1. Tuition Policy Advisory Committee Meeting September 2, 2003 Committee Meeting #1

2. Today’s Agenda President’s Welcome President’s Welcome Procedural Issues Procedural Issues Background Information Background Information – recent history – university finances… – next year’s budget – tuition & fees

3. Welcome and Thank You for Agreeing to Serve!

4. Procedural Issues

5. Working Timeline

6. Recent History Recent History

7. Recent History Aging infrastructure confirmed by third party studies – conclusion: Under funding R&R $20M per year Infrastructure fee proposed but rendered impractical by AG ruling Legislative solutions sought with limited success UBC focused on $40M recurring shortfall for the FY03/04 fiscal year: $ 5M Aggressive cost savings measures $25M General budget reductions undertaken $10M R&R budget reduced to cover final legislative “dings”

8. Legislative Session Outcome Positives Negatives 100% IDC Retention +$20M 100% IDC Retention +$20M Tuition Flexibility Tuition Flexibility Continued downward trend in State financial support Continued downward trend in State financial support  GR reduction ($22M)  P/T Benefits ($6M)  90 Day Wait ($2M)  TX Tomorrow ($3M)  B-on-Time ($?M)  Higher tuition set asides $20M -$33M

9. Budget issues to Deal with $30M annual shortfall in R&R funding $30M annual shortfall in R&R funding –$20M annual coming into the year –$10M reduction to balance the Fy03/04 budget $15M recurring shortfall in competitive compensation funding $15M recurring shortfall in competitive compensation funding

10. University Finances

11. Total University Budget Educational & General Component 59% Endowment Component 9% Research Component 20% Auxiliary Component 12% $846.7M + 6.8% University Finances FY03/04 Total University Budget $1.44B $176.6M + 2.2% $129.1M – 1.0% $292.2M + 12.6% $1.44B + 4.7% or $63M

12. University Finances How does State General Revenue fit into the Picture?

13. The Permanent University Fund (PUF) Why isn’t it enough? PUF Lands==> 02’ Market Value $6.7B PUF Lands ==> 02’ Market Value $6.7B Available University Fund 2/3 UT System 1/3 A&M System System Costs PUF Bonds UT Austin UT Austin receives about 30% of the total distributed income from the PUF UT Austin return on investment <== return on investment Fy03/04 $109.4M

14. Next Year’s Budget Next Year’s Budget

15. Budget Accomplishments For our State Improved research competitiveness Improved research competitiveness For our Students Additional faculty positions Additional faculty positions Increased tuition & scholarship support Increased tuition & scholarship support Capacity to invest in specific programmatic initiatives Capacity to invest in specific programmatic initiatives For our Employees Preservation of a competitive benefit program Preservation of a competitive benefit program Possibility of mid-year salary program Possibility of mid-year salary program

16. It was a challenge to balance the budget! Efficiency Improvements $5M from Office Supplies & Credit Card changes…more to come $5M from Office Supplies & Credit Card changes…more to come Across-the-board Budget Reductions $25M total reductions…$4M from occupied positions $25M total reductions…$4M from occupied positions Reduced Infrastructure Funding $10M reduction in an area already under funded! $10M reduction in an area already under funded!

17. What are our Continuing Challenges? Infrastructure Funding - $30M annual shortfall

18. Facility Aging Drives Repair & Renovation (R&R) Requirements There is a significant bubble of R&R requirements in the near future. A substantial portion of the University’s Plant, those projects built in the 50’s through 80’s, is approaching 30-60 years old and will require substantial repair and renovation.

19. Why is a Near Term Infrastructure Solution Needed – Why can’t this wait? Campus & Building Safety Cost Usability / Habitability Continuity of Plant Operations

20. What are our Continuing Challenges? Competitive Compensation Program Funding - $15M recurring

21. Tuition & Fees

22. Appropriation & Tuition and Fees Collected per FTE 1999/00 UT vs. Peer Institutions

23. Competitive Position – Tuition & Mandatory Fees UT vs. Other Institutions (2002 Data) Source: Morgan Stanley, based on information from the College Board and the Chronicle of Higher Education..

24. A Rule of Thumb for Planning  Every dollar increase in tuition generates about $1M of net revenue, after set-asides, for the University on an annual basis.  Therefore, a student taking 28 SCH annually would pay $28 more in tuition per year for each $1 increase in tuition.

25. Next Steps

26. The Challenge Summary Infrastructure Funding - $30M annual Compensation Program Funding - $15M recurring

27. Possible Near Term Solutions Reduce expenses elsewhere and reinvest in R&R Just completed exhaustive effort Impossible to not impact people Reduce / eliminate January compensation program Increases competitive issues Not a long-term fix Increase tuition

28. Thank You