1. Missouri Budget Update FANG Meeting June 21, 2012

2. Agenda Economic Outlook State Revenue and Spending Overview FY 13 and 14 Budget Issues Impact on Higher Education State Student Aid Programs Other News

3. Missouri Economic Outlook Personal income growth remains strong – Annual rate of 4 % Wages and salaries increased as 2011 ended – Expect continued strength into next year Unemployment declining – Remains below national average – Projected to reach 7 % by mid-2013

4. Missouri Revenue Revenue sources – Individual Income Tax – 67 % – Sales Tax – 25 % – Corporate Tax – 5 % – All other – 3 % Relatively consistent for past 5+ years Balanced budget assumes growth of 3.9 % Collections have been improving in most areas

5. Missouri Budget Update FY 2013 General Revenue budget - $8 billion – PK – 12 Education – 36 % – Human Services – 30 % – Higher Education – 11 % – Corrections/Public Safety – 8 % Includes approximately $850 M for higher education – Remains well below 2001 high point

6. Missouri Budget Update Potential budget issues for FY 2013 – Is revenue estimate accurate? 3.9% growth required to be balanced – Possible $75 M shortfall $35 M lottery $20 M new tax breaks $20 M Medicaid and disaster recovery Results – No action expected until after November

7. Missouri Budget Update What is ahead for FY 13 and 14? – Will core revenue remain strong? – Will tax credit reform be addressed? – Will tobacco tax increase pass? – How will pent up demand be addressed? – How will $200+ M of one-time funds be replaced for FY 2014? $40 M mortgage settlement $62 M federal fund carryover $115 M fund balances

8. Higher Education Budget Public Institutions – Governor’s recommendation $106 M reduction from FY 12 Revised to $60 M reduction based on housing settlement – Final budget provides level funding for FY 2013 Withholdings/spending restrictions? – Tuition Limitation – July 1 deadline

9. Higher Education Budget Student Financial Aid Programs – Level funding Access Missouri – Approximately $60 M available ($5 M MOHELA) – Expect 10-12 % increase in eligible applicants – Reduction of estimated awards possible Bright Flight – Approximately $12 M available – Awards may increase based on decline in eligible students

10. Higher Education Budget A+ – Approximately $30 M available ($4M from MDHE) – Continue full funding – 40 new A+ high schools – Projecting 10 % increase in students Ross-Barnett – Direct funding remains flat – Some additional funds available from other programs

11. Other Legislative News HB 1042 – Signed by Governor – Remediation study and reform – Statewide core transfer library Minimum of 25 lower division courses By July 1, 2012 – Foster reverse transfer – Authorize fees for approval of out-of-state publics – Restructures proprietary school licensure fees

12. Other News MDHE Student Portal – Information in letters to students – More publicity coming soon – Expansion in planning stage State student aid data report – Requested by Governor – Deadline of August 1 A+ rule revisions

13. Questions Missouri Department of Higher Education P.O. Box 1469 Jefferson City, MO 65102 Phone: (573) 751-2361 Fax: (573) 751-6635 Info. Center: (800) 473-6757 info@dhe.mo.gov www.dhe.mo.gov