TENNESSEE BOARD OF REGENTS FINANCIAL OVERVIEW JANUARY 19, 2010 Presentation to the Association of Government Accountants’ Winter Seminar

Outline  TBR Financial Basics  How Have Tennessee Higher Education Finances Changed In Last Decade  Current Fiscal Challenges  Key Issues 2

TBR Revenue FY (millions) 3

TBR Revenues: 2 Year View 4

FY Expenditures (By Function, Millions) 5

Expenses by Function: 2 Year View 6

FY Expenditures (By Object, Millions) 7

Expenses by Object: 2 Year View 8

How Have Tennessee Higher Education Finances Changed In The Last Decade

Tennessee Higher Education Commission Annual Percent Change in State Appropriations 10

Tennessee Higher Education Commission Tuition and Fees Median TN Family Income Growth, : 13% or $6,

Tennessee Higher Education Commission Higher Education Revenues 13

Tennessee Higher Education Commission Higher Education Revenues 14

Tennessee Higher Education Commission Shifting Revenue Streams 15

Tennessee Higher Education Commission Shifting Revenue Streams 16

Tennessee Higher Education Commission Shifting Revenue Streams 17

Tennessee Higher Education Commission Total Student Support 18

Compound Annual Growth Rate: Adjusted TN Tax Collections, ( ) 19

Current Fiscal Challenges

Overview of State Appropriations (millions) 21

Overview of State Appropriations (millions) 22

Overview of State Appropriations (millions) 23

Use of ARRA Funds (millions) 24

Summary of Funding Challenge (millions) 25

Summary of Solution (millions) 26

Budget Reduction Summary (millions) 27

Key Challenges For Administrators

Educational Attainment If our State goal is to reach the U.S. average in educational attainment by 2025, then we must increase the number of college graduates by 3.5% annually 29

Economic Importance Of Educational Attainment 30

Growing Occupations In Tennessee Pay More Than Twice That Of Declining Occupations None of the top 10 declining occupations require any post- secondary education. In contrast, eight of the top 10 fastest growing occupations require some post- secondary education. 31

Trends In Higher Education Funding 32

Tuition & Fees Per FTE As % Of Peer Institutions 33

Conclusions  Need to create a more educated populous  Declining levels of state financial support  Increased levels of tuition & fees needed to -  Partially offset lost state funds  Fund cost of servicing increased enrollments  Fund inflationary costs 34

Future Challenge State’s Future Prosperity Depends on an Educated Populous Current low educational attainment levels represent a threat to Tennessee’s future economic vitality Need for higher enrollments combined with increased levels of degree and certificate completions are the cure Must Be Accomplished In the Face Of - - Stagnant or Decreasing State Support Limitations on Ability of Students to Finance Education Need for Increased Educational Productivity Doing more with the same (or less) 35

Questions