1. Office of the President 1 The Challenges Ahead April 6, 2010 President John Haeger

2. Celebrating Accomplishment Academics Joint art exhibit in the Beasley Gallery involving students from Sendai, Japan and NAU Professional Science Masters degree in Climate Change Solutions Adoption of the Recommendations of the Global Learning Task Force, with global competence embedded in outcomes for every student’s education Implementation of new first year seminar Parks and Recreation Management cited through program review for providing excellent professional experiences for its students Biological Sciences cited through its program review for significant involvement of undergraduates in research 2

3. Celebrating Accomplishment Research Support from Science Foundation Arizona (SFAz) for16 graduate research fellows and two Bisgrove post-doc toral scholars. National Science Foundation (NSF) funding to add mathematics and psychology to existing astronomy, environmental science and environmental biology summer Research Experiences for Undergraduate (REU) programs Jim Sample, Lori Rubino-Hare, Mark Manone (School of Earth Science and Environmental Sustainability/Center for Science Teaching & Learning) – grants from NSF and SFAzfor using geospatial tools to improve K-12 science teaching Paul Keim group (Apichai Tuonyok and others) - high-resolution forensic analysis of bacteria Jason Beduhn, National Endowment for the Humanities for international collaboration studying ancient manuscripts Huenneke and group of Chemistry/Biology/Health & Human Services faculty, National Cancer Institute, 5 year partnership with the U of Arizona Cancer Center and Partnership for Native American Cancer Prevention – research, training, and outreach Leslie Schulz, ARRA award from NIH, $577K, gene-environment interactions and diabetes in Native Americans in the border region of Mexico 3

4. 4

5. Celebrating Accomplishment Athletics 5 Athletes’ graduation rate is higher than NAU general student population Athletes’ cumulative GPA is higher than NAU average cumulative GPA Each student athlete is expected to perform a minimum of 10 hours a year. Student athletes typically perform over 4,000 hours of community service activity annually. NAU spends approximately 3% of its budget on Athletics; less than Big Sky, peer and division average. NAU Athletics is generally successful in the Big Sky; it is consistently among the top three contenders for the President’s Cup. Overall: NAU is receiving good value for its investment in Athletics. Source: March 8, 2010 report from Mellonbrook Group

6. Active and Upcoming Capital Projects BuildingBeginEnd SkydomeDecember, 2010August, 2011 Liberal ArtsDecember, 2010August, 2011 HRM (Inn)May, 2010December, 2010 North PlantCurrentAugust, 2011 North UnionCurrentNovember, 2010 Native American Cultural CenterSummer, 2010Summer, 2011 Health & Learning CenterCurrentJanuary, 2012 Master PlanningCurrentSeptember, 2010 6

7. Renovation of the Inn at NAU 7 Lab Kitchen Lobby

8. The Health and Learning Center 8 Indoor Track New Stadium Gymnasium Current Status

9. Native American Cultural Center 9

10. The National Debate on Higher Education Cost Performance Accountability/accessibility Role of the Research University 10

11. Arizona’s National Position 11 Source: Chronicle of Higher Education March 20, 2010

12. Change in U.S. States Support of Higher Education FY08-FY10 12 Source: The Chronicle Letter, January, 2010

13. Arizona Budget Issues Context Arizona is next-to-last among the states for job growth but are still one of the fastest-growing states Since December, 2007 –The unemployment rate has more than doubled to 9.5% –Over 275,000 jobs have been lost from the Arizona economy –Retail sales are down about 20% –Home prices have fallen by 42% –State revenues for FY10 were expected to be 34% less than 2007, but are falling short of that! FY10 Shortfall of $.7B and anticipated FY11 shortfall of $2.6B theoretically addressed in March 19 legislative session 13

14. AZ State Fiscal Support of Higher Education 14Source: The Grapevine, PostSecondary Education Opportunity

15. The University Budget 15

16. 16 Fluid Partially Fluid Not Fluid

17. 17 Fluid Partially Fluid Not Fluid

18. FY10 Budget Initial State Budget Planning April 2009 Forum 18 FY10 State Budget Actual April 2010 Forum ←General fund actually reduced to $133.1 ←Tuition changes and surcharges brought in $12M additional ←Net: funds available were $3M less than anticipated ←Therefore not all plans could be implemented

19. Stimulus Funding Last April, we did not know when and how much one-time stimulus money we would receive We received more than expected -- $23M used for personnel expenditures 19

20. One-time Projects Funded Approx. Amount (millions) One-time Projects Planned Approx. Amount (millions) VSRIP Faculty Payout4.0E-Planning? Mediate Furloughs1.5Hersey & Paperless? Innovation Fund1.0Arizona Architecture? GRAMS Research Infrastructure.9Financial System Replacement ? Web of Science & InCites (Cline).4Other Requests not yet approved 10.0 Transfer Processing Centralization.4Reserve3.0 Seamless Joint Admission.3 ASTRA Scheduling.3 Research Infrastructure Staff.2 Stimulus Reporting.1 20

