.0 203.0 4.0% -270.0 -4.8%

English AS 33,852.5 32,303.0 31,959.0 1,549.5 4.8% 1,893.5 5.9%

History AS 7,107.0 10,235.0 10,483.0 -3,128.0 -30.6% -3,376.0 -32.2%

Math and Computer Science AS 14,185.0 14,344.0 15,024.0 -159.0 -1.1% -839.0 -5.6%

Modern Languages and Lit AS 5,031.0 6,184.0 4,595.0 -1,153.0 -18.6% 436.0 9.5%

Music AS 3,896.0 5,004.5 5,980.0 -1,108.5 -22.2% -2,084.0 -34.8%

Native American Studies AS 3,038.0 3,204.0 3,715.0 -166.0 -5.2% -677.0 -18.2%

Philosophy AS 2,918.0 2,798.0 3,113.0 120.0 4.3% -195.0 -6.3%

Physics AS 3,259.0 2,619.0 3,058.0 640.0 24.4% 201.0 6.6%

Political Science AS 4,948.0 5,854.0 7,967.0 -906.0 -15.5% -3,019.0 -37.9%

Psychology AS 10,345.0 11,626.0 9,632.0 -1,281.0 -11.0% 713.0 7.4%

Sociology/Social Work AS 11,425.0 13,776.0 15,337.0 -2,351.0 -17.1% -3,912.0 -25.5%

Cisler College of Business BU 17,574.0 20,748.0 21,768.0 -3,174.0 -15.3% -4,194.0 -19.3%

Clinical Sciences HS 6,412.0 5,489.0 3,392.0 923.0 16.8% 3,020.0 89.0%

Criminal Justice HS 7,794.0 7,967.0 6,542.0 -173.0 -2.2% 1,252.0 19.1%

Educatn/Leadership/Public Serv HS 8,050.0 10,099.5 12,317.5 -2,049.5 -20.3% -4,267.5 -34.6%

Engineering Technology HS 4,592.0 4,428.0 4,015.0 164.0 3.7% 577.0 14.4%

Health & Human Performance HS 17,369.5 17,571.5 16,089.0 -202.0 -1.1% 1,280.5 8.0%

Nursing HS 6,907.0 7,847.0 7,817.0 -940.0 -12.0% -910.0 -11.6%

Tech/Occupational Studies HS 9,771.0 11,737.0 13,833.0 -1,966.0 -16.8% -4,062.0 -29.4%

