Budget Sub Meet and Confer Budget Primer September 12, 2017 Rick Straka

Presentation Topics 1. Tuition vs. Fees – What is the difference? 2. Types of Fees – What are they and why? 3. Fund types – What are they? 4. What role does foundation play in budget? 5. Trends in State Appropriation 6. General Budget Update 7. Capital Budget/Building Updates 8. Q&A

Tuition vs. Fees Tuition Major source of General Fund revenues along with State Appropriations General Fund Core Instructional and Operational budgets Tuition does NOT fund: Parking related expenses Student Union operations or debt service Residence Life operations or debt service Student Activity operations

Tuition vs. Fees Fees Defined and authorized by MnSCU Board Policy 5.1.1 http://www.mnscu.edu/board/policy/511.html http://www.mnscu.edu/board/procedure/511p1.html Fee revenues are restricted for specific uses based upon above MnSCU Policy and Procedure Note: There is a current Minesota State System Tuition and Fee Review Task Force addressing Tuition and Fee Policy

Types of Fees Mandatory Fees Optional Fees Senior citizen fee in lieu of tuition, Parking fee, Late fee, Payment plan fee, Statewide student association fee. Optional Fees Application fee, Credit for prior learning assessment fee, Student life/activity fee, Athletics fee, Health services fee, Special events fee, Residential learning community fee, Technology fee Personal property charges and service charges Revenue Fund fees

Major Fund Types General fund Student Activity Fund Revenue Funds Tuition and Appropriation, Primary university operations Student Activity Fund Student Fee Funded activities Revenue Funds Student Union, Residential Life (Room and Board), Outdoor Rec Fee Auxiliary Funds Parking, Bookstore

MSU Budget Process Operating Budget is Primarily Incremental in Nature (Gen Fund, Student Fees, Room and Bd) Last Year’s Base +/- Incremental Change Incremental Change Aligned with Strategic Goals Mandated/Required Changes Also Considered Legislative and Bargaining Changes Challenging Biennial Budget Finalized 6 weeks prior to Biennium Start Bargaining Agreements Often Settled Late in Biennium

Gen Fund Budget Subcategories Basic Operations Base +/- Incremental Equipment 40% Base, 60% Zero Based Strategic Priority Zero Based Repair and Betterment

Other Fund Types Federal Grants State Grants Private Grants Financial Aid Funds Agency Funds

Role of Foundation Primary Role of Foundation Secondary Role Scholarship Support via Annual Gifts and Endowment Earnings Secondary Role Restricted Purpose Gifts Foundation revenues are not a material source of unrestricted General Fund Budget

State Appropriation Trends Historic state funding goal 2/3 Appropriation, 1/3 Tuition Current Funding Approximately 1/3 Appropriation, 2/3 Tuition Fifteen year trend has been steadily declining state support. There has been an increase in last three biennium which partially supported tuition freezes in 4 of last 6 years (FY14-FY19). Unlikely to return to historic funding goal.

FY17 Review Budget was balanced Enrollments Decreased to 13,650 Reserves Look Sound – 7% range plus Slightly Positive Gen Fund Cash Flow for FY17 Largest Increase in Online Differential NAI No Financial Recovery Plan Required

FY18 Update Enrollment for FY18 Projected decrease 120-170 FYE. Plan for fairly stable enrollment in FY19 Decline in NEF and Transfers Uptick in Retention HS Demographics - Leveling Off in Total FY18 Tuition Shortfall Can be Covered by Biennial Cash Flow in FY18 FY18 Budget Planning Showed One-Time Cash Flow Increase FY19 Will Require Balancing Structural Deficit

Capital Budget/Building Funds General Obligation (GO) Bond Funds Funds Major Academic (Non-Revenue Fund) projects Ex. Ford Hall, Clinical Sciences, Trafton Renovation MSU Pays 1/6 of debt service from General Fund Future Projects After CSB Phase 2 will pay 1/3 of debt service

Capital Budget/Building Funds Revenue Bond Funds Funds Major Improvements to Residence Halls, Student Union and Other Revenue Streams Ex. Sears and Preska Halls, Dining, CSU Addition/Renovation, Outdoor Recreation Project Revenue Funds Pay 100% of Debt Service via Student Fees (Room and Board, CSU Facility Fee)

Capital Budget/Building Updates $25.8M in GO funded Clinical Sciences Building. Completed December 2016. Asking for $6.5M in CSB Phase II funding and $3.5M in HEAPR in 2018 GO Bonding cycle. Carkoski Dining Replacement (Rev Bonds) completed December 2016. Space Utilization Study in Fall 2017 will help develop long term capital plan to address Armstrong Hall

Open Q & A Questions??

Budget Sub Meet and Confer Budget Primer September 12, 2017 Rick Straka