Budget

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Budget Academic Report on the University
Fall 2003
Lou Anna K. SimonInterim PresidentProvost and
Vice President for Academic Affairs
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CONTEXT CHALLENGES TENSIONS RESPONSE LOOKING
AHEAD GOOD NEWS 21st CENTURY LAND-GRANT UNIVERSITY
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CONTEXT
MSU has established a record of commitment to
quality and accessibility.
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CONTEXT
MSU tuition restraint policy saves students as
much as 1,600 per year MSU has about 37
million less than if fees had been raised at the
average of peer institutions MSU increased
financial aid funding at a higher rate than
tuition/fees MSU shifted 20 million in
existing funds for reinvestment in quality
programs MSU made 13 million in internal
budget cuts to address health care cost
increases Similar reductions in state support
have been occurring across the country, beginning
in other states, earlier than here in Michigan
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CONTEXT
Impact of Tuition Policy1994-95 through 2003-04
Big Ten Universities
Michigan 4-Year Public Universities
Michigan State University
Annual Student Benefit Of Tuition Guarantee
1200
1600
Annual MSU Tuition Revenue Foregone
37 M
51 M
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CONTEXT
Impact of Tuition Policy1994-95 through
2003-04(includes summer 2004 increase)
Big Ten Universities
Michigan 4-Year Public Universities
Michigan State University
Annual Student Benefit Of Tuition Guarantee
1100
1500
Annual MSU Tuition Revenue Foregone
34 M
47 M
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CHALLENGES
We see a growing pattern of public divestment in
public higher education including MSU, despite
aggressive efforts at cost containment.
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CHALLENGES
A WILD CARD Reauthorization of the Higher
Education Act
Mounting pressure for prescriptive
accountability Must communicate our value
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CHALLENGES
State funding to MSU was reduced this year by
10 State support per student of 7,167 about
the same as 1995-96 when increased enrollments
considered For 10 years MSU received
approximately 3.8 annual increases, so 10 cut
is equivalent 14 reduction Prior to current
reductions, 38 million per-student funding
disparity 87 million shortfall compared to
average support provided to research universities
with medical schools in Michigan Health care
rates increasing 10-20 annually Infrastructure
expenses though 2014 to exceed 500 M Must act
thoughtfully potential exists to improve
relative status
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CHALLENGES

• Times of budget pressure magnify tensions
  between public good/private good.
• Colleges Caught in a Vise
• Stanley Fish The New York
  Times Op/Ed, September 18, 2003

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CHALLENGES
Moving from Public Good to Private Good
Appropriation Support
FY04
Tuition
1960
1970
1980
1990
2000
Other revenues comprise 5 to 7 of total
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CHALLENGES
Budgeted State Funds
10 reduction in state support
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TENSIONS
We knew we would not be able to continue to do
all that we were doing, and do it well. In such
a situation, even the best course of action is
difficult and painful.
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TENSIONS

• Collaboration AND Competition
• Universities should not compete with one another
  over ever-smaller slices of the revenue pie
• Acknowledge differences, different needs,
  different strengths
• Strive to be academically competitive
  internationally
• Strategy is to work together for a more
  reasonable state appropriation for all
  constructing alliances for research, education
  and outreach programs

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TENSIONS
It is especially difficult now for programs that,
historically, have not been ranked or
highly-regarded nationally.
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TENSIONS
Tensions lead to strong direction to invest in
units that are
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TENSIONS

• Experiencing enrollment increases

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity
• Resisting temptation to modify indirect cost
  recovery to get grants

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity
• Resisting temptation to modify indirect cost
  recovery to get grants
• Supporting people on other-than-General Funds and
  gaining productivity

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity
• Resisting temptation to modify indirect cost
  recovery to get grants
• Supporting people on other-than-General Funds and
  gaining productivity
• Avoiding the use of newly-allocated funds to
  build back, and are reinvesting in building
  quality programs

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity
• Resisting temptation to modify indirect cost
  recovery to get grants
• Supporting people on other-than-General Funds and
  gaining productivity
• Avoiding the use of newly-allocated funds to
  build back, and are reinvesting in building
  quality programs
• Pursuing shared priorities in faculty recruitment
  and retention

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity
• Resisting temptation to modify indirect cost
  recovery to get grants
• Supporting people on other-than-General Funds and
  gaining productivity
• Avoiding the use of newly-allocated funds to
  build back, and are reinvesting in building
  quality programs
• Pursuing shared priorities in faculty recruitment
  and retention
• Addressing recurring technology and computer
  support issues

