1. February 14, 2001 8:30 – 10:00 AM David K. Scott, Chancellor University of Massachusetts Amherst 374 Whitmore Administration Building Amherst, MA 01003 413-545-2211 dkscott@chancellor.umass.edu Budget and Planning Update

2. 2 Agenda 8:30 AMWelcome 8:35 – 8:50Background 8:50 – 9:30Financial Projections FY02 and FY 03 9:30 –10:00Questions Agenda Meeting to discuss next steps: March 13, 2001, 8:30 –10:00 AM Campus Center Auditorium

3. Budget and Planning Update 3 Background Strategic Action FY96-01Strategic Action FY96-01 was designed to identify key areas for investment and to realize funds for those investments through new revenues and planned reallocation and restructuring of the base budget. For further information, please see: Strategic Action - Towards a Commonwealth of Learning - A Six Year Retrospective – FY 1996-2001 http://www.umass.edu/chancellor/vision http://www.umass.edu/chancellor/vision In addition, a variety of investments were made in the long-neglected campus infrastructure, in financial aid to increase access, in information technology to maintain competitive advantage and in other major programmatic initiatives. The overall institutional budget has not been reduced and we do not anticipate reductions in the near future. While the state appropriation to the campus has increased on average 5.8% per year over the past five fiscal years, it is unlikely to do so in the immediate future.

4. Budget and Planning Update 4 Revenue Factors Leading to Ongoing Need for Reallocation and Restructuring The state appropriation to the campus has increased an average of 5.8 percent over the past five fiscal years. The anticipated increase for FY02 is 3.5 percent. The anticipated increase for FY03 is 3 percent. Fees have been held level or have been increased minimally in past six years. While some increases are expected in overhead from grants and other activities, no major increases are expected from distance learning or licensing/patents in the next several years, beyond the initial investment needs. Continued increases in private fund-raising are expected, but much of this revenue is earmarked to specific areas or projects and, as such, will not help address the shortfall for at least several years. Revenue-based Factors

5. Budget and Planning Update 5 UMA State Appropriations Projection State Appropriations

6. Budget and Planning Update 6 State Tax Revenue and UMA State Appropriation Estimated Change in Tax Revenue - FY2002 Governor’s Office – 3.5% Massachusetts Tax Payers Association – 0 to 2% UMass President’s Office – 3.5% State Appropriations

7. General Operations Budget Sources and Uses FY01 to FY03 * FY01 and FY02 salary increases (COLA/Merit): Includes annualization from prior year

8. Budget and Planning Update 8 Financial Projections FY02 and FY03 Proposed Reallocations

9. Budget and Planning Update 9 Summary – Key points It is anticipated the overall state allocations will increase by smaller percentages in FY02 and FY03 than in preceding five years. Currently, the approximate shortfall for FY02 and FY03 is $15M. A more precise number will be known in late spring. Over the course of FY02 and FY03, the reallocation for Academic Affairs will be $2.4M/1.5% and for other executive areas* it will be $3.2M/5.0%. It is possible that the percentages will be increased in FY03 depending on state appropriations and other factors. *University Advancement still under review Summary

10. Budget and Planning Update 10 Fiscal Management – Summary 10 Year Financial Plan Summary 10 Year Plan

11. Key Performance Indicators

12. Budget and Planning Update 12 Change in Resources and Investments FY 1996 - 2001 APPENDIX Millions Reallocation - $11.6M Restructuring - $15.5M Other Revenue - $11.0M State Appropriation - $67.0M One-time Strategies - $3.1M) Program Investments - $11.6M Info Technology - $8.9M Infrastructure - $8.7M Development / Athletics - $2.6M Major Initiatives - $13.0M Financial Aid - $8.8M Central / Mandated - $11.3M Salary Increases - $43.3M

13. Budget and Planning Update 13 Financial Model Options FCI = total cost of existing deficiencies current replacement value = 0.25 at UMass Amherst = $ 1.69 billion $ 431 million Annual Funding Facility Condition Index (FCI) Fiscal Year Ex. 1 - Current funding Ex. 2 - Maintain FCI Ex. 3 - Reduce FCI to.10 ‘01‘02‘03‘04‘05‘06‘07‘08‘09‘10‘11‘12‘13‘14‘15‘16‘17‘18‘19‘20 APPENDIX