AVERAGE 9,512.6 10,156.4 10,099.3 -643.8 -6.3% -586.7 -5.8%

TOTAL 237,815.0 253,909.5 252,481.5 -16,094.5 -6.3% -14,666.5 -5.8%

39

Addendum 3

Instructional Faculty FTETF by Department History


FTETF = Full-time Equivalent Teaching Faculty


Art and Design AS 23.8 23.8 19.6 0.0 0.0% 4.2 21.4%

Biology AS 26.6 23.0 19.6 3.6 15.7% 7.1 36.1%

Chemistry AS 16.9 13.5 13.7 3.4 25.2% 3.2 23.4%

Commun/Performance Studies AS 12.5 13.0 16.2 -0.5 -3.8% -3.7 -22.8%

Earth/Environ/Geographic Sci AS 9.7 9.3 8.3 0.4 4.3% 1.4 16.9%

Economics AS 5.6 5.6 6.0 0.0 0.0% -0.4 -6.7%

English AS 57.9 52.8 51.4 5.1 9.7% 6.5 12.6%

History AS 8.1 10.1 10.5 -2.0 -19.8% -2.4 -22.9%

Math and Computer Science AS 24.5 21.4 23.1 3.1 14.5% 1.4 6.1%

Modern Languages and Lit AS 10.8 11.1 8.0 -0.3 -2.7% 2.8 35.0%

Music AS 9.6 9.3 9.0 0.3 3.2% 0.6 6.7%

Native American Studies AS 5.0 5.2 4.6 -0.2 -3.8% 0.4 8.7%

Philosophy AS 3.0 3.6 3.0 -0.6 -16.7% 0.0 0.0%

Physics AS 6.1 4.8 4.9 1.3 27.1% 1.2 24.5%

Political Science AS 7.0 7.7 9.3 -0.7 -9.1% -2.3 -24.7%

Psychology AS 14.3 15.2 11.6 -0.9 -5.9% 2.7 23.3%

Sociology/Social Work AS 14.4 14.0 14.2 0.4 2.9% 0.2 1.4%

Cisler College of Business BU 28.4 33.1 28.4 -4.7 -14.2% 0.0 0.0%

Clinical Sciences HS 13.3 11.9 7.7 1.4 11.8% 5.6 72.7%

Criminal Justice HS 11.2 10.0 9.0 1.2 12.0% 2.2 24.4%

Educatn/Leadership/Public Serv HS 20.7 20.2 20.5 0.5 2.5% 0.2 1.0%

Engineering Technology HS 9.4 8.0 8.1 1.4 17.5% 1.3 16.0%

Health & Human Performance HS 30.3 26.9 24.8 3.4 12.6% 5.5 22.2%

Nursing HS 22.2 23.7 22.0 -1.5 -6.3% 0.2 0.9%

Tech/Occupational Studies HS 20.8 21.6 20.3 -0.8 -3.7% 0.5 2.5%

TOTAL 412.1 398.8 373.8 13.3 3.3% 38.4 10.3%

40

Addendum 3

Credit Hours per FTETF by Department History


FTETF = Full-time Equivalent Teaching Faculty


Art and Design AS 550.3 630.5 691.0 -80.2 -12.7% -140.7 -20.4%

Biology AS 619.1 679.5 658.3 -60.4 -8.9% -39.2 -6.0%

Chemistry AS 517.1 573.3 510.2 -56.2 -9.8% 6.9 1.3%

Commun/Performance Studies AS 523.0 600.4 577.6 -77.4 -12.9% -54.6 -9.4%

Earth/Environ/Geographic Sci AS 944.6 942.3 901.1 2.4 0.3% 43.6 4.8%

Economics AS 952.7 916.4 934.2 36.3 4.0% 18.5 2.0%

English AS 584.7 611.8 621.8 -27.1 -4.4% -37.1 -6.0%

History AS 877.4 1,013.4 998.4 -136.0 -13.4% -121.0 -12.1%

Math and Computer Science AS 579.0 670.3 650.4 -91.3 -13.6% -71.4 -11.0%

Modern Languages and Lit AS 465.8 557.1 574.4 -91.3 -16.4% -108.5 -18.9%

Music AS 405.8 538.1 664.4 -132.3 -24.6% -258.6 -38.9%

Native American Studies AS 607.6 616.2 807.6 -8.6 -1.4% -200.0 -24.8%

Philosophy AS 972.7 777.2 1,037.7 195.4 25.1% -65.0 -6.3%

Physics AS 534.3 545.6 624.1 -11.4 -2.1% -89.8 -14.4%

Political Science AS 706.9 760.3 856.7 -53.4 -7.0% -149.8 -17.5%

Psychology AS 723.4 764.9 830.3 -41.4 -5.4% -106.9 -12.9%

Sociology/Social Work AS 793.4 984.0 1,080.1 -190.6 -19.4% -286.7 -26.5%

Cisler College of Business BU 618.8 626.8 766.5 -8.0 -1.3% -147.7 -19.3%

Clinical Sciences HS 482.1 461.3 440.5 20.8 4.5% 41.6 9.4%

Criminal Justice HS 695.9 796.7 726.9 -100.8 -12.7% -31.0 -4.3%

Educatn/Leadership/Public Serv HS 388.9 500.0 600.9 -111.1 -22.2% -212.0 -35.3%

Engineering Technology HS 488.5 553.5 495.7 -65.0 -11.7% -7.2 -1.4%

Health & Human Performance HS 573.3 653.2 648.8 -80.0 -12.2% -75.5 -11.6%

Nursing HS 311.1 331.1 355.3 -20.0 -6.0% -44.2 -12.4%

Tech/Occupational Studies HS 469.8 543.4 681.4 -73.6 -13.5% -211.7 -31.1%

AVERAGE 577.1 636.7 675.5 -59.6 -9.4% -98.5 -14.6%

41

Addendum 3

Non-Instructional Staff FTE by Division History


Division FY14 FY10 FY06 4yr Chg 4yr %Chg 8 yr Chg 8yr %Chg

Academic Affairs 192.9 185.4 180.7 7.5 4.1% 12.2 6.8%

Finance & Administration 114.7 124.1 130.0 -9.4 -7.6% -15.3 -11.8%

Enrollment Management & Student Services 102.9 101.3 90.3 1.7 1.6% 12.7 14.1%

President's Division 21.2 16.0 14.7 5.2 32.7% 6.5 44.6%

Advancement 4.7 3.7 3.1 1.0 27.8% 1.7 55.1%

TOTAL 436.5 430.4 418.6 6.1 1.4% 17.8 4.3%

* Academic Affairs includes Department Head administrative time.

