REVISED DRAFT 5/29/2014 Strategic Financial Forecasting Project Georgia Tech Foundation Development Committee Project Update June 2014

History and Background Initiative of GTF Development Committee Team assembled in July 2012; key core working group:  David Perdue, Chair, GTF Development Committee  Sandi Bramblett, DSG/Administration & Finance  Emily Howell, College of Engineering  Mark Long, Georgia Tech Foundation  Renee Queen, GT Alumni Association  Dorcas Wilkinson, Development Continuation of Project by Decision Support Group Sponsor: Steve Swant, Executive Vice President for Administration & Finance Forecasting Model Implementation Directors: Jim Kirk, Institute Budget Planning and Administration Sandi Bramblett, Institutional Research and Planning

Importance of Model in GT’s Financial Planning Process Focus on GT Strategic Plan in building the next year’s budget Annual budget and program proposals from colleges & other units – linked to Strategic Plan Base budget analysis – considers performance/ workload metrics for all campus units: Enrollment and other student data Sponsored program activity Faculty and staff totals and ratios compared to workload Executive considerations in reviewing spending options: 1.Workload factors for colleges & other units 2.Investments to further Strategic Plan objectives 3.Future resource limitations – based on forecasting model

Importance of Model in GT’s Financial Planning Process December/January February/March April/May GT’s Rolling Budget Review and Approval Process Revenue and spending projections for next FY Tuition, fee, funding requests to BOR Multi-year projections with scenarios Preliminary unit budget & strategic planning Unit Presentation of priorities to President’s Office Performance metrics to President’s Office Update of revenue projections: BOR action on tuition, fees, allocations Student enrollment update – summer/ fall Multi-year projections update Executive allocation decisions for Original Budget Hold-back items contingent on fall revenue picture

June/July/August September/October December/January/ February Initial allocations & adjustments to Original Budget Fiscal year close-out & determination of year-end resources available Review of contingent/hold-back items Budget adjustments based on 1 st quarter spending & revenue factors Preparation of revised list of hold-back items for consideration in 3 rd quarter Budget adjustments based on 2 nd quarter spending & revenue factors Multi-year projections update Begin following year’s budget planning process Importance of Model in GT’s Financial Planning Process GT’s Rolling Budget Review and Approval Process

Strategic Financial Forecasting Project Goals Institute Ongoing Goals: Identify multi-year gaps between the Institute’s projected revenues and expenditures under various scenarios. For annual budget process determine risks in making new commitments. Estimate the level of resources available for GT Strategic Plan and other initiatives over extended period. Consider alternate revenue sources to match requirements. Institutional Long- Range Development Goals (to be affirmed): Determine Development priorities for upcoming Capital Campaign. Determine how the next Capital Campaign will target its efforts to fill the resource gap. Common Goal: Jointly address resource requirements of the Institute for instruction, research, and public service to students, businesses, sponsors, and other Institute stakeholders.

Project Approach – 1 st Phase Enhancement of existing financial modeling efforts Expanded scope of financial planning to consider: Entire Institute enterprise Expanded timeframe – from 3 years to 6 years out Particular needs of GTF Development effort Compiled and analyzed 9 years of actual trend data from Fiscal & Fiscal 2014 budget data: Revenue and expenditures Student data Faculty and staff data Research activity Projected 6 year revenue, expenditures, and net revenue from Fiscal 2014 through 2019 Sensitivity analysis for input variables to create scenarios

Selected Variables Considered in Forecasting Model

Principal Assumptions for Base Scenario No program expansion or improvement in student/faculty ratio Modest enrollment growth Gradual undergraduate enrollment shift: residents to non-residents 5% resident & 2% non-resident tuition increases per year 1% state funding increase per year Faculty and staff salary increases of 3% per year Research expenditures & revenues based on recent trends

Enrollment Assumptions for Base Scenario

Sample Projected Net Revenues – Base Scenario

Recap of Projected Net Revenues – Base Scenario $27.2M for FY19 is only 1.3% over projected $2B total

Scenario A – Flat Enrollment

Scenario B – Tuition Increase 2% Above Base

Scenario C – Increase in State Funding to 2%/Year

Scenario D – Additional Other Operating Increases

Scenario E – 20 New Faculty & Support Per Year

Phase 2 Implementation of Model Revenue: Link Strategic Financial Forecasting Model to other GT projection models (e.g. tuition, enrollment, sponsored funds) Develop scenarios for state revenue projections – determined following changes to state funding formula Develop methods for refining grants and contracts and indirect cost recovery projections Change, test, and challenge all projection assumptions Test multiple scenarios for revenue and expenditure assumptions Automate updates of model for future fiscal periods Model has been updated for FY13 actual and FY14 YTD data