Report To Board of governors

1

FY 2009 Budget Update

April 22, 2009

Office of Budget, Planning and Analysis April 2009

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Agenda Topics• State Budget Update

• Review of FY 2009 Budget through 2nd Quarter

• Impact of WSU’s Financial Aid “Stimulus” Package

• Discussion of WSU Expenditure Trends

• Update on Budget Calendar

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State Budget Update

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State of MichiganBudget Update

2009 2010$7,000

$7,500

$8,000

$8,500

$9,000

$9,500

$10,000

Gen

eral

Fun

d Re

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e, in

mill

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May

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8 Co

nsen

sus

Janu

ary

2008

Con

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us

4

UM

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• The FY 2009 $8.6 B in forecasted revenues are about $578 M less than state economists projected in May.--Green Arrow

• The FY 2010 general fund revenues (from Jan. est.) are expected to be $372 M less than projected revenues from current year— Blue Arrow

• Revised estimates indicate that January / February revenues collections were $100 M less per month — Red Arrow

• Next Revenue conference is May 15th

Janu

ary

2009

Con

sens

us

Janu

ary

2009

Con

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Mar

ch /

April

Rev

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Est

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State Appropriation ScenariosCurrent State Approp. = $221 M

Governor's Original Version (Cuts base by 3% and restores to FY 2008 Levels)

CategoryFY 2006 Actuals

FY 2007 Actuals

FY 2008 Actuals

FY 2009 FY 2010 FY 2011 FY 2012

Permanent $216,387 $196,819 $239,026 $214,237 $214,237 $214,237 $214,237Stimulus $0 $0 $0 $24,812 $24,812 $24,812 $0Total $216,387 $196,819 $239,026 $239,049 $239,049 $239,049 $214,237

House Version (Cuts base by 3% and restores to FY 2009 Levels)

CategoryFY 2006 Actuals

FY 2007 Actuals

FY 2008 Actuals

FY 2009 FY 2010 FY 2011 FY 2012

Permanent $216,387 $196,819 $239,026 $214,599 $214,599 $214,599 $214,599Stimulus $0 $0 $0 $6,637 $6,637 $6,637 $0Total $216,387 $196,819 $239,026 $221,236 $221,236 $221,236 $214,599

Version X (Cuts base by 5% and Restores to FY 2006 Levels)

CategoryFY 2006 Actuals

FY 2007 Actuals

FY 2008 Actuals

FY 2009 FY 2010 FY 2011 FY 2012

Permanent $216,387 $196,819 $239,026 $210,175 $210,175 $210,175 $210,175Stimulus $0 $0 $0 $6,212 $6,212 $6,212 $0Total $216,387 $196,819 $239,026 $216,387 $216,387 $216,387 $210,175

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Utilization of State Stabilization Fund

• Funds may be used for:– General expenditures (including

Financial Aid)

– Modernization / renovation of facilities used for instruction, research or student housing

• Funds may not be used:– the institution’s endowment– Routine facility maintenance– Improvement of athletic facilities– Improvement of facilities used for

religious worship

• Possible Reporting Requirements:– Use of the funds provided– How the State distributed the

funds– List of tuition rate increases by

IHEs and actions taken by the State to limit those increases

– Changes in IHE in-State enrollment, including students eligible for Pell or other need based aid

– Description of each improvement project with cost detail

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FY 2009 2nd QuarterBudget Update

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FY 2009 Revenues Outlook

GF Revenues Budget Proj. Actuals Variance State Approp. $220.9 M $220.9 M $ 0 M Tuition & Fees $271.9 M $267.0 M ($ 4.9 M) ICR $ 32.5 M $ 34.5 M $ 2.0 M Invest Income $ 4.2 M $ 2.2 M ($ 2.0 M) Other $ 5.4 M $ 5.4 M $ 0.0 M Total Revenues $ 534.9 M $530.0 M ($ 4.9 M)

Tuition declined as a result of enrollment shortfall in the fall semester Investment income is projected to decrease as a result of current economic

conditions

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FY 2009 Expenditures OutlookGF Expenditures Budget Proj. Actuals Variance

Compensation $357.9 M $348.9 M $ 9.0 M Operational Exp $94.2 M $ 97.2 M ($ 3.0 M) Facilities Services $ 39.9 M $ 39.4 M $ 0.5 M Financial Aid $ 43.0 M $ 47.4 M ($4.4 M) Total Expenses $ 535.0 M $532.9 M $ 2.1 M

Compensation is projected to be under budget due to reductions in positions from budget cuts

Financial Aid is projected to be over budget due to expenditures of carryforward funds

SUMMARY Total Revenues $ 534.9 M $530.0 M ($ 4.9 M)

• Total Expenses $ 535.0 M $532.9 M $ 2.1 M

• BALANCE($2.8 M)

1010

FY 2009 Enrollment Update--Headcount

FY 2008 FY 2009 # Variance%

Variance

HEADCOUNT Undergraduate

Fall 21,145 20,123 -1,022 -4.8%Winter 18,841 18,611 -230 -1.2%

GraduateFall 11,235 10,902 -333 -3.0%Winter 10,579 10,435 -144 -1.4%

TotalFall 32,380 31,025 -1,355 -4.2%Winter 29,420 29,046 -374 -1.3%

Category

1111

FY 2009 Enrollment Update—Credit Hours

Spring & Summer numbers are based on current estimates, through April 4th

FY 2008 FY 2009 # Variance%

Variance

Annual Credit Hours (Fall, Winter, & Summer Est)Undergraduate

Resident 448,968 443,521 -5,447 -1.2%Non-Resident 31,594 28,896 -2,698 -8.5%Total 480,562 472,417 -8,145 -1.7%