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity
• Resisting temptation to modify indirect cost
  recovery to get grants
• Supporting people on other-than-General Funds and
  gaining productivity
• Avoiding the use of newly-allocated funds to
  build back, and are reinvesting in building
  quality programs
• Pursuing shared priorities in faculty recruitment
  and retention
• Addressing recurring technology and computer
  support issues
• Supporting cross-collegiate initiatives

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TENSIONS

• Experiencing enrollment increases
• Growing off-campus and international activity
• Resisting temptation to modify indirect cost
  recovery to get grants
• Supporting people on other-than-General Funds and
  gaining productivity
• Avoiding the use of newly-allocated funds to
  build back, and are reinvesting in building
  quality programs
• Pursuing shared priorities in faculty recruitment
  and retention
• Addressing recurring technology and computer
  support issues
• Supporting cross-collegiate initiatives
• Balancing salaries and program support to gain
  flexibility within the internal budget structure

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TENSIONS

• Engaging in self-help, shared-help, self-critique
  and organizational change

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TENSIONS

• Engaging in self-help, shared-help, self-critique
  and organizational change
• Managing faculty/staff position vacancies
  attending to leadership succession

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TENSIONS

• Engaging in self-help, shared-help, self-critique
  and organizational change
• Managing faculty/staff position vacancies
  attending to leadership succession
• Leveraging internal resources to increase
  external support

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TENSIONS

• Engaging in self-help, shared-help, self-critique
  and organizational change
• Managing faculty/staff position vacancies
  attending to leadership succession
• Leveraging internal resources to increase
  external support
• Setting priorities at the University level within
  a multi-year strategic framework consistent with
  the Guiding Principles and MSU Promise

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TENSIONS

• Engaging in self-help, shared-help, self-critique
  and organizational change
• Managing faculty/staff position vacancies
  attending to leadership succession
• Leveraging internal resources to increase
  external support
• Setting priorities at the University level within
  a multi-year strategic framework consistent with
  the Guiding Principles and MSU Promise
• Set multi-year, unit-level strategic priorities
  that are broadly-discussed and understood, within
  the practical vision of the Guiding Principles
  and MSU Promise

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TENSIONS

• Engaging in self-help, shared-help, self-critique
  and organizational change
• Managing faculty/staff position vacancies
  attending to leadership succession
• Leveraging internal resources to increase
  external support
• Setting priorities at the University level within
  a multi-year strategic framework consistent with
  the Guiding Principles and MSU Promise
• Set multi-year, unit-level strategic priorities
  that are broadly-discussed and understood, within
  the practical vision of the Guiding Principles
  and MSU Promise
• Innovative and risk-taking to advance academic
  quality being savvy about managing the results

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TENSIONS

• Engaging in self-help, shared-help, self-critique
  and organizational change
• Managing faculty/staff position vacancies
  attending to leadership succession
• Leveraging internal resources to increase
  external support
• Setting priorities at the University level within
  a multi-year strategic framework consistent with
  the Guiding Principles and MSU Promise
• Set multi-year, unit-level strategic priorities
  that are broadly-discussed and understood, within
  the practical vision of the Guiding Principles
  and MSU Promise
• Innovative and risk-taking to advance academic
  quality being savvy about managing the results
• Unit productivity profiles appropriate to the
  unique mission-balance of the unit

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RESPONSE
Campus units asked to formulate and share
specific actions at the unit level. No unit was
immune.
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RESPONSE

• Develop multi-year strategies to enhance academic
  quality recognize fiscal realities
• Formulate strategy to meet difference between
  General Fund revenue (appropriations tuition)
  and inflation-adjusted expenditure base
• Work in an inclusive and purposeful manner
• Develop new sets of contingencies
• Seek new efficiencies, be smarter regarding
  administrative tasks, put every dollar possible
  toward critical programs and initiatives
• Limit scope of programs and services in some
  areas
• Every dollar saved in administrative costs
  translates into capacity to retain people and
  programs and to enhance quality.

