Budget Briefing February 17, 2004

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Budget BriefingFebruary 17, 2004
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Budget Briefing Overview

• Guiding principles and values
• State appropriations cuts
• Efficiency and cost-containment
• FY03 and FY04 budget allocations
• Differential cut funds distribution
• State budget situation and outlook
• Governors 2/12 budget recommendation
• Governors tuition pledge
• Impact of the pledge on OU Budget
• FY05 base budget reduction strategies
• Initiatives to move us forward
• Feedback mechanisms

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Core Functions of Oakland University

• The Senate Planning Review Committee strongly
  recommends that all budget adjustment decisions
  should be based on the principle of protection of
  the core functions of Oakland University as
  enumerated below. Major categories are in
  priority order, and items within each major
  category are in priority order.
• Provision of High Quality Education
• High quality undergraduate education with a
  strong liberal arts component for all
• High quality focused graduate education
• Attraction, retention, and support of a diverse
  population of high quality students
• Attraction, retention, and support of a diverse
  population of high quality faculty
• Provision of adequate facilities, technology,
  equipment, and personnel to support high quality
  education
• Provision of a supportive environment for the
  community of active scholars on campus which
  encourages scholarship, research and the
  production of new knowledge

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• 2. Provision of Specific Student Support
  Services
• Academic and career advising
• Tutoring academic support
• Retention initiatives including COM 101 and peer
  mentoring
• Financial aid
• Provision of leadership development opportunities
• Provision of student growth and development
  initiatives
• 3. Campus Environment
• Enhance the scholarly environment with support
  for faculty and student research and scholarship
• Campus life programs encouraging open exchange of
  ideas
• 4. Community and Professional Partnerships and
  Service
• Support collaborative efforts with community and
  professional partners
• Support continuing education
• Build relationships and cultivate friends
• Disseminate information about OU activities and
  accomplishments

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State Appropriations for Higher Education
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Comparison of General Fund Revenue Sources FY
1992, FY 2002 and FY 2004 Budget
Since 1992, Oakland Universitys relative
reliance on tuition and fees in the General Fund
has grown from 41 to a projected 60 in 2004.
Source OU Financial Statements
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History of Cost Containment Efforts

• Estimated
• Annual Savings
• Outsourcing/Partnerships (1,301,000)
• Bookstore 200,000
• Central stores 164,000
• Food service 250,000
• Meadow Brook Music Festival 250,000
• Concours dElegance 150,000
• Custodial services 200,000
• Nursing hospital partnerships 87,000
• Utilities (950,000)
• Energy conservation measures
  650,000
• Electric choice - deregulation 300,000
• Going Paperless (170,000)
• Electronic distribution of reports
  50,000
• Fall 2003 student e-mail communication 120,000

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History of Cost Containment Efforts

• Estimated
• Annual Savings
• Reorganization/Process Re-Engineering (253,350)
• Facilities Management 55,000
• Purchasing 33,350
• Graham Health Center 15,000
• Orientation 2 days to 1 10,000
• IT reorganization 140,000
• Health Benefits Changes (863,000)
• 2002 prescription co-pay increase 163,000
• 2003 benefit plan restructuring
  700,000
• Technology/Telecomm Savings (112,000)
• Renegotiated telephone switch lease 75,000
• Reduced remote dial-in access 37,000
• Total Estimated Savings/Benefits
  3,649,350

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Additional Cost Containment Efforts

• No salary increases for president, provost, vice
  presidents, deans and other selected senior
  administrators
• Accelerated program review
• Employee suggestion program
• Hiring freeze
• Energy conservation
• Re-bid contracts
• Health care initiatives
• Pawley Institute Lean Management Training

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Cuts to OU State Appropriations

• 2002-03 0 change (flat funding) to enter the
  fiscal year
• 2 cut by Executive Order (Gov. Engler
  December 2002)
• 1.5 cut by Executive Order (Gov. Granholm
• February 2003)
• 2003-04 6.5 cut anticipated to enter the fiscal
  year
• 2.9 differential cut to OU (most other
  universities
• cut 6.7)

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1.9M Allocations

• The approved initiative includes
• A tuition rollback of 1.4 percent for
• Winter 2004 969,280
• Funding to restore faculty positions 852,305
• Additional money for Distinctive
• Undergraduate Experience Fund
  50,000
• Additional graduate student support 100,000

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Fiscal 2004 Budget Balancing

• Cuts by Division
• Academic Affairs 3.4 2.9M
• Finance Admin. 5.5 .9M
• Student Affairs 5.5 .3M
• University Relations 5.5 .1M
• Office of the President 5.5 .3M
• Total Budget Reductions 4.5M
• Tuition Fees Increase (8.5) 5.7M
• Total Shortfall Met 10.2M
• Cuts reflect a reduction of 44 FTE
  positions.

