1. 304.558.0699 (Phone) 304.558.1011 (Fax) www.hepc.wvnet.edu1018 Kanawha Blvd. East Suite 700 Charleston, WV 25301 Budget Request and Analysis Fiscal Year 2005-2006 Presentation to Senate Finance Committee March 10, 2005

3. Senate Finance Committee Presentation - March 10, 2005- 3 - Table of Contents Page Mission Statement 5 Measuring Up Results 6 Map of Public Higher Education Institutions 7 Credit Headcount Enrollment Trend Line 8 Headcount Enrollment 9 Performance Measures 10 History of Appropriations 11 Current Level Impact Statement 12-13 Tuition and Fees 14-19 Joint Commission and Council Requests 20 Financial Aid21 Higher Education Funding Priorities 22 Deferred Maintenance23 Capital Outlay24 Base Budget Adjustments25 Other Issues26 Attachments 27-63

5. Senate Finance Committee Presentation - March 10, 2005- 5 - Mission Statement As stated in West Virginia Code §18B-1-1a, the Higher Education Policy Commission focuses on a public policy agenda that includes, but is not limited to, the following: ( 1) Diversifying and expanding the economy of the state; (2) Increasing the competitiveness of the state's workforce and the availability of professional expertise by increasing the number of college degrees produced to the level of the national average and significantly improving the level of adult functional literacy; and (3) Creating a system of higher education that is equipped to succeed at producing these results.

6. Senate Finance Committee Presentation - March 10, 2005- 6 - MEASURE200020022004 PreparationD+ C+C+ ParticipationD+C-C- AffordabilityD FF CompletionCC-C BenefitsF DF Measuring Up Results “Measuring Up” is a national evaluation of West Virginia’s higher education performance compared to top performing states. This report is prepared by the National Center for Public Policy and Education.

7. Senate Finance Committee Presentation - March 10, 2005- 7 - Map of Public Higher Education Institutions

8. Senate Finance Committee Presentation - March 10, 2005- 8 - Credit Headcount Enrollment Public Institutions, Fall 1990 - 2004

9. Senate Finance Committee Presentation - March 10, 2005- 9 - Headcount Enrollment, 2002-2004 ` Source: HEPC data files - early fall data submissions. Higher education enrollment is growing at about 5-8% per decade.

10. Senate Finance Committee Presentation - March 10, 2005- 10 - Performance Measures

11. Senate Finance Committee Presentation - March 10, 2005- 11 - History of Appropriations

12. Senate Finance Committee Presentation - March 10, 2005- 12 - West Virginia’s higher education systems are doing more with less. For fiscal year 2005, West Virginia had the greatest decrease in state appropriations to higher education institutions, with its higher education budget falling 3.9% to $339.4 million according to The Chronicle of Higher Education. West Virginia ranked number 50 out of the 50 states in change of state appropriations with a 10.6% decrease from FY 2003 to FY 2005. West Virginia’s public higher education systems continue to be expected to serve more students without a comparable increase in state appropriated dollars. In fall 2000, West Virginia’s public institutions served 65,212 undergraduate students; in fall 2004, that number increased to 71,764, a 10% increase. While some institutions were able to provide small salary increases to faculty and staff in FY 2005, faculty and staff salary levels still lag significantly behind similar institutions across the country. In addition, West Virginia Code § 18B-8-1 et seq. sets forth a salary schedule for classified staff that never has been fully funded. To fund the salary schedule, higher education will need $24 million, of which the State’s portion would be $10 million. The ability of West Virginia higher education institutions to attract and retain qualified staff members is greatly diminished in such an environment and can have grave consequences on the quality of the educational offerings. The cost to fully fund all classified staff at the minimum level on the zero step pay schedule for higher education is $3.2 million. The State appropriation share is approximately $1 million. Cumulative impact has been to shift a sizeable share of the cost of education from the state to students and their families. Current Level Impact Statement for West Virginia Higher Education Policy Commission and West Virginia Council for Community and Technical College Education