Faculty Release/Reassigned Time FY14 FY10 FY06 4yr Chg 4yr %Chg 8 yr Chg 8yr %Chg

Instructional Department Administration * 9.1 8.1 7.2 1.0 12.3% 1.9 25.9%

Research 6.7 5.4 2.4 1.3 24.9% 4.4 185.2%

Public Service 0.4 0.3 0.7 0.1 48.0% -0.4 -50.0%

Academic Support 4.3 3.9 1.4 0.3 8.7% 2.9 214.0%

Student Service 0.2 0.2 0.3 0.0 -5.9% -0.2 -52.9%

Institutional Support 5.7 5.8 2.8 -0.1 -2.6% 2.9 103.9%

TOTAL 26.3 23.6 14.8 2.6 11.1% 11.5 77.7%

* Faculty release/reassigned time only. Does not include Department Head administrative time.

42

Addendum 3

Recent Revenue and Enrollment Trends

Impact on Operations


Addendum 3

State Appropriation Revenues

$45.1 $45.1

$38.4

$40.8

$42.0

2010 2011 2012 2013 2014

Revenue and Enrollment Trends 44

Addendum 3

Tuition and Fee Revenues(net of financial aid)

$55.2 $56.0$61.1 $61.8 $60.7

2010 2011 2012 2013 2014


Addendum 3

Total Enrollment (Final Fall Headcount)

9,417 9,405 9,159 8,918 8,781

2010 2011 2012 2013 2014


Addendum 3

Total Fiscal Year Equated Student (FYES)

8,588 8,611 8,569

8,2588,033

2010 2011 2012 2013 2014

Revenue and Enrollment Trends

Federal and State Calculation based on credit hours and level (undergraduate, graduate, doctoral) of student

47

Addendum 3

Cumulative Projected Change in Student Headcount (Fall 2010 through Fall 2016 – based on past trend)

-11 -23

-269

-510

-647

-769

-863

-1,000

-900

-800

-700

-600

-500

-400

-300

-200

-100

0

2010 2011 2012 2013 2014 2015 * 2016 *

(-$4.5 Million)

(-$5.8 Million)

(-$6.8 Million)

(-$7.7 Million)

(-$2.4 Million)

(-$205,000)(-$98,000)

* Projected Final Fall counts – based on prior trends.Note: Revenue loss amounts are based on FY14 average headcount revenue.


Addendum 3

Budget Considerations

Fiscal Year 2015-16


Addendum 3

General Fund Base Budget Overview Fiscal Year 2015-2016

• Budget Timeline• February 11, 2015 – Governor’s recommended budget

released• February 24, 2015 – Testified at Joint Senate and House

Appropriations Subcommittee hearing• March – May 2015 – House and Senate recommended

budgets released• May 2015 – Road Funding Plan Vote• May or June 2015 – Board of Trustees set FY16 tuition

and fee rates• May through September 2015 – State approval of higher

education budget

Projected Budget 50

Addendum 3

General Fund Base Budget Overview Fiscal Year 2015-16

• State Appropriation (36% of revenue)

o Governor’s recommendation includes 2.07% increase for NMU ($916,000)

• Tuition and Fees and Enrollment (63% of revenue)

o Tuition - rate increase (based on a 2.8% cap) ($1,750,000)

Each 1% of tuition and fees increase equates to approximately $625,000 of net revenues (net of financial aid)

o Tuition – enrollment change: projections - optimistic +0.5% to mid-point -1.9% (-$1,520,000 to + $400,000)

Each 1% enrollment decrease equates to approximately $800,000

Projected Budget

Factors/Challenges Impacting Budget

Resources

51

Addendum 3

Fund Balance

One-time funds at Fiscal Year-end


Addendum 3

Unrestricted Fund Balance(One-time Funds)

• Why have an unrestricted fund balance?– Institution must have retained wealth to realize long-term strategic objectives –

resources sufficient for mission and long-term strategic goals

• How is it created?– Unrestricted fund balance is primarily generated in two different ways – the

result of net revenues in excess of expenditures (including unrealized gains in endowments) and depreciation to the extent it is not reinvested in capital assets

• What level should we have?– Generally, over a period of time we should have 3 to 6 months of operations

– Funds needed to maintain university bond rating

– Cover possible unexpected expenses

– Self-insured – maintain adequate retention reserves

Fund Balance: One-Time Funds at Year-End 53

Addendum 3

Unrestricted Fund Balance (One-time Funds)

Fiscal Year 2013-2014

Unrestricted Fund Balance

(One-Time Funds)

$90.5 Million*

• Departmental savings for future expenditures

• Unexpected stoppage or elimination of appropriation

• Revenue loss from fluctuations in enrollment

• Cover possible unexpected expenses (e.g., utilities)

• Future major repair/maintenance and renovation projections

• Maintain adequate reserve for self-insured health, property, and liability – incurred but not billed services

• Endowment funds, student loans, auxiliary operational reserves

• Purchase orders issued but not yet paid

• Faculty professional development/contractual travel carryover funds

• Inventory and receivables

What are funds reserved for?