GraduateResident 183,852 181,201 -2,651 -1.4%Non-Resident 38,536 35,668 -2,868 -7.4%Total 222,388 216,869 -5,519 -2.5%

TotalResident 632,820 624,722 -8,098 -1.3%Non-Resident 70,130 64,564 -5,566 -7.9%

Category

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WSU’s Financial Aid Stimulus

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Financial Aid Terminology• The base tuition rate is just the “sticker price” of what it costs a family /

student to attend college if no financial aid is available• What the family /student actually pays depends on how much financial aid a

they receive through either scholarship.• Financial need is calculated by a federal formula which determines how much

the family is expected to contribute and how much the student can receive from the either the federal government, the state or from institutional grants

• What the family is expected to contribute is called the Expected Family Contribution (EFC)

– Typically, the lower your EFC, the more financial aid you will receive. Factors such as family size, number of family members in college, family savings, and current earnings (information you provide on the FAFSA) are used to calculate this figure.

– For WSU, on average, a $5000 EFC represents a household income of $60,000.

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Need Based Financial Aid ExamplesFamily #1:

• Household Income $25,000• One Child in College

• Living at Home• FY 2009

– Tuition $8,109– Pell Grant ($4,731)– SEOG Grant ($500)– BOGG Grant ($1,500)– Total Grants ($6,731)– EFC $0– Unmet Need $1,378

• FY 2010 (w/ 6% increase)– Tuition $8,595– Pell Grant ($5,350)– SEOG Grant ($500)– BOGG Grant ($2,746)– Total Grants ($8,595)– EFC $0– Unmet Need $0

Family #2: • Household Income $60,000

• One Child in College• Living at Home

• FY 2009 – Tuition $8,109– Pell Grant ($0)– SEOG Grant ($0)– BOGG Grant ($0)– Total Grants ($0)– EFC ($5,000)– Unmet Need $3,109

• FY 2010 (w/ 6% increase)– Tuition $8,595– Pell Grant ($0)– SEOG Grant ($0)– BOGG Grant ($3,596)– Total Grants ($3,596)– EFC ($5,000)– Unmet Need $0

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Distribution of Need Based Grants by EFC Level

0 1000 2000 3000 4000 5000 6000 7000 8000 8100+$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$1,378 $1,828 $1,828 $1,828 $1,719

$3,109 $2,109

$1,109 $109

UnmetBOGGSEOGPellEFC

2,800 657 485 368 314 206 135 111 102 544

49% 11% 8% 6% 5% 4% 2% 2% 2% 10%

FY 2009--Based on Lower Division Tuition Rates of $8,109—30 cr. Hrs.

Number ofFreshman

Note: An EFCof $5,000 equalsan approx familyIncome of $60k

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Distribution of Need Based Grants by EFC Level

0 1000 2000 3000 4000 5000 6000 7000 8000 8500+

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0

UnmetBOGGSEOGPellEFC

2,800 657 485 368 314 206 135 111 102 544

49% 11% 8% 6% 5% 4% 2% 2% 2% 10%

FY 2010--Based on Lower Division Tuition Rates of $8,595*--30 cr. Hrs.*assumes 6% tuition increase

Number ofFreshman

Note: An EFCof $5,000 equalsan approx familyIncome of $60k

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Expenditures Trends

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Source: HEIDI Data

Instruction as a % of Budget – Current Funds

Instruction includes expenditures for all activities that are part of the institution’s instruction program

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 20080%

5%

10%

15%

20%

25%

30%

35%

40%

WSU MPU Avg.

Want to be above average for this category

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Source: HEIDI Data

Institutional Support as a % of ExpendituresCurrent Funds

Institutional support includes expenditures associated with executive-level activities concerned with management for the entire institution, such as the governing board, legal services and fiscal operations

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 20080%

5%

10%

15%

20%

WSU MPU Avg.

Want to be below average for this category

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WSU Expenditure TrendsFY 1996 to FY 2009

FY 1996

FY 1997

FY 1998

FY 1999

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

43% 39%

28% 28%

4%9%

24% 25%

Schools & Colleges

Acad. Supp. & Divisions

Central Accounts

Financial Aid

Includes CLL as Part of Schools & Colleges Funding increases since FY 1996: S / C $69 M; AS & D $56 M

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Average Annual % Increase for Expenditures (FY 2004 to FY 2009)

Schools & Colleges

Acad Supp & Divisions

Fin Aid Cent Accts0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

4.2% 4.5%

8.1%

4.1%

Note: 82% of Central Accounts are made up of Fringes (52%), Debt Service (6%), Deferred Maint. (6%), & Utilities (18%)

University Average

(Grant Only)

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Upcoming Budget Dates

• Next Budget & Finance Meetings:– New Date July 1, 2009 (June 17th meeting postponed)

• Possible Discussion of Tuition Rates for FY 2010

– New Date August 5, 2009 (July 29th meeting postponed)

• Presentation of FY 2010 Current Funds Budget– Approval of General and Auxiliary Fund Budgets