13. Senate Finance Committee Presentation - March 10, 2005- 13 - Tuition increases cannot continue to make up for reductions in state appropriations. General revenues and lottery revenues appropriated for operating purposes have been reduced by 12% from FY 2002 to FY 2005. Reductions for four-year campuses have been significantly larger than for the two-year campuses. Over the last three years, annual tuition increases at four-year institutions have exceeded 9 percent. Last year many institutions increased tuition and required fees by 11 percent and one institution increased fees by 17 percent. Some community and technical college tuition rates have increased at a slower rate, but tuition rates for the administratively-linked institutions remain significantly higher than rates in other SREB states. This discourages the goals of providing West Virginia residents with expanded access to higher education, more workforce development opportunities, and greater adult basic education. Reflecting the policy of minimum budget cuts for two-year campuses, the pressure on tuition and fees have been less on these campuses. State policy further limits the percentage increase to 4.75 percent. In the absence of a significant increase in financial aid, the result of increased tuition rates will be fewer students participating in higher education and less affordability. Approximately 2,518 potential students currently are on the waiting list for West Virginia Higher Education Grant Program, and an estimated 2,000 fewer students will receive support from the Higher Education Adult Part-Time Student Grant Program because increasing tuition rates are outpacing financial aid dollars. A firm policy and budget link needs to be established between tuition and fees and appropriations for financial aid. Budget Cuts Have Been Partially Offset By Tuition and Fee Increases

14. Senate Finance Committee Presentation - March 10, 2005- 14 - 4-Year Undergraduate Regular Tuition and Fees Institutional Comparison with National Peers

15. Senate Finance Committee Presentation - March 10, 2005- 15 - West Virginia Council for Community and Technical College Education Two-Year Undergraduate Regular Tuition and Fees Institutional Comparison with National Peers

16. Senate Finance Committee Presentation - March 10, 2005- 16 - West Virginia Higher Education Policy Commission Resident Undergraduate Fee Rates – Academic Year 2004-2005 by Category

17. Senate Finance Committee Presentation - March 10, 2005- 17 - West Virginia Council for Community and Technical College Education Resident Undergraduate Fee Rates – Academic Year 2004-2005 by Category

18. Senate Finance Committee Presentation - March 10, 2005- 18 - SREB FY 2003 Funding Comparison Per FTE Student Public Funds for E&G Operations

19. Senate Finance Committee Presentation - March 10, 2005- 19 - Median Resident Tuition Comparison to Household Income Fall 2002

20. Senate Finance Committee Presentation - March 10, 2005- 20 - 1.Restoration of Proposed Budget Reductions for FY 2006 – $17.9 million Commission - $14.9 million Council - $3 million 2. Financial Aid – $27 million Higher Education Grant - $10 million(minimum $3 million) PROMISE Scholarship - $10 million(minimum $8 million) HEAPS Grant - $7 million(minimum $2 million) 3.Authorization and Funding of Annual Increment for Faculty - $2.6 million Commission - $2.3 million Council - $0.3 million 4.Commission Only – Recommended 5% salary increase for all employees. Joint Commission and Council Recommendations

21. Senate Finance Committee Presentation - March 10, 2005- 21 - Students have unmet financial aid needs that could be addressed by additional funding for the following programs: Higher Education Adult Part-time Student Grant Program. To fully fund approximately 7,000 part- time students and almost 1,000 workforce students, HEAPS will need approximately $11 million in FY 2006. This is $7 million more than the current appropriation. Funds are requested to expand the number of part-time students served. Higher Education Grant Program. To fully fund almost 11,500 higher education grants for needy West Virginians, the Higher Education Grant Program will need about $27.5 million in FY 2006, approximately $7.5 million more than current funding. The federal matching grant of the Leveraging Educational Assistance Partnership program (LEAP) and Special Leveraging Educational Assistance Partnership program (SLEAP) is proposed for elimination in President Bush’s budget. Last year $1.2 million of federal funding was received from these programs. For FY 2005, the current appropriation is $830,000. PROMISE Scholarship Program. To fully fund over 9,000 PROMISE scholarships in FY 2006 at the current GPA of 3.00 and ACT 21/20 requirements, the PROMISE Scholarship Program will need approximately $38 to $40 million in FY 2006. Financial Aid

22. Senate Finance Committee Presentation - March 10, 2005- 22 - Higher Education Policy Commission Funding Priorities

23. Senate Finance Committee Presentation - March 10, 2005- 23 - The total BRIM building replacement value for all public higher education institutions is an estimated $2.1 billion. The annual investment in our buildings needed to avoid the accumulation of deferred maintenance costs is calculated using the building renewal formula. This calculation indicates that the total annual investment needed to sustain the life of buildings is $35.7 million, $23.7 million for E&G buildings and $11.9 million for auxiliary buildings. A predictable fund source is needed to fund both the backlog of total deferred maintenance and sustained annual expenditures for building renewal. In many states the funding of annual expenditures for building renewal is allocated between the operating and capital budgets 50/50 reflecting the nature of the projects involved. Institutional match should be required for the capital component. Deferred Maintenance

