Salisbury University Strategic Planning Team Financial - Environmental Scan October 2002

Trends - General Declining State Support as % of Budget Declining State Support as % of Budget Competing with other social goods Competing with other social goods Change in philosophical reasons for public education Change in philosophical reasons for public education –Informed Citizens in a democracy –Work Force Demands –Private Income Enhancement

Trends - General Higher Ed seen as cost not investment Higher Ed seen as cost not investment Big Government vs. Privatization Big Government vs. Privatization Middle Class Entitlements Middle Class Entitlements Culture of Evidence Culture of Evidence –Calls for outcomes assessment

Trends - General In economic downturns, enrollment usually increases In economic downturns, enrollment usually increases Revenue generated by this demand is usually offset by limited supply and marginal cost increases Revenue generated by this demand is usually offset by limited supply and marginal cost increases

Other States

Virginia Virginia –Projects at least a $2 billion deficit in FY 2003 –Has had consecutive 8% and 15% cuts in funding for FY 2003 Education has been hit with layoffs and funding reductions Education has been hit with layoffs and funding reductions –UVA has lost $23.4 million in general funds for FY2003, with another $33.3 million reduction expected in FY2004 –UVA had initial tuition increase of 8.9%, but has approval for a mid-year increase of $200 per full-time student –George Mason increased tuition and fees by almost 25% Pennsylvania Pennsylvania –Penn State University has had a 5% general fund reduction in FY 2003 ($16.7 million)

West Virginia West Virginia –Anticipate a $200 million state deficit Preliminary 3% across the board general fund reduction Preliminary 3% across the board general fund reduction New Jersey New Jersey –$3.8 million dollar reduction (6.59%) on Department of Education North Carolina North Carolina –For FY 2003 University of North Carolina system has increased tuition by 8% and 12% respectively for in- state and out-of-state students –Eliminated 1,070 positions –Reduced general funds by $131 million in recurring activities

Maryland Economy Estimated $400 million deficit in FY 2003 and $1.3 billion deficit in FY 2004 Estimated $400 million deficit in FY 2003 and $1.3 billion deficit in FY 2004 State hiring freeze State hiring freeze

USM Funding Guideline Funding Guideline –Diminishing state allocation per FTES Mandatory increases from the state Mandatory increases from the state –Debt Service ($107,024) –Health Benefits (≈ $200,000) –Workmens Compensation (varies)

Possible Responses Cost Containment Cost Containment –80% of budget is wages and benefits –Re-engineering, streamlining operations –Economies of scale Collaborative ventures with UMES Collaborative ventures with UMES –Incentives for good managers –Eliminate lower priority services, programs –Outsourcing

Possible Responses Revenue Enhancement Revenue Enhancement –Enrollment Growth to fill unoccupied seats –Innovative delivery systems Appropriate technology Appropriate technology Blended courses Blended courses –New Markets Off campus Off campus Weekends Weekends

Possible Responses Revenue Enhancement Revenue Enhancement –Non-credit activities Grants Grants Contracts Contracts Federal Earmarks Federal Earmarks Non-credit courses, workshops Non-credit courses, workshops

Possible Responses Revenue Enhancement Revenue Enhancement –Private Giving –Corporate and Private Foundations –Planned Giving