1. University of Arkansas FY06 & FY07 Finances Faculty Senate March 8, 2006 Faculty Senate March 8, 2006

2. Ordinary folk (parents, the public, university students, staff & faculty, etc.) at right after 20 minutes of trying to understand the in’s and out’s of university financial operations (after The Scream by Edvard Munch below)

3. FY06 Financial Issues  E&G utility budgets are less than projected expenditures by $1.75 million. With a $660K reserve, the deficit carried forward to FY07 is expected to be $1.09 million.  Annual expenditures of about $3 million for new faculty start-up and matching funds for grants are NOT in the FY06 budget.  Uncommitted & unrestricted year-end balances that are used to supplement inadequate contingencies are decreasing as a result of the carry-forward policy. Thus, it is harder to find funds for activities, like start- ups & matches, that the university cannot decide to stop doing.

4. FY07 Revenues  State Appropriations  FY06$104,180,511  FY07  RSA “A”$94,980,287  RSA “B”$6,861,071  RSA Total$101,841,358  EETF (9/2/05)$8,338,715  FY07$110,180,073  FY07 Increase$5,999,562  FY06 SSCH Growth in FY06 Tuition Dollars $5,064,106  Additional Revenue from Tuition Rate Increase $658K/ (% of increase)

5. FY07 Revenues Continued  FY07 Projected Enrollment Increases  Undergraduate6.3%  Graduate5.1%  Law(0.7%)  Revenue Growth$5 million  Remaining Unrestricted & Undesignated Revenue Adjustment (primarily to reduce expected earnings on cash management) ($267K)  Generally positive financial picture for FY07 though it is doubtful that there will be sufficient funding to do “all good things that should be done”.

6. Unrestricted but Dedicated Fee Revenues  Mandatory fees are part of the cost of education  Student initiated new mandatory fees:  Readership Fee  Concert Fee  Institutionally initiated fees such as:  Teaching Enhancement & Laboratory Equipment Fee (varies by College or School) has provided increased teaching support to offset the lack of departmental maintenance increases  Mandatory fees are not available for general budget considerations.

8. 4-Year US Public vs UA Tuition & Fees

9. UA Enrollment

10. UA Enrollment ( FTE ) Note: FY06 is an estimate.

11. UA State Appropriation

12. UA Appropriation per FTE Student Note: FY06 is an estimate.

13. UA Appropriation per FTE Student Note: FY06 is an estimate. (’89-’90 constant dollars*) * Based on HEPI inflation rates

14. Two Primary Sources of UA E&G Revenue:

17. University of Arkansas Fayetteville for FY2006

20. FY05 Expenses by Function Financial Report Budget* Instruction$96,087,697$86,947,457 Research$87,513,517$11,583,474 Public Service$57,677,724$4,998,619 Academic Support$28,909,057$22,745,887 Student Services$16,292,007$14,121,582 Institutional Support$25,239,057$19,279,045 Scholarships & Fellowships$24,370,475$22,858,145 Plant Operations & Maintenance$29,503,679$22,755,944 Auxiliary Enterprises$63,467,384 Debt Service$5,805,302 Reserves$1,856,128 Depreciation$38,875,804 Total Operating Expenses$467,936,401$212,951,583 *0102, 0112 & 0372 Unrestricted Only Revised Q4

21. FY07 Budget  Have to budget those expenditures not previously budgeted but for activities for which the institution does not or cannot made the decision to quit doing.  Classified pay plan requires $896K  GA stipend increases cost $63K/(% of increase)  N/C Non-faculty salary increases cost $272K/(% of increase)  Faculty salary increases cost $701K/(% of increase)  Faculty promotion increases $318K  Utility E&G budget increase for FY07 cost only is $1.48 million  Additional funding for faculty positions under review

22. General Financial Challenges  Diversity enhancements  Student centered  Full formula funding  Budgeting revenue enhancements (i.e., investments vs. improvements; e.g. SSCH growth and grants & contracts with indirect costs)  Capital needs  Need-based scholarships  Balance need for flexibility with demonstrating full and effective use of funding  Faculty, GA, & Staff salary improvement  Base support for activities made possible by development  Unrelated business & private sector competition  Public sense that universities are not controlling costs  Deferred maintenance & renovations to modernize “Universities share one characteristic with compulsive gamblers and exiled royalty; there is never enough money to satisfy their desires.” —Derek Bok (1930- ) President, Harvard University (1971-1991)