Florida State University Financial Planning and Outlook Chairs and Deans Meeting March 15, 2010

As Florida’s Economy Has Slowed

The State’s Unemployment Has Risen

State Revenues Have Declined

The Drop Has Come in General Revenue

Financial Planning Periods to (5-Year period, since spring 2007) to (3-Year current plan)

Budget Crisis Committee Lawrence G. AbeleProvost and Executive Vice President for Academic Affairs Rafael AlvarezAssociate Vice President for Budget/Planning & Financial Services Robert BradleyVice President for Planning and Programs John CarnaghiSenior Vice President for Finance and Administration Mary CoburnVice President for Student Affairs Kirby KemperVice President for Research Reggie CuylerStudent Government Association Senate President Pro Tempore Lee HinkleVice President for University Relations Elizabeth MaryanskiAssociate Vice President for Student Affairs Thomas McCalebProfessor, Economics Eric WalkerProfessor and President, Faculty Senate Jayne StandleyProfessor and Vice-chair, Faculty Senate Steering Committee

Base budget of General Revenue and Lottery 2007 = ~$336M

Budget Reduction Challenges A great deal of money really can’t be reduced – Health Insurance Benefits ~ $26.2 M – Utilities ~ $25.1 M (E&G only) – Retirement Benefits ~ $22.2 M – Social Security Match ~ $12.1 M – Medicare Match ~ $3 M “Fixed Costs” ~ $97.6 M/ $336 M base

Budget Reduction Challenges 1,018 Employees Earn < $30,000 50% of all Employees Earn < $50,000 Furlough for the lowest 50% yields ~ $200,000/day Furloughing everyone on campus yields ~ $1.1M/day Budget reduction by furloughs would reduce everyone’s salary by about 33%

Actions to Cut ~$56 million Released all vacant positions back to the state Released all positions vacated by retirements back to the state Reduced the budgets of all units on campus Engaged in the painful process of layoffs Sought federal stimulus funding for two years of salary plus benefits to those affected by layoffs

The Funding Reductions Have Dramatically Affected FSU Faculty and Staff Footnotes provide definitions

Program Eliminations Were Included For Several Reasons Based in part of a need for SACS “teach out” of 2 years with guaranteed funding Based use of Stimulus funds for “teach out” Based on problems with further Across-the-Board cuts and low on- going funding had already resulted in campus-wide program thinning Further Across-the-Board reductions would exacerbate program thinning, diminish quality and result in SCH reductions within current workload efforts Lack of Enough Non-recurring to Bridge an Uncertain Funding Gap and Cope with Questions about the Status of Non-recurring Resources

The Next Couple of Years Will Be Challenging Further State Reductions are in the Offing Federal Stimulus Funds will Disappear Restrictions will Continue to Limit the Use of Increased Tuition Funds

Federal Stimulus Funding In addition to filling the $30 million gap with central fund balances, we are also using temporary ARRA appropriations Status * Appropriated$21,182,461 Requested/Expected$21,182,461 * Funds are expected for only one more year

Federal Stimulus Funding Use Status Faculty/Staff Headcount200 Other Headcount (graduate students, adjuncts, etc.) Note: Primary use is to allow certain students to complete their degree programs

Other Resources Will Come Into Play Increasing revenues from tuition Increased revenues from the technology Fee Increased revenues from an aggressive fund raising effort Redeploying existing assets will continue

Bridging A Part of the Gap With Various Non-recurring Resources May Be Possible

Balancing State Recurring Reductions > Internal Recurring Reductions FSU’s 3-Year Plan to (strategy summary) 1.Earmarking future recurring revenues to close interim annual budget gaps and achieve normal budget balancing whereby: Recurring revenues ≥ Recurring internal allocations 2.Use of central non-recurring fund balances and Federal ARRA funds until there is a return to normal annual budget balancing

Where are We Now Recurring deficit remaining from ~$30 M Plans to reduce this without further unit cuts or layoffs – – Recurring deficit ~ ($11 M) Reduced from $30M with “new” funds – Non-recurring reserve ~ $40.5 M Tuition collections through – Legislative increases estimated 8% – Differential increases estimated 7%

Where are We Now (cont.) Legislative tuition increase is discretionary and all funds are committed to reducing the deficit. Differential Tuition increase is restricted to: – 30% to undergraduate need-based aid – 70% to ‘enhance the undergraduate educational experience’ and may not be used for graduate students

State total revenues are projected to increase by $1.4 billion, but the legislative debate is about a $1.0 billion to $3.0 billion shortfall Large dollar items in the shortfall debate: availability of Federal funds, transfers from Trust Funds, Medicaid, Casino Monies, the Budget Stabilization Fund, Class size, etc.

$29,215.0 in 2007

Senate Higher Education 6% GR cut to the base budget totaling $111 M $50.3 M GR added back for ‘Reprogram for State Priority Areas’ 8% across the board tuition increase $10.9 M in Recurring GR to replace non-recurring GR (BOG requested $11.3 M) $18.8 M in Recurring GR to replace some federal stimulus funds

House Higher Education 4.6% GR cut to the base budget totaling $92.3 M $65 M cut to ‘employee compensation & benefits’ (it is unclear exactly what this is at the moment) 8% across the board tuition increase

Recovery May Be Delayed Until 2015

What can we say at this point about potential additional reductions and FSU’s potential course of action? Although things may change we believe that with current non- recurring funds and the expectation of tuition increases we can continue our current strategy and avoid any cuts to campus for

Questions?