* Note: The $90.5 million balance will be reduced by approximately $46.0 million at the end of the current fiscal year due to a state allocation of unfunded state pension liabilities (MPSERS).

54

Addendum 3

Unrestricted Fund Balance (One-time Funds)FY 2013-14 Balances

Capital & long-term maintenance, $30,486,000

Departmental reserves, $20,973,000

General University reserves, $2,200,000

Purchase orders issued, not yet paid at year-end,

$11,634,000

Funds functioning as endowment, $12,652,000

Debt stabilization fund, $1,415,000

Self-insurance reserves, $4,721,000

Auxiliary activities reserves, $6,434,000

Capital Renewal – $49MDeferred Maint. – $68MPlant Adaption – $68M

$188 million capital needs based on 10 year

capital assessment:

$90.5 Million

Fund Balance - One-Time Funds at Year-End 55

Addendum 3

Unrestricted Fund Balance (One-time Funds)FY 2013-14 Balances

Unfunded state pension liability *,

$46,000,000

Capital & long-term maintenance, Dept

reserves, Aux activities reserves,

$14,093,000

Contractual commitments at

year-end, $11,634,000



Self-insurance reserves,

$4,721,000

* The State of Michigan will allocate liability to NMU of approximately $46 million for unfunded state pension liabilities atJune 30, 2015. This will reduce the unrestricted fund balance from $90.5 million to $44.5 million

Capital & long-term

maintenance, $30,486,000

Departmental reserves,

$20,973,000

General University reserves,

$2,200,000

Contractual commitments at year-end, $11,634,000



Self-insurance reserves, $4,721,000

Auxiliary activities reserves, $6,434,000

($90.5 Million $44.5 Million)($90.5 Million)

$60.1 Million

$14.1 Million

Note: Monthly University Expenses are approximately $15.4 million

56

Addendum 3

Unrestricted Fund Balance (One-time Funds)Division/Department Reserves by Division

FY 2013-14 Balances

Academic Affiars69.8%

Finance & Administration

16.7%

Enrollment Management & Student Services

11.6%

Advancement1.0%

President's Division0.9%

($21.0 Million)


Addendum 3Unrestricted Fund Balance (One-time Funds)Division/Department Reserves by Division

FY 2013-14 Balances

College of Arts & Sciences &

departments8.5%

College of Business & departments

7.0%

College of Health Sciences &

Professional Studies & departments

15.0%

Academic Information Services

& deparments7.0%

Academic Affairs & Admistrative departments

62.5%

Academic Affairs: $14.7 Million



FY 2013-14 Balances

Business Svcs15.5%

Controller8.2%

Dept Indirect Cost Reserve

1.6%

Finance & Admin VP -Infrastructure

Reserve40.3%

Finance & Planning5.0%

Financial Svcs7.8%

Health/Wellness Committee

0.6%

Human Resources9.8%

Internal Audit & Risk Management

1.4%

MIOSHA9.9%

Finance and Administration: $3.5 Million



FY 2013-14 Balances

VP Enrollment Management &

Student Svcs1.2%

Academic & Career Advisement Ctr

22.9%

Admissions20.9%

Career Services7.6%

Dean of Students8.3%

Center for Student Enrichment

0.4%

Financial Aid Office19.1%

Identity, Brand & Marketing

3.1%

International Affairs1.5%

Multicultural Educ & Resource Ctr

14.8%

Enrollment Management and Student Services: $2.4 Million



FY 2013-14 Balances

President's Office55.4%

Public Safety and Police Services

44.6%

President’s Division: $0.2 Million



FY 2013-14 Balances

Alumni Office100.0%

Advancement: $0.2 Million


Addendum 3

Future Budget Planning and Process


Addendum 3

Future Budget Process Considerations

Goal: review the budget process in Academic Affairs Division to move more budget decisions to the Dean and/or Department level similar to other divisions

• More control over adjunct and overload funds

• More control over position savings

• Establish budget processes for accreditation and minimum support levels based on FTE and labs.

• Incentives for departments that grow enrollment over established targets

• Redefine methodology for allocating/reallocating budgets based on enrollment changes

Projected Budget 64

Addendum 3

Summary

Future university budget process goals – need understanding of the following:

• Understanding of overall University finances

• Overview of size and scope of the University operations

• External financial review and responsibilities

• Need for net revenues and long-term sustainability

• Budget allocations and changing trends in enrollment, revenue, and staffing

• Early stages of Fiscal Year 2015-16 budget considerations

• University fund balance and its composition

Projected Budget 65

Addendum 3

END

66

Documents

Financial Overview 3 - BOT Focus... · 2016. 2. 24. · Summer College Faculty Salary & Dept Support 3,397,700 Vp For Academic Affairs 3,055,000 Vp For Academic Affairs - Reserves