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Fiscal 2004 General Fund Budget
Other University Divisions
64.2
66.8
65.6
66.6
67.8
68.8
69.0
Academic Affairs
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Oakland UniversityFull-Time Faculty Headcount
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Cuts to OU State Appropriations

• 2002-03 0 change (flat funding) to enter the
  fiscal year
• 2.0 cut by Executive Order (Gov. Engler
  December 2002)
• 1.5 cut by Executive Order (Gov. Granholm
• February 2003)
• 2003-04 6.5 cut anticipated to enter the fiscal
  year
• 2.9 differential cut to OU (most other
  universities cut 6.7)
• 5.0 cut by Executive Order (Gov. Granholm
  December 2003)
• Total cuts 11.4 to date

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Fiscal 2004 Budget PlanningOne-time Executive
Order Reduction

• 1x Bgt Reduction
• State appropriation reduction at 5 2,450,000
• Central Sources
• FY 2004 enrollment growth above target
  1,000,000
• Compensation savings 200,000
• Insurance 100,000
• Contingency, Strategic Plan, technology
  improvements 200,000
• Rainy Day Fund 437,500
• Total Central Sources 1,937,500
• Division One-time FY 2004 Target Target
• Academic Affairs 382,838
• Finance and Administration 74,313
• Student Affairs 23,575
• University Relations 7,688
• President 24,088
• Total Division Sources 512,502

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Oakland University Pledge to Limit Resident
Undergraduate Tuition and Fee Rate Increase for
2004-05

• RESOLVED, that the Oakland University Board of
  Trustees pledges not to increase Oakland
  Universitys resident undergraduate tuition and
  fee rates mid-year in 2003-2004 and, be it
  further
• RESOLVED, that the Oakland University Board of
  Trustees pledges to keep Oakland Universitys
  2004-2005 resident undergraduate tuition and fee
  rate increases at no more than 2.4 and, be it
  further
• RESOLVED, that the foregoing Oakland University
  Board of Trustees pledges are contingent upon
  the State of Michigan restoring 3 of Oakland
  Universitys appropriation in 2003-2004, and
  imposing no further cuts in Oakland Universitys
  state appropriation for 2004-2005.

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Oakland UniversityFY 2005 General Fund Budget
Planning

• Analysis of Gov. Granholms Proposal
• FY 2005 preliminary budget forecast (3,104,000)
  
• 2 state appropriation reduction
  (982,000)
• Total projected deficit (4,086,000)
• 2.4 tuition rate increase net 1,711,000
• Remaining budget shortfall (2,375,000)
• FY 2004 remaining division reductions
  (143,000)
• Total budget reduction required for FY
  2005 (2,518,000)

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Fiscal 2005 Base Reduction Targets

• Total Budget Reduction Required for FY
  2005 2,517,400
• Faculty salaries and fringe benefits 0.5
  246,300
• Academic Affairs, non-instructional 2.1
  701,900
• Finance and Administration 2.6 415,300
• Student Affairs 2.6 131,800
• University Relations 2.6 43,200
• President 2.6 134,600
• Central Funds (Contingency, Strategic Plan
  
• and Technology Improvement Funds)
  11.0 300,000
• Reductions to date 1,973,100
• Remaining base shortfall to cover
  544,300

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Projected Change in Michigan High School
Graduates Oakland and Macomb Counties 2003 - 2007
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Projected Change in Michigan High School
Graduates
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Grants, Contracts and Sponsored Research
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Campaign Dollars to Units

• College of Arts and Sciences 4,176,045
• School of Business Administration 3,056,165
• School of Education and Human Services
  11,307,249
• School of Engineering and Computer
  Science 1,074,650
• School of Health Sciences 45,941
• School of Nursing 1,267,499
• Academic Affairs other 3,532,369
• Athletics 386,994
• Student Affairs 117,979
• Office of the President 125,748
• Auxiliaries 1,038,570
• Other 2,070,473
• Total 28,199,682

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Keys to Continued Success

• Talented faculty and staff
• State Appropriations
• Enrollment management
• Extramural funding
• Fund raising
• Streamlining operations
• Partnerships/strategic alliances
• Location
• History of success