Board of Trustees Budget Update 04/13/2012 1

Budget Objectives Building Value for Michigan Build upon status as one of world’s top 100 universities, serving Michigan first Sustain land-grant mission - preserve access for talented students, prepare students to be part of a highly talented work force and provide cutting edge research and outreach, – the key drivers for 21 st century prosperity Fulfill obligations of a responsible long-term steward of MSU’s people, programs and facilities Assure MSU remains a best value for students and other stakeholders 2

MSU Context Metrics Academics, Research & Outreach 77% graduation rate – up 3% in 5 years, the largest increase in the Big Ten Exceeds predicted (U.S. News) graduation rate by 15% 91% retention rate – Carnegie peer median 87% 90% of seniors rated their educational experience as good or excellent Student faculty ratio – 16:1, approximates Big Ten average $439M in external support, up 15% in five years 1,000,000+ outreach contacts per year 3

Financial Aid Over $600M in financial aid administered, 200% increase over 10 years, general fund supported aid up 67% over five years Student debt levels beneath national averages 4 MSU Context Metrics MSU Maintains Distribution of Family Income Within Student Population

Stewardship Over past five years, reengineered employee health care programs Eliminated funded post-retirement health care for new employees Incentivized use of generic drugs Capped funded health care growth at 5% per year Top 6 th percentile over 10 years for endowment performance Among the lowest energy cost and consumption patterns in the Big Ten Over $110M in reductions and cost containment efforts over 3 years 58% of expenses dedicated to core activities (Instruction, research, public service), 2 nd in the Big Ten 5 MSU Context Metrics

6 Appropriation “What if Analysis” If Appropriations Resident Undergraduate Tuition All Other Tuition & Fees Note 0%5.0% June 2011 Planning 1.0%4.3%5.0% 1.4% Governor 4.1%5.0%Cap at 4.0% Costs $0.4K 1.8% Senate 4.0%5.0%Cap at 3.5% Costs $1.8M 2.0%3.6%5.0% 3.0%2.9%5.0% 4.0%2.2%5.0%

Appropriation Analysis-AgBio/MSUE Approp 3% AgBio $28.3M $0.9M MSU E $24.4M$0.7M Governor, Senate, and House recommendation each call for appropriations at levels House recommendation includes provision that could allocate an additional $1.6M (3.0%) if performance funding remains unallocated Impact of state funds are compounded by leveraging of federal match

8 Appropriation Analysis-FRIB Governor and Senate include FRIB funding of $2.4M in in their respective recommendations Governor also includes $5.0M in House proposal shifts like amount to Department of Treasury appropriation Amounts are dedicated to pay debt service on community cost- share portion of project Longer term, work to receive appropriations adequate to fund project expenditures directly instead of debt service model

9 MSU Planning Model Summary Budget Item June 2011* *** April 2012 State Appropriations-15%0%0-1.8% Tuition & Fees6.9%5.0%3.5%-5.0% Financial Aid10%5.5% Graduate Assistants0%3.0% Faculty Salaries2.0%** Utilities5.0%8%4.0% Health Care5.0%5%5.0% Surplus/(Deficit)$0 $0.0-$1.5 *Preliminary budget approved by the BOT in June, 2011 **Includes 1.5% general merit, 0.5% college market, plus 1.0% provost market pool *** Appropriations and resident undergraduate tuition based upon Governor’s recommendation, utilities reduced by 2.1M, entering class assumed at 7,650