1. 2014/15 Educational and General Budget Board of Governors Finance, Administration, and Facilities Committee October 16, 2013

2. Total Budget $2,183.7 Educational and General $1,562.4 Auxiliary $327.9 Restricted $293.4 2013/14 Total Budget Dollars In Millions

3. Appropriation $412.8 26% Tuition and Fees $1,019.7 65% All Other $129.9 8% 2013/14 E&G Revenue and Sources Dollars In Millions E&G Budget $1,562.4

4. Salaries & Wages $796 51% Benefits $353 22% All Other “Operating” $307 20% 2013/14 E&G Expenditures and Uses Dollars In Millions E&G Expenditures: $1,562

5. 2013/14 E&G Budget

6. 2013/14 Budget Balancing Strategies Strategy Number of Universities $ in Millions Use of Carryforward while Restructuring*8$26.1 Workforce Reductions*1123.7 Departmental Operating Reductions1113.7 Student Aid Reductions61.5 Reduce Investment in Facilities, Equipment, Information Technology42.0 Increase Student Fees; Enrollment32.2 Total14$69.2 *Several universities are in the midst of major, multi-year restructuring efforts, to include program and workforce realignment.

7. 2014/15 Revenue Assumptions Enrollment Expectations 2014/15 enrollment estimates should be consistent with university’s enrollment trends. Revenue State Appropriations – no change Tuition – no rate change; adjust for enrollment Use of Carryforward – for one-time purposes or as a transitional step toward structural changes.

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

9. Agenda Percent Change in High School Graduates 2008/09 and 2019/20 5,801 or 5.2% less than 10/11 +15 Source: WICHE, Knocking at the College Door

10. FTE Enrollment by University

11. 2014/15 Cost Drivers Expenditure Categories Percent Increase$ in Millions Salary Adjustments*3.1%$23.9 Employee and Annuitant Health Care* 7.0%**12.6 Retirement*21.4%18.2 PSERS and SERS Rate Changes Only*29.5%13.2 Consumer Price Index3.0% *Estimated cost of required adjustments based on a static complement. **Varies by health care program.

12. Projected Retirement Costs 32 % 27 % SERS Rates as % of Salary 2013/1415.1% 2014/1520.0% 2017/1831.6%

13. Personnel Complement 135 faculty and coaches participated in the Voluntary Retirement Incentive Program Some universities are in the process of developing workforce reduction plans that are not reflected above PASSHE has 544 fewer permanent employees today than in Fall 2008  192 fewer permanent faculty  352 fewer permanent nonfaculty

14. Payroll Headcount

15. Expenditure estimates also include the net effect of realignment efforts, which include the following two components: Reducing/eliminating under-utilized programs and services Expanding and/or creating relevant, high-need programs  Includes up-front, transitional, nonrecurring costs Restructuring and Realignment

16. 2014/15 E&G Budget

17. Tuition, Fees $1,015.2 Funding Requirement $68.7 *Includes other miscellaneous revenue, and use of carryforward. Note: Numbers may not add due to rounding. $ in Millions Appropriation $412.8 2014/15 E&G Budget $ in Millions E&G Budget: $1,613.9 Other $117.2

18. Funding Options Components for Balancing 2014/15 E&G Budget Projected Budget Gap: $68.7 Million

19. Line Item History YearLine ItemsAmount 2011/12All line items eliminated 2010/11 and 2009/10 Programs Initiatives Diversity and Equal Opportunity McKeever Environment Learning Center PA Ctr. For Environment Education Total Line Items $18.5 1.6 0.2 0.4 $20.7 Note: Line Items were funded at similar levels in fiscal years 2000/01 – 2008/09.

20. Possible Line Item Proposal Align academic program offerings to current and emerging high priority occupations across the Commonwealth that will provide employment opportunities for graduates to remain in Pennsylvania and contribute to the economic, social and cultural vitality of their region.

21. Possible Line Item Proposal Benefit Provide seed money for the expansion and development of programs that are critical to the economic vitality of the Commonwealth. Support flexible curriculum design utilizing various delivery methods to attract, retain and graduate traditional and nontraditional students in these key programs. Increase the availability of an educated work force that aligns with Commonwealth’s critical- need jobs. One-time funding commitment.

22. Board Action Items Approval of University E&G Budgets Page 19 of meeting materials Approval of Appropriation Request Page 43 of meeting materials

23. 4% E&G Appropriation $16.5 Assume Tuition Increase Similar to CPI $27.3 Line Item* $18.0 One-Time Sources $12.7 Enrollment $4.5 Nonrecurring Recurring *Line Item request to provide seed money for aligning academic program offerings with high priority occupations across the Commonwealth. 2014/15 Budget Request Strategy ($ in Millions)

24. 2014/15 Appropriation Request Proposal AppropriationAmount E&G Appropriation$429.3 Increase of $16.5 million or 4.0% Line Item$18.0 High Priority Occupations To submit a balanced budget, assume a tuition increase similar to the projected CPI.

25. 1988/89 18% reduction ($90M)

26. PASSHE Funding and Enrollment History