1. Town Hall Meeting
May 9, 2017
Presented by: Barry Mills, Deputy Chancellor and Chief Operating Officer
Kathleen Kirleis, Vice Chancellor for Administration and Finance
Lisa Johnson, Vice Chancellor for Enrollment Management
Emily McDermott, Associate Provost and Dean of Faculty
Marie Bowen, Assistant Vice Chancellor for Human Resources

2. Agenda Introduction Current University Financial Situation
FY17 Operating Budget
FY18 Operating Budget
Capital Projects
Status of Enrollment
Course Section Planning
Next Steps

3. FY17 Operating Budget

4. Operating Budget Sources of funds: tuition and fees
state appropriation
grants & contracts
auxiliary revenue
federal aid
Expenditures that normally occur during business operations:
salary and fringe
utilities
supplies
equipment
depreciation and interest

5. FY14 – FY17 Results FY14 FY15 FY16 FY17 Initial Budget FY17 Projection
Enrollment – HCT
16,277
16,756
17,030
17,085
16,847
Revenue (in millions)
354,137
376,122
406,403
431,866
424,310
Expenses (in millions)
347,427
377,435
411,912
429,607
431,310
Operating Margin $ (in millions)
6,710
-1,313
-5,509
2,259
-7,000
Operating Margin %
1.9%
-0.8%
-1.4%
0.5%
-1.6%

6. Employment (FTE as of Nov)
Faculty and Staff Trends
Employment (FTE as of Nov)
FY14
FY15
FY16
FY17
Faculty
683
739
799
809
Staff
1,202
1,254
1,286
Total
1,885
1,993
2,053
2,095

7. Expense and Enrollment Growth

8. FY17 Operating Budget Adopted by Board of Trustees (July 2016)
Enrollment – HCT
17,085
Revenue (in millions)
$431.9
Expenses (in millions)
$429.6
Operating Margin $ (in millions)
$2.3
Operating Margin %
0.50%
Reductions needed to meet Budget
$25.8

9. FY17 Budget Deficit Solutions
Base budget reductions $11.2 M
Online/summer fee increases $3.6 M
Financial aid (lower enrollment) $1.0 M
Deferred IT investments $1.2 M
Shuttle/utility savings $1.2 M
Capitalizing lot/public safety costs $818 K
Hiring freeze $750 K
Graduate stipends/waivers $410 K
NUP voluntary furlough $234 K
Higher other revenue $694 K
Lower than projected state ($700 K)
TOTAL: $20.4 M

10. Operating Margin Operating Margin is a measure of financial health.
It indicates how much revenue is left over after operating expenses are considered.
Provides for reinvestment in the institution.
The formula for calculating operating margin is:
(Operating Revenue - Operating Expenses) / Revenue = Operating Margin
FY15
Actual
FY16
FY17
Projected Budget
Operating Margin
-0.8%
-1.4%
-1.6%

11. Depreciation and Debt-Related Expenses
Depreciation - a straight-line reduction in the book value of an asset based on the asset’s estimated useful life.
Debt – related costs
Interest Expense
Principal Payments
Depreciation and Interest Expense are considered operating costs and are part of the operating budget.
Principal payments are a balance sheet item that requires the use of cash for the annual payments due.

12. Depreciation and Debt-Related Expenses (in millions)
FY14
FY15
FY16
FY17 Budget
FY18
Projected
Depreciation
13.0
16.6
19.0
24.4
23.3
Interest Expense
9.1
11.6
11.7
11.3
12.9
Principal Payments
6.7
8.1
11.9
12.4

13. Unrestricted Reserves (in millions)
FY17
FY14
FY15
FY16
Budget
Projection
Unrestricted net assets
88,321
72,024
40,352
27,899
23,052
Total expense
347,427
377,435
411,912
429,607
431,310
Financial cushion
25.4%
19.1%
9.8%
6.5%
5.3%
Utilization of Reserves
(in millions)
FY15
FY16
FY17
Actual
Projected
Operating Deficit
-1.2
-5.4 -7
Capitalized Interest/Debt Payments
-13.7
-14
-10.3
University Hall
-13
Other Adjustments
-1.4
0.7
 Total
-16.3
-31.7
-17.3

14. FY18 Operating Budget

15. The $30M Deficit FY18 Revenues $427.8 Operating Budget ($431.6)
(in millions)
Revenues
$427.8
Operating Budget
($431.6)
Depreciation Expense
($25.3)
Subtotal Expense
($456.9)
Surplus/(Deficit)
($29.1)

