1. President Susan Martin & CFO John Lumm
Welcome!!
June 11, 2014 – Campus Forum
President Susan Martin & CFO John Lumm

2. Deloitte October 2012 Market Analysis Hyper-competitive Local Market
EMU operates in two difficult markets
Both core region (greater Detroit) and broader region (Michigan-Ohio-Indiana) are:
Marked by slow employment growth
Historical population decline
Dampens growth of traditional freshman
Several large competitors, with high and established market share
Near market saturation for many degree programs

3. EMU Profile Core region: Broad region:
8.6% of Bachelor’s degrees
7.5% of Master’s degrees
Broad region:
4.4% of Bachelor’s degrees
4.7% of Master’s degrees
In the period 2002 to 2011 EMU had:
A slight decline in bachelor’s degree market share
A slight increase in master’s degree market share
EMU offerings are well aligned towards high-growth & high-wage occupations

4. EMU Mission, Vision, Values
MISSION: (APPROVED/ISPC )
EMU enriches lives in a supportive, intellectually dynamic and diverse community. Our dedicated faculty balance teaching and research to prepare students with relevant skills and real world awareness. We are an institution of opportunity where students learn in and beyond the classroom to benefit the local and global communities.
VISION: (APPROVED/ISPC )
Eastern Michigan University will be a premier public university recognized for student-centered learning, high quality academic programs and community impact.
CORE VALUES: (APPROVED/ISPC )
Excellence – We provide an exceptional environment to our faculty, staff, and students. We improve our performance continuously and strive to be the best in everything we do.
Respect – We care for our people, communities and the environment and show respect for the dignity of the individual.
Inclusiveness – We create an environment that supports, represents, embraces and engages members of diverse groups and identities.
Responsibility – We are accountable – individually and in teams – for our behaviors, actions and results. We keep commitments.
Integrity – Integrity and transparency are critical to our institutional effectiveness. We pursue the highest level of personal, intellectual, academic, financial and operational integrity within the University community. 

5. Strategic Themes Student Engagement and Success
Descriptor: Foster an environment where students have the greatest opportunity to engage in purposeful learning and involvement so that they can successfully meet and maximize their education goals.
High Performing Academic Programs and Quality Research
Descriptor: Support and foster high quality academic and research programs that serve a demonstrated need in the community/region.
Institutional Effectiveness
Descriptor: Ensure EMU has the systems and processes in place that support the mission of the institution as efficiently as possible, while fostering innovation, diversity and ethical conduct in the workplace.
Service and Engagement
Descriptor: Support community engagement and collaborations that create a mutually beneficial exchange of knowledge and experiences.

6. SCH Total University (by Academic Year)

7. SCH Mix Total University
10.3%
10.8%
11.1%
11.6%
11.8%
12.2%
12.3%
12.0%
11.9%
11.4%
89.7%
89.2%
88.9%
88.4%
88.2%
87.8%
87.7%
88.0%
88.1%
88.6%

8. SCH by College 2006 vs 2013

9. Total Enrollment Trends among Michigan Publics and UT

10. Undergrad Enrollment Trends among Michigan Publics and UT

11. Graduate Enrollment Trends Among Michigan Publics and UT

12. New Student Enrollment in MI Publics (FTIACs and new Transfer students)

13. EMU Budget Update – June 2014
Twelfth in a series of budget forums and discussions with President
Martin that began in the Summer of 2009
Focus of budget forums is on Eastern’s budget, financial position
and external economic factors that are impacting us
Today’s Topics
Current Financial Position
Fiscal Year – Outlook
Fiscal Year – Budgets – General, Auxiliary, Capital Funds
Budget development context
Adopted budget key assumptions and major actions
Q & A / Open Discussion

14. Current Financial Position
Five years from FY through FY represented period of unprecedented campus capital investment – over $220M invested
Capital investment contributed to stabilizing/growing enrollment in challenging competitive environment, but as expected, additional borrowing and use of reserves adversely impacted Eastern’s financial position and Balance Sheet
FY FY
Long Term Debt $ 146M $ 240M
Unrestricted Net Assets $ 54M $ 25M
Moody’s (June 2013) – rating affirmed
Standard & Poor’s (September 2013) – rating downgraded
Higher Learning Commission (HLC) (August 2013) – Notification of potential Financial Panel review
Financial Challenge
Improve financial position and balance sheet while at the same time increase ongoing funding for capital investments to at least $15M annually

15. Financial Position – Rating Agencies Views
Similar comments cited in Moody’s and S&P’s 2013 reviews and reports
Positive Factors
Stabilized enrollment and large enrollment base
Expense control and cost containment actions
Manageable debt service burden at 5% of total operating expenses and broad diversity of revenues available to cover debt service
Net tuition revenue growth
Negative Factors
Full-accrual operating deficits although positive on cash basis
High financial leverage - reserves to debt
Slim financial resources - reserves to annual expenses
Declining demographics of graduating high school students in Michigan combined with heavy reliance on in-state students
Diminished, strained state funding environment