21. Proposed Budget Planning Assumptions for FY11-12 Current General Fund appropriation of $133.1 M remains the same for FY11 if Proposition 100 passes The universities are subject to a $200M rollover – our share is $30M If Proposition 100 does not pass, our General Fund appropriation is reduced by $16M to $117M New $11M of one-time stimulus funds expected Estimate $8-$10M for FY11 in new tuition funding with enrollment growth. Can we earn an additional $10M for FY12? Administrative overhead fee rate remains stable Further divisional budget reductions limited Contract 6/6 for service professionals/administrators continued Ability to use furloughs maintained in contracts, but no current plans for FY11 Continue to look for ways to increase revenue and decrease costs Must fund classes to meet enrollment growth and losses from VSRIP FY 11 and 12 General Fund appropriations are a big ? The State may have continuing holes in its budget NAU will handle required 2.75% salary line reduction internally 21

22. Tuition Policy 22 Extended Campuses and NAU-Yuma Pay $1,500 less in tuition and fees than resident undergraduates on the research campus NAU-Yavapai NAU-Yavapai will charge about $3,100 less in tuition and fees

23. 23 Using New Guidelines

24. Faculty Retirement Incentive Program (VSRIP) COLLEGE/AREA # Participating COLL OF ENGINEER, FORESTRY & NATURAL SCI 10 COLLEGE OF ARTS & LETTERS 10 COLLEGE OF BUSINESS ADMINISTRATION 7 COLLEGE OF EDUCATION 3 COLLEGE OF HEALTH & HUMAN SERVICES 1 COLLEGE OF SOCIAL & BEHAVIORAL SCIENCES 9 PRESIDENT 1 PROVOST 2 Grand Total 43 Over $4 million in salary and ERE 24

25. 25 Best Case Scenario Example: FY11-FY12 State appropriation maintained in FY12 Tuition Increases to average of peers over two years; enrollment increases of 1,000 each year provides approximately $10 million a year 201020112012 State General Fund Appropriation133M Marginal Base Tuition Revenue Growth (summative)10M20M30M Base Fund (State General Fund + Marginal Tuition)$143M$153M$163M Discretionary Tuition Funds Available Over Prior Year10M Other Considerations Rollover-30M Use of one-time stimulus funds23M11M

26. Medium Case Scenario Example: FY11-FY12 10% reduction in State General Fund in FY12 (MOE no longer in effect) Tuition Increases to average of peers over two years; enrollment increases of 1,000 each year provides approximately $10 million a year 26 201020112012 State Fund Appropriation133M 120M Marginal Base Tuition Revenue Growth (summative)10M20M30M Base Fund (State + Marginal Tuition)$144M$154M$150M Discretionary Investment Funds Available Over Prior Year10M-$4M Other Considerations Rollover-30M Use of one-time stimulus funds23M11M

27. 27 Bad Case Scenario Example: FY11-FY12 Proposition 100 Fails Additional 10 percent General Fund Reduction in 2012 Limited Tuition/Enrollment Increases ($5M per year) 201020112012 State General Fund Appropriation133M117M106M Marginal Base Tuition Revenue Growth10M20M25M Base Funds (State General Fund + Marginal Tuition)$143M$137M$131M BUDGET REDUCTION USING ALL NEW TUITION REVENUE AS BACKFILL (an unrealistic assumption because cost rise annually) -$6M-$12M BUDGET REDUCTION FROM 2010 GENERAL FUND BASE (worst case) -$16M-$27M Other Considerations Rollover-30M Use of one-time stimulus funds23M11M

28. What is the effect of these possible scenarios? 28

29. University Strategies – Short-term Strategies Use reserves for immediate, one-time reductions; spend the next year identifying any permanent reductions needed Review every vacancy for most critical use Local funds for university use Review academic programs, services, practices, policies etc. for effective and efficient practices Review non-academic programs, services, practices, policies, for effective and efficient practices Use technology to improve services and lessen need for people Consider reductions in financial aid What economies can the university community suggest? Conservative on spending Build central reserves for FY12 cliff Continue to anticipate changing scenarios Move the university forward to fulfill university mission, goals and priorities 29

30. Must Invest in Institutional Priorities Strategic Investment in Personnel Class Coverage Student Success Using Technology to change business practices Building renovation System Architecture Degree programs for the future 30

31. Innovation Fund Decisions Key PersonnelProjects Tom Acker, Paul Flikkema, Bruce Hungate, Matthew Hirteau, Darrell Kaufman, George Koch Climate Science and Solutions Karen PugliesiCurricular Design Innovation Paul Keim, Eck Doerry, Maribeth Watwood, and Gery Allan Bioinformatics Curriculum Development Paul JagodzinskiTransforming STEM Education Liz Grobsmith/ProvostCurricular Innovations Jane Kuhn and Richard Bowen, CAS staff working with proposers Sustainability Janet McShane; Karen PugliesiComprehensive Redesign of Entry Level Mathematics and Statistics David Bousquet/Capital AssetsProximity Cards Provost’s Office, Associate Deans, Gypsy DenzineFaculty Reporting Harvey CharlesGlobal Education Task Force 31

32. Degree Granting Public Institutions 32 Carnegie Classification 2008

33. NAU-Yavapai 33

34. Long-Term Strategies for Academic Excellence and Economic Well-Being Assumptions: –Permanent shift in state funding –State funding will be tied to new performance measures –Business and technological changes have helped the institution but there is a “cost of doing business” Academic Issues and Challenges: –Tenure density –Full use of technology available –Freshman/sophomore year –Organizational structure –Low enrolled courses, majors and programs –Standardization of course content –Self-paced and competency-based modules 34

35. Questions and Comments 35