Mike Brandy Central Services 3/31/04 Budget Update for 2004-2005 Mike Brandy Central Services 3/31/04

Major Assumptions REVENUE Enrollment Growth Resident student enrollment will be the same next year in spite of potential fee increases Non resident student enrollment will drop by 5% Growth We will not anticipate any growth due to downward pressures of fee increases for resident and possible bachelor degree holders

Revenue Assumptions (continued) State Cost of Living Adjustment (COLA) Governor’s Office has now included fully funding COLA for 04-05 (we are assuming the COLA to be 1.84%, may be adjusted to 2.3%, but funding would have to be found) (1.84% = $2.1 million) Equalization: We have included $2.6 million in equalization to come in as unrestricted funding State wide faculty groups testified that their recommendation is to direct all this funding to new full time faculty positions(3/22/04) Continued speculation at state on whether this will survive the legislative review process in tact

Deficit factors We have not assumed a deficit factor for 03-04 ( could be a loss of as much as $2.3 million) or any potential deficit factor for 04-05

PFE We have assumed that PFE will be funded in 04-05 at the same level as 03-04.

Net Increase to Revenues With all of these factors, and other more minor factors, the revenue for 04-05 is currently forecast to increase about $5 million more compared to the 03-04 budget, or, $3.9 million compared to the 03-04 estimated actual revenue

Expenses All funded positions in 03-04 have been budgeted in 04-05 There are no across the board salary increases budgeted All step and column increases are funded Benefits have been projected to increase 15% All utilities, property and liability insurance program, new retiree benefits, etc have been budgeted REDUCTIONS FROM NEGOTIATIONS OR COLLEGE/CENTRAL SERVICE REDUCTIONS ARE NOT YET IN THESE EXPENSE FORECASTS

Current Estimate of Operating Deficit Revenue = $148.5 million Expense = $ 158.1 million Deficit = $ 9.0 million

Solutions to Deficit Ending Balance from 6/30/04 above 5% reserves Modifications to benefit programs pending results of negotiations Proposed reductions to Colleges and Central Services budgets estimated to be in the range of $ 3 million Possible one time solutions from the negotiating tables (pending results of negotiations) Possible other one time solutions (pending results of negotiations)

Timing Many items in negotiations are close to being finalized in the next few weeks The state will release the “May Revise” in mid May which will test our various assumptions on revenue The legislature has now started the hearings and debate on the 04-05 revenue, we will monitor and change our assumptions if certain proposals at the state look more certain The Legislature will agree on budget and send to Governor (hopefully by end of June, but could be as late as July or August) Meantime, we will close our books at end of July and have a true ending balance number by early August

2005-2006 Remember, We are using some one time funds to balance our 2004-2005 budget, we will not have the use of those funds to balance the 2005-2006 budget We are anticipating increases in benefits in 2005-2006 in the 15% range again, so we will have to resolve that issue again next year