1. President’s Recommended FY16 Annual Operating Budget Eric W. Kaler, president Richard Pfutzenreuter, vice president, Finance Board of Regents June 24, 2015

2. 2 Budget Goals Keeps tuition increases for resident students as low as possible — lowest increase in 15 years. Invests in Promise Scholarship to fully offset the tuition increase for 42% of our resident undergraduate student body. Increases the gap between tuition for resident and non-resident/non-reciprocity students to have the lowest impact on retention and enrollment. Recognizes that the University needs a strong partnership with the Legislature.

3. 3 State Appropriations Trend: 2006-2017* Operations & Maintenance/State Specials ($ in millions) *Excludes Cigarette Tax, MnCare, and nonrecurring project appropriations If fully funded, our legislative request would have restored funding to the University to its 2008 high point by the end of the biennium, not including inflation. Instead, it is 9 percent below our 2008 high point, not including inflation. To equal 2008’s high point our state appropriation for FY16 would be about $780 million, if we accounted for inflation. $684.4

4. 4 Total Revenue $3.7 billion Fed. Appropriations ($16.3m) 0% Tuition ($898.2m) 25% State Support ($650m) 18% ICR ($133m) 4% Internal Sales ($221.6m) 6% Gift & Endowment ($216.2m) 6% Sales, fees, misc. ($330.3m) 9% Grants, contracts, misc. ($342.3m) 9% Sponsored Grants ($570.0m) 15% Auxiliary Enterprises ($342.1m) 9%

5. 5 Tuition and Fees – FY16 Highlights 1.5% rate increase for resident undergraduates – all campuses Increase tuition for nonresident undergraduate students $1,350 (7%) increase on the Twin Cities Campus – differential becomes $8,420 Use revenue to increase Promise Scholarship. $461 (3%) increase on the Duluth Campus – differential becomes $3,950 Crookston, Morris and Rochester Campuses - nonresident = resident Align graduate and professional tuition rates with market conditions and peer institutions General resident graduate rate increase of 2.5%; others vary Resident rate for professional programs vary from 0% - 3.5% - most 2.5% NRNR rate generally increases 3.5%; some vary Carlson School of Management tuition surcharge (last year of phase in) Minimize campus/collegiate, course and miscellaneous fee increases

6. 6 Twin Cities Campus, Resident Undergraduate – Residence Hall FY15 Academic year FY16 Academic year $ Increase % Increase FY16 % of total Tuition (13-credit band)$12,060$12,240$1801.554.3 Student services fee836861253.03.8 Collegiate fee*443460173.82.0 Other required fees**22122983.61.0 Subtotal tuition & required fees 13,56013,7902301.761.2 Room & Board (double room, 14-meal plan) 8,5548,7441902.238.8 Total Cost– Twin Cities$22,114$22,534$4201.9%100.0% * Average of all undergraduate programs, 6+ credits – based on FY14 enrollment ** MN Student Association, Capital Enhancement Fee, Stadium Fee, Transportation Fee Change in Tuition, Fees and Room & Board – FY16 vs. FY15

7. 7 Proposed Tuition Increase Resident undergraduate change FY15 v. FY16 CrookstonDuluthMorrisRochesterTwin Cities Tuition$150 1.5% $176 1.5% $176 1.5% $76 1.5% $181 1.5% Fees$28 6.4% $54 4.8% $87 12.7% 0$50 3.3% Room and Board $156 2.1% $206 2.2% $178 2.3% $172 1.9% $190 2.2% Total$334 1.8% $442 2.2% $441 2.2% $348 1.6% 421 1.9%

8. 8 Tuition Increases Offset by Increased Aid for 42% of Minnesota-resident undergrads Federal Pell Grant - Increase award by $45 for most recipients; increase maximum to $5,775 per year Minnesota State Grant Program – Eligible full-time students will receive award increases between $480 - $550, based on financial need U Promise – Award increases of $180 for students who are unlikely to qualify for Minnesota State Grant program, with the intent of offsetting the 1.5% tuition increase for all qualified Minnesota resident undergraduates –Program is fully funded with awards between $750 - $4,000, based on financial need, for students from families with up to $100,000 annual adjusted gross income FY16 changes in Pell Grant, MN State Grant & U Promise

9. 9 Academic Excellence & Affordability: Investment Needs Competitive compensation at 2% (including steps) Financial aid Medical School Academic excellence Strategic initiatives

10. 10 $78.5M New Investments: Delivering on Budget Goals

11. 11 Summary: FY16 Recommended Annual Operating Budget Committed to access, affordability and academic excellence Benefits from Operational Excellence Accountable to Legislature and taxpayers Increases undergraduate tuition for Minnesota residents 1.5 percent 42 percent of Minnesota resident undergraduates will see the increases offset by aid

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