24. Senate Finance Committee Presentation - March 10, 2005- 24 - Capital Outlay 1.Accumulated deferred E&G maintenance projects have been identified for funding. Funding for the projects will take place over two years and split 50/50 with matching institutional funding. First year funding of $7 million was approved by the Higher Education Policy Commission to come from the Higher Education Improvement Fund with an additional $7 million from institutional funding. 2.An additional $7 million is requested for the following year to fund the second year of deferred maintenance projects. 3.The Commission recommends system bond issues for E&G building and campus renewal projects of $41 million and new building projects of $85 million over the next two fiscal years 2006 and 2007. 4.The Commission also recommends that special lottery funds be used to fund the debt service on the new system bonds.

25. Senate Finance Committee Presentation - March 10, 2005- 25 - 1.Special project funding from lottery proceeds in the amount of $292,748 should be shifted to the base budget of Fairmont State University. 2.The unclassified budget from lottery proceeds in the amount of $2,097,598 for four- year institutions should be added to the individual campus base operating budgets. Governor Manchin’s budget makes the transfer for the two-year institutions. 3.The appropriation for Potomac State College should be discontinued and the amounts incorporated into the appropriation for West Virginia University consistent with provisions of WV Code §18B-1-10, which makes Potomac State College a division of West Virginia University. The multi-year reduction in appropriations per FTE should be concluded in the 2006 budget. Permanent Base Budget Adjustments

26. Senate Finance Committee Presentation - March 10, 2005- 26 - There are several other issues including the following: 1.West Virginia State University Land Grant - The request for the West Virginia State University Land Grant is to obtain funding in order that federal matching funds will be received. Without this funding, the institution will lose a substantial amount of federal funding. This institution is one of only two institutions in the state with land grant status. Only $1.2 million was appropriated in a supplemental bill for FY 03, but representatives from the university have indicated in order to avoid losing federal matching dollars that state funding of $1.5 million is needed per year. 2. Tuition and fees should be reflected in the budget as a state policy adjustment acknowledging that if general revenue cannot be increased then the level of tuition and fee increases should be authorized accordingly to offset the lack of general revenue increases. 3. The appropriations bill should identify state funding for public service and research as well as instruction. Other Issues

27. Senate Finance Committee Presentation - March 10, 2005- 27 - Attachments Page Revenues and Expenditures of Commission, WVNET, and Combined 28 Budget Appropriation Request with a 5.5% Reduction29-32 Analysis of Governor Manchin's FY 2006 Budget Request 33-35 Cost to Fund Salary Schedule36-38 Cost of 5% Salary Increase 39 Average Salaries of Full-Time Faculty 40 Listing of Special Projects41-43 Capital Table 1- Funded Capital Projects44-46 Table 2 – Health, Life Safety & ADA, and Deferred Maintenance 47-52 Table 3 – Building, Campus Renewal, and Equipment List53-56 Table 4 – New Capital Projects List57-60 Table 5 – Community & Technical Colleges Capital Priorities 61 Building Renewal Requirements 62 Housing Capacity and Occupancy Survey 63

28. Senate Finance Committee Presentation - March 10, 2005- 28 - Combined Financial Statement Summary For Fiscal Years 2004 and 2003 (in thousands)

29. Senate Finance Committee Presentation - March 10, 2005- 29 - West Virginia Higher Education Policy Commission and West Virginia Council for Community and Technical College Education Proposed FY 2006 Appropriation Request

30. Senate Finance Committee Presentation - March 10, 2005- 30 - West Virginia Higher Education Policy Commission and West Virginia Council for Community and Technical College Education Proposed FY 2006 Appropriation Request

31. Senate Finance Committee Presentation - March 10, 2005- 31 - West Virginia Higher Education Policy Commission and West Virginia Council for Community and Technical College Education Proposed FY 2006 Appropriation Request

32. Senate Finance Committee Presentation - March 10, 2005- 32 - West Virginia Higher Education Policy Commission and West Virginia Council for Community and Technical College Education Proposed FY 2006 Appropriation Request

