ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY University of Alaska Fairbanks Executive Leadership Workshop 1 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY

Agenda I FY10 Status - Projected Results  Projected Carryforward II FY11 Conditions and Distributions  The Issues  How do we Address Them? III FY12 budget and year planning horizon  Operating Budget Priorities IV Summary 2 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY

I – FY10 Status – Projected Results 3 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY

4 FY10 Budget $8.2M Non-General Funds Required to Maintain Existing Programs! ($7.4M projected additional in FY10) ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY Compensation Increase $4.2M General Fund $3.3M Non-General Fund Maintenance & Repair $434K General Fund $657K Non-General Fund Other Fixed Costs $150K General Fund $4.2M Non-General Fund Programs $1.1M General Fund $2.7M Non-General Fund

Carryforward Analysis  Unrestricted (F1) carryforward projected at $6.5M or 2.8%  Estimate $5M to $7M at end of FY10  Initial contingency reserve low but a pullback replenished  Higher than anticipated tuition and ICR revenue partly offset fixed costs increases  Grants and Contracts accounts receivable reduced  Units with deficits at end of FY10 will submit a remedial plan ALASKA’S FIRST UNIVERSITY  AMERICA’S ARCTIC UNIVERSITY 5 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY

II - FY11 Conditions and Distributions 6 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY

 Overall UAF status going into FY11  GF salary and benefit funding distributions  Planning assumptions  3% SW Pool  Central needs  Structuring of required redistributions – PBB and other Initial Budget Issues How do we Solve them? 7 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY

8 FY 11 Budget $10.8M Non-General Funds Required to Maintain Existing Programs! ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY Compensation Increase $3.91M General Fund (net of system level reduction) $3.68M Non-General Fund BOR Request ($4.7M GF, $3.8M NGF) Maintenance & Repair $795K General Fund $790K Non-General Fund BOR Request ($795K GF, $790K NGF) Other Fixed Costs $1.58M General Fund $3.66M Non-General Fund BOR Request ($1.8M GF, $3.8M NGF) Programs $1.5M General Fund* $2.67M Non-General Fund BOR Request ($4.9M GF, $7.2M NGF) As passed by the Legislature *Includes CES, ACEP, MAP and 150K of one-time STEM funding.

9 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY Handouts: 1.FY11 Conference Committee Action 2.FY11 Fiscal Status - Delta Document 3.FY11 Reference Document Discussion

Fiscal Impact Planning Assumptions 10 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  Legislature’s 3% redistribution pool is substantially returned to UAF  2% enrollment growth  Anticipate utility trigger mechanism  Flat research revenue

3% SW Pool 11 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  $11.6M total for all of UAF  $4.6M GF  $7.0M NGF  Anticipate 95% will be returned

FY11 Central Obligations 12 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  Must cover ongoing cost increases  Fuel  Tuition rate increases (institutional scholarships)  SW chargebacks  Must cover existing structural deficits  Bookstore/Tech Center  Institutional scholarship budget shortfall  Must cover strategic facility upgrades  One-stop shop  Life Sciences planning advance  Must build adequate emergency reserve  $2.6M required to meet

FY11 Campus-wide Unfunded Obligations 13 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  KUAC  Athletic Travel  Upark Department Moves  Wells Fargo Lease/Moves  Sustainability (SIREN) Fee Match  SOM/Northern Leadership  OIT  HR Office  Grant Technician  $2.0M required to meet

Required Adjustments 14 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  $2.6M required for central needs  $2.0M in unfunded obligations campus-wide  $1.3M PBB $5.9M in required FY11 redistributions

Redistribution Options 15 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY Across the board School/college/Unit level VC/Provost/Chancellor level Amount allocated By financial driver % GF, % NGF Administrative vs. Academic vs. Research By Space Vacancies centrally held Other

16 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY Discussion

III - FY12 Budget and 3–5 Year Planning Horizon 17 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY

18 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY FY 12 Operating Budget Priorities  Address fixed costs increases – 5% to 7% per year  Meet obligations to established programs: Biomedical, Climate, WFD including teacher preparation, others  Maintain momentum: Engineering, Energy  Increase graduation rates (including State financial aid)

ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY 19 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY Operating Budget 3 to 5 Year Conditions  Annual 3% salary increase  Annual 15% benefit increase  Annual 10% tuition increase  Enrollment increase 10% if significant State financial aid package  ICR rate increase but Research flat overall if no significant facilities investment  2% to 3% total increase in GF per year  Debt Obligations

20 Unrestricted Revenue Gap Based Upon FY05 to FY09 Annualized Data ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY $8.3M Gap $13.8M Gap $4.2M Surplus Breakeven $3.5M Gap Does not include financial aid- dependent enrollment increase

Closing the Funding Gap 21 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  Across the Board reductions will not be adequate for 3-year budget horizon  Vertical reductions will require elimination and/or restructuring of some programs / functions  Reallocation of savings from vertical reductions will meet “gap” in funding experienced by other units

Closing the Funding Gap 22 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  Program review will need to occur in administrative, support, academic, and research operations  Criteria needed for each functional area  Priorities necessary within and across functional areas

Closing the Funding Gap 23 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  Benchmarking to peers  Performance metrics  Areas of distinction or focus  Accreditation and mission alignment  ?

Next Step 24 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY  Summer 2010 – begin Administrative review  Fall / Winter 2010 – begin Academic, Research, Student Support review  Implementation in FY12 based on reviews

VI - Summary 25 ALASKA ’ S FIRST UNIVERSITY  AMERICA ’ S ARCTIC RESEARCH UNIVERSITY