16. Current Year Outlook FY2013-14 year ends June 30, 2014
Operating deficits last two years FY and FY – following three years of surpluses
General Fund ($296M budget)
Projected Credit Hours – 533,500
Small (0.8%) decline vs. FY13 but 1% increase budgeted
Shortfall in Winter - higher Dec. graduates, lower new students – and Spring
Net revenue below budget for SCH and Financial Aid expense
Expenditures in total at or below budget
Deficit expected in General Fund
Auxiliary Funds and Capital
Auxiliary Funds ($44M budget)
Surplus expected – housing, dining revenue over budget
Capital ($9M budget)
On track to budget

17. FY2014-15 Budget Development - Context
Credit Ratings and HLC
FY15 budget must take steps to improve financial performance and position
Restoring operating surpluses demonstrates commitment to financial improvement and is first step in long-term financial position improvement
GASB #68
Accounting rule change requiring that the State’s net MPSERS pension liability be reflected in participants financial statements
Significant (non-cash) impact to Eastern’s financial statements beginning in FY
Enrollment and Credit Hours
In today’s highly-competitive Higher Ed environment in Michigan, not realistic to assume continuing enrollment growth annually in budgets
Realistic credit hour and revenue assumptions significantly improves probability of year-end surpluses to build adequate reserves
Focused Priorities and Resource Re-Allocation
Challenge to balance budget at lower credit hours while supporting priorities of successful PA program launch, enrollment growth, safety/security, technology

18. FY 2014-15 Budgets Approved by Board of Regents
Yesterday, FY15 budgets adopted by Board of Regents
General Fund Operating
Auxiliary Funds
Capital Spending
General Fund (millions) Amount Percent of Total
Revenues
Tuition and Fees $ %
State Appropriation
All other revenues
Total GF Revenue $ %
Expenditures
Personnel – Salaries & Benefits $ %
Financial Aid
SS&M
Utilities, Debt Service, Asset Preserv
All other expenses and transfers
Total GF Expense $ %
Budgeted Surplus $

19. FY 2014-15 General Fund Highlights and Key Assumptions
Student Credit Hour assumption – 524,880 hours
8,620 hours below FY projection; 19,146 below FY budget
New students in Fall – 2,600 FTIACs, 1,850 Transfers, 1,200 Grad
Tuition & Fee rate increase of 3.2% (State cap to receive performance funding)
Program fee increases higher for some 300 level courses and above
State funding increased by $4.8M
Total GF revenue up $6.2M (2.1%) compared with FY13-14
Total GF expenditures up $5.5M (1.9%) - $700K surplus budgeted
Expenditure Increases:
Financial Aid - $4.6M (11.7%) increase
Public Safety - $820K for additional officers and associated expenditures
Athletics – higher Game Guarantee revenues fund $550K operating expenditure increase and $500K capital for Rynearson turf replacement
Significant cost savings – over $5M in General Fund, $800K Auxiliaries
Increased operational - generated funding for capital, but still not adequate
FY15 operating budgets more robust
Realistic credit hours
Alignment of credit hours and associated financial aid
Full-accrual breakeven with 1% contingency
Consistent with University Budget Council Recommendations

20. FY 2014-15 Auxiliary and Capital Budget Highlights
Auxiliary Activity Funds
Room & Board rate increases of 4.0% approved by Board of Regents in March; Apartments re-structured to contract-based similar to residence halls
Auxiliary fund revenues of $49.2M include Dining $17.7M, Residence Halls $16.2M, Apartments $3.8M, Parking $3.7M, and all other $7.8M
Capital Budget and Three Year Projection
Approved FY15 capital budget of $12.6M. Priority placed on supporting CHHS growth, campus technology, and safety and security. Over 70% of total capital spending being invested in these priority areas, including:
Rackham Renovations $ 4.8M
Campus technology $ 2.7M
Safety and Security $ 920K
PA Program $ 750K
Three year capital spending projection of $36.9M with academic facility enhancements and technology investment accounting for about half ($18.8M). Next major residence hall renovation planned is Wise Hall in Summer of 2015.

21. Employee Total Compensation Changes
The budget includes the following total compensation changes during the next fiscal year for non-bargained-for employees (AP, AC, CA, AH classifications):
Retirement Plan
Effective November 1, 2014, the EMU contribution for employees hired prior to January 1, 2013 will be 9%; for employees hired on or after January 1, 2013, the EMU contribution will be 5% and if the employee contributes 4%, EMU will match that 4% (maximum EMU contribution of 9%)
Health Care Cost Sharing
Effective January 1, 2015, employee cost sharing of health care costs will be increased from approximately 9% to 12%
Merit Increase
The budget includes a 2% merit pool effective November 1, 2014
Human Resources will be scheduling information sessions in the month of July including group and individual sessions

22. Summary and Look Ahead
Improving Eastern’s financial position is a high priority that will take time to fully achieve. We are in a highly competitive Higher Education market in Michigan and the pace of improvement in our financial position must be balanced with the University’s other program and capital needs.
The FY15 budget takes an important step in that direction. With more conservative revenue assumptions and budgeted surpluses, the probability is significantly higher of realizing surpluses and adding incrementally to our reserves.
Future University budgets will need to build on the progress made with the FY15 budget. Identifying and implementing both cost savings and revenue enhancements will be required – in either case, innovation will be essential.
   Comments……Questions?