1. PASSHE Operating Budget Finance, Administration, and Facilities Committee Board of Governors July 8, 2013

2. E&G Budget Dollars in millions *FY 2008/09 E&G Appropriation is net of midyear budget cuts. **2009/10 and 2010/11 includes ARRA SFSF funds.

3. 1988/89 18% reduction ($90M)

4. PASSHE Funding and Enrollment History

5. History of Tuition and Average Fees 2000/01 – 2012/13 22% less than 2010 National Average: $17,860 National Increase: 112% PASSHE Increase: 89% PSU Average: $26,134 PSU Increase: 95%*

6. Tuition and Average Fees 2012/13 by University 22% less than 2010

7. Revised Budget Projections Dollars in Millions Note: Numbers may not add due to rounding. Revenue/Sources2012/132013/14$ % Tuition$831.1$825.5($5.6)(0.7%) Fees178.1177.7(0.3)(0.2%) State Appropriation412.8 0.00.0% All Other Revenue65.666.61.00.0% Use of Carryforward Funds50.430.1(20.3)(35.3%) Total Revenue/Sources$1,537.9$1,512.6($25.3)(1.6%) Expenditures & Transfers Salaries & Wages$787.8$800.4$12.61.6% Benefits324.9357.432.510.0% Subtotal, Compensation$1,112.7$1,157.7$45.04.0% All Other Expenditures/Transfers425.1431.96.81.6% Total Expenditures & Transfers$1,537.9$1,589.6$51.73.4% Revenue/Sources Less Expenditures/Transfers $0.0($77.0)

8. E&G Budget Request vs. Funding Dollars in Millions

9. Cost Containment Results Efforts made in recent years to become more efficient and reduce costs include: Workforce management--400 fewer funded positions Streamlining course offerings and academic programs Consolidated operations--such as electronic library services, distance education and construction services Better utilization of technology to improve operations and student services Multi-year collaborative procurements Energy utilization reductions Over the last 10 years, base budget reductions of $285 million have reduced PASSHE’s budget by 16%.

10. Projected Retirement Costs 45 % 36 % SERS Rates as % of Salary 2012/1310.5% 2013/1415.1% 2017/1831.1%

11. 2011/122012/132013/142014/15 Faculty $ 457.9 $ 477.6 $ 488.8 $ 500.9 AFSCME 111.9 114.1 117.6 123.5 SCUPA 21.9 22.5 23.3 24.3 Nonrepresented 108.0 111.3 114.6 118.6 Other 32.6 33.0 33.9 34.8 Students 22.6 Total Pay $ 754.9 $ 781.2 $ 800.8 $ 824.8 Change ($) $ 26.3 $ 19.6 $ 23.9 Change (%)3.5%2.5%3.0% Not in Original Budget$22.2$14.0N/A Estimated E&G Pay through Life of Contracts Dollars in Millions

12. Balancing the 2013/14 Budget FY2012/13 resident full-time undergraduate tuition rate is $6,428 per academic year.

13. Projected Percent Change in the Number of New High School Graduates, by County: 2012-2022 Percent Change 2012-2022 by County 66.7 to 100.033.3 to 66.6 0.0 to 33.2 -33.3 to -0.1-66.7 to -33.4 -100.0 to -66.8

14. FY 2013/14 Budget Spring 2013 Revisions

15. Commonwealth Outlook  “Pennsylvania economy is still in recovery and has not yet emerged from the ‘Great Recession.’”  The New Normal: Mandatory expenditure increases projected to eclipse revenue projections. Pensions, healthcare, corrections, debt service  The New Normal: Mandatory expenditure increases projected to eclipse revenue projections. Pensions, healthcare, corrections, debt service  13/14 enacted budget is $63 million less than Governor’s budget; excludes pension savings. State Revenues $56.9 million or 0.2% above estimate -1.8% 1.8% -1.4% *Estimates are not provided for July * 3.6% 4.8% -0.8% -2.8% -1.6% 0.9% 1.8% -1.7%

16. 2013/14 Governor’s Recommendation Dollars in Millions Note: Numbers may not add due to rounding. Revenue/Sources2012/132013/14$ Change% Change Tuition$830.7$833.6$3.00.4% Fees178.3179.10.80.5% State Appropriation412.8 0.00.0% All Other Revenue66.367.00.71.0% Use of Carryforward Funds34.830.1(4.7)-13.5% Total Revenue/Sources$1,522.8$1,522.6($0.2)(0.0%) Expenditures & Transfers Salaries & Wages$768.5$773.3$4.80.6% Benefits326.1354.528.38.7% Subtotal, Compensation$1,094.7$1,127.7$33.13.0% Utilities34.735.50.82.3% Services & Supplies256.4257.00.60.2% Capital Expenditures & Transfers137.1139.42.31.7% Total Expenditures & Transfers$1,522.8$1,559.6$36.82.4% Revenue/Sources Less Expenditures/Transfers $0.0($37.1)

17. 2013/14 Assumptions, Revised  Enrollment Reductions in anticipated enrollment  Salaries Salary adjustments have been added for APSCUF (faculty and coaches), SCUPA and nonrepresented employees  Benefits Healthcare rates: 1% decrease - 3% increase Retirement increases: SERS—45%; PSERS—37%  Operating Utilities: 3% increase; all other: similar to current year Capital/Transfers: similar to current year

18. Note: Numbers may not add due to rounding. Revised Enrollment Projections Annualized FTE Students 2012/13 % Change2013/14 FTE Change % Change Original Undergraduate96,205(2.2%)96,5323270.3% Graduate10,609(6.7%)10,561(48)(0.4%) Total106,814(2.7%)107,0942800.3% Revised Undergraduate95,889(2.5%)95,495(394)(0.4%) Graduate10,902(4.1%)10,734(168)(1.5%) Total106,791(2.7%)106,229(562)(0.5%) Difference(23)(865)

19. Agenda Revised Enrollment Projections Annualized Full-time Equivalent 5,801 or 5.2% less than 10/11

20. $ in Millions 18% Reduction ($90 Million PASSHE Appropriations

21. 2013/14 Budget Adjustments Dollars in Millions *Original 2013/14 projection for PASSHE health care programs was a 7% increase; revised projection is a 2% increase; no change to PEBTF.