16. To fund current operations, an FY18 Draft Operating Budget would be:
Surplus/(deficit)
FY18 baseline forecast
(29.1)
New/increased operating costs
(4.4)
Tuition/fee increases
10.4
FY18 adjusted deficit
(23.1)

17. Current Capital Projects

18. Major Capital Project Costs – Recently or Substantially Complete
Project Name
Project Budget
(in millions)
Integrated Sciences Complex (ISC)
$179.0
University Hall
$137.0
Healey Library Roof Project
$8.2
Bayside Demolition
$6.7
Fox Point Dock
$2.7
HarborWalk Improvements and Shoreline Stabilization
$3.8
Monan Park
$1.6
TOTAL:
$339.0

19. Capital Projects Under Construction
Project Name
Project Budget
(in millions)
Utility Corridor and Roadway Relocation Project (UCRR)
$260.0
Residence Hall (P3 Project)
$119.4
University Dining Facility (Res Hall)
$17.8
Renovations to Existing Buildings (REAB)
$45.0
Parking Garage
$71.0
Clark Gym Roof/E. Curtain Wall and S. Rink Facade
$5.3
Elevator Replacement (Clark, McCormack, Wheatley, Quinn)
$8.3
University Hall (outstanding payments)
$6.5
TOTAL
$533.3

20. Remaining Projects to be Funded from Escrow Balances and State Committed Funding
Description
Amount
Escrow balances as of March 31
$205,506,226
Expected additional state funding for UCRR
$25,000,000
Funding from DCAMM for Clark Project
$1,625,000
Available Funds to Complete Projects:
$232,131,226
Projects
Utility Corridor and Roadway Relocation (UCRR)
Parking Garage
Renovations to Existing Academic Buildings (REAB)
University Hall
Clark Gym Roof/E. Curtain Wall and S. Rink Façade
Elevator Replacement

21. Substructure Demolition and Quadrangle Project (SDQD)
Project cost is estimated between $155 - $230 million (subject to future revision upon outcome of studies).
Funding committed by the Commonwealth is $77.5 million.
A fully-funded plan needs to be in place before construction proceeds.

22. Major Capital Projects - Unfunded
Project Name
Project Budget
(in millions)
General Academic Building #2
$100.0
Energy Producing Facility
$27.5
Public Safety and Athletics Facility
$22.7
Healey Library and Clark Athletic Center Fire Suppression
$11.9
Parking Garage Pedestrian Bridge
$4.0

23. Status of Enrollment for Fall 2017

24. 5% 19% 28% FALL 2017 APPLICATIONS ADMITS DEPOSITS First Year Numbers
(Data as of May 5, 2017)

25. 22% 45% 65% FALL 2017 TERM 2016 2017 APPLICANT 11,235 11,751 ADMIT
First Year Deposits
TERM
2016
2017
APPLICANT
11,235
11,751
In-State
6923
7269
International
1181
1264
Out of State
3131
3218
ADMIT
6,265
7,427
3855
4646
513
724
1897
2057
DEPOSIT
1,254
1,604
1032
1263 96
158
126
183
IN-STATE
22%
from 2016 to 2017
OUT OF STATE
45%
from 2016 to 2017
INTERNATIONAL
65%
from 2016 to 2017
(Data as of May 5, 2017)

26. FALL 2017 GOALS TOTAL 1,680 FOR NEW FRESHMEN In-State 1330
International
250
Out of State
100

27. Course Section Planning

28. Academic Planning Strategic Goal: 18:1 Student/Faculty Ratio
Fall ’17 Section Reductions:
Consultative process for deciding on reductions
86 Sections removed from schedule
51 still available via other sections of same course
35 Single-Section Courses
21.5 FTE Associate Lecturers not-hired

29. Example: Economics Fall ‘17
Courses Offered (excluding independent study, honors theses, CAPS, online, UG/Grad): 46
- Reduced 2 from Fall 48
Course Removed: 1 Independent Study (2 other IS’s available)
Sections Cancelled: 3
-Microeconomics, Macroeconomics, Macroeconomic Theory
-All Available in Other Sections
Spring 2018: 44 to be offered – No reduction from Spring 2017

30. Proposed Voluntary Separation Program
Next Steps
Proposed Voluntary Separation Program
Scalable revenue growth, starting with online education
FY18 Budget preparation and review

31. Comments and Questions?