33. Senate Finance Committee Presentation - March 10, 2005- 33 - Analysis of Governor Manchin's FY 2006 Budget Request

34. Senate Finance Committee Presentation - March 10, 2005- 34 - Analysis of Governor Manchin's FY 2006 Budget Request

35. Senate Finance Committee Presentation - March 10, 2005- 35 - Analysis of Governor Manchin's FY 2006 Budget Request

36. Senate Finance Committee Presentation - March 10, 2005- 36 - Cost to Fund Full Classified Staff Schedule, All Funding Sources Fall 2004 Personnel Data, Pay Step as of July 1, 2005

37. Senate Finance Committee Presentation - March 10, 2005- 37 - Cost to Fund Full Classified Staff Schedule, All Funding Sources Fall 2004 Personnel Data, Pay Step as of July 1, 2005

38. Senate Finance Committee Presentation - March 10, 2005- 38 - Cost to Fund Full Classified Staff Schedule, All Funding Sources Fall 2004 Personnel Data, Pay Step as of July 1, 2005

39. Senate Finance Committee Presentation - March 10, 2005- 39 - Cost of Implementing a 5% Salary Increase for all Public Higher Education Employees Fall 2004 Personnel Data

40. Senate Finance Committee Presentation - March 10, 2005- 40 - Average Salaries of Full-Time Instructional Faculty at Public Four-Year Colleges and Universities

41. Senate Finance Committee Presentation - March 10, 2005- 41 - Listing of Special Project Requests

42. Senate Finance Committee Presentation - March 10, 2005- 42 - Listing of Special Project Requests

43. Senate Finance Committee Presentation - March 10, 2005- 43 - Listing of Special Project Requests

44. Senate Finance Committee Presentation - March 10, 2005- 44 - Table 1 – Funded Capital Projects

45. Senate Finance Committee Presentation - March 10, 2005- 45 - Table 1 – Funded Capital Projects

46. Senate Finance Committee Presentation - March 10, 2005- 46 - Table 1 – Funded Capital Projects

47. Senate Finance Committee Presentation - March 10, 2005- 47 - Table 2 - Health, Life Safety & ADA, and Deferred Maintenance Projects List

48. Senate Finance Committee Presentation - March 10, 2005- 48 - Table 2 - Health, Life Safety & ADA, and Deferred Maintenance Projects List

49. Senate Finance Committee Presentation - March 10, 2005- 49 - Table 2 - Health, Life Safety & ADA, and Deferred Maintenance Projects List

50. Senate Finance Committee Presentation - March 10, 2005- 50 - Table 2 - Health, Life Safety & ADA, and Deferred Maintenance Projects List

51. Senate Finance Committee Presentation - March 10, 2005- 51 - Table 2 - Health, Life Safety & ADA, and Deferred Maintenance Projects List

52. Senate Finance Committee Presentation - March 10, 2005- 52 - Table 2 - Health, Life Safety & ADA, and Deferred Maintenance Projects List

53. Senate Finance Committee Presentation - March 10, 2005- 53 - Table 3 - Building, Campus Renewal, and Equipment List

54. Senate Finance Committee Presentation - March 10, 2005- 54 - Table 3 - Building, Campus Renewal, and Equipment List

55. Senate Finance Committee Presentation - March 10, 2005- 55 - Table 3 - Building, Campus Renewal, and Equipment List

56. Senate Finance Committee Presentation - March 10, 2005- 56 - Table 3 - Building, Campus Renewal, and Equipment List

57. Senate Finance Committee Presentation - March 10, 2005- 57 - Table 4 - New Capital Projects List

58. Senate Finance Committee Presentation - March 10, 2005- 58 - Table 4 - New Capital Projects List

59. Senate Finance Committee Presentation - March 10, 2005- 59 - Table 4 - New Capital Projects List

60. Senate Finance Committee Presentation - March 10, 2005- 60 - Table 4 - New Capital Projects List

61. Senate Finance Committee Presentation - March 10, 2005- 61 - Table 5 - WV Council for Community & Technical College Education Capital Project Priorities

62. Senate Finance Committee Presentation - March 10, 2005- 62 - Building Renewal Requirements *Includes administratively-linked institutions.

63. Senate Finance Committee Presentation - March 10, 2005- 63 - Housing Capacity and Occupancy Survey Institution Summary - Fall 2004