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RESPONSE
MSU budget increased by only 1.6, about the
rate of inflation Financial aid budgets
increased by 30 31 million internal
expenditure reductions reallocations Enrollmen
t moratoria on 16 academic degree programs,
suspended admission to some programs Discontinu
ed 15 academic degree programs Reorganized and
consolidated functions and programs Implemented
efforts to enhance grant dollars and other
revenues Moved costs off the General Fund
See website for more information
http//ntweb1.ais.msu.edu/j4100/scripts/feedback.a
sp
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RESPONSE
Staff reductions and layoffs reduced General
Fund positions MSU Extension significantly
reduced workforce Michigan Agricultural
Experiment Station reduced faculty and graduate
assistant support Student costs increased about
8 (9.9 tuition fees 6 room board) Used
technology to streamline processes Intensified
energy conservation program
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RESPONSE
FTE Employee Changes

• Decline of 337 GF, MAES, MSUE since Fall 2001
• Central transition support of 2.1M and unit
  transition amounts of at least 4M, plus 0.5M to
  Arts Letters suggest potential for additional
  reductions in range of 80 to 130 FTE
• FTE in some instances understates impact e.g.,
  typical graduate assistant appointed half time
• Executive Management positions not filled

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RESPONSE
General Fund, MAES, MSUE FTE EmploymentOctober
(preliminary)
10 to 20 additional layoff actions in process at
unit /central levels
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RESPONSE
Other Fund FTE EmploymentOctober (preliminary)
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RESPONSE
Tenure System Faculty New Hires
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RESPONSE
Savings through Re-engineering

• Student Health Center (1.5 million)
• Enrollment Services (1.5 million)
• Accounts Payable and Purchasing (0.2 million)
• Functions integrated introduced additional
  technology
• Electronic Workflow (0.3 million)
• Payroll, billing systems, and Human Resources
• Travel discounts negotiated with carriers (0.5
  million)
• (in addition to unit-based initiatives, over
  time)

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RESPONSE
Internal reallocations 24 million over past 8
years Internal reductions13 million over past
two years to address health care costs THIS
YEAR31 million reductions in response to
decline in state funding, including 6.9 million
in targeted reductions to address the common
good
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RESPONSE
Reductions
Efficiency Factor -1 (3.8)
M Budget Reduction -8.1 (31.0)M Total
Reductions -9.1 (34.8)M TARGETED
ALLOCATONS/REALLOCATIONS Efficiency Factor
3.8 M Redesignated Funds
6.0 M Common Good Reductions 6.9
M (Applied in part to offset Efficiency
Factor by 0.5) TOTAL
16.7 M Unit Driven Reduction (4.3
.5 efficiency) (18.1)M
4.2 M tuition revenue, plus 1.8 M Quality Fund
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RESPONSE
Unit Reductions
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RESPONSE
Revenue Based Initiatives
FY03 FY04
Change College Enrollment Support
10.3M 10.3M - Financial
Aid
3.0M 3.0M - College
Based Courses 7.7M
9.8M 2.1M Off Campus Virtual
7.7M
8.9M 1.2M Study Abroad Intl
4.9M 5.6M
0.7M Direct Lending
2.0M
2.0M Enrollment Incr.
4.2M
4.2M Total
33.6M 43.8M
10.2M
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RESPONSE
Carry Forward

• Unit carry forward up to 6 increased from
  16.2M to 18.8M Representing a change in
  cumulative totals from 4 to 5
• Planned special carry forward amounts increased
  from 41.8 to 48.2 M
• Reflects implementation of reduction plans during
  2002-03 in order to provide internal transition
  support in 2003-04

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LOOKING AHEAD
MSU stable, but fragile in some areas critical
to our future
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LOOKING AHEAD

• Focusing on students

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LOOKING AHEAD

• Focusing on students
• Preserving capacity

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LOOKING AHEAD

• Focusing on students
• Preserving capacity
• Working to enhance quality

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LOOKING AHEAD

• Focusing on students
• Preserving capacity
• Working to enhance quality
• Maintaining accessibility

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LOOKING AHEAD
State Concerns

• FY04
• 250M deficit rolled forward from FY03
• 235M in planned state employee concessions
  unlikely
• FY05
• 500M in cuts taken in FY04 on nonrecurring basis
• 300 to 400M in new revenues
• FY04 and FY05 potential for 1B in further
  reductions offset by 400M in new revenues
• NOTE 1 state GF/GP budget equals
  approximately 90M

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GOOD NEWS
Momentum Academic Quality Intellectual Vitality
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GOOD NEWS
Student Profile

• MSU Fall 2003 enrollment 44,542
• This years entering class Bright, prepared,
  engaged
• Mean GPA 3.58 Mean ACT 24.5
• Record Honors Enrollment 2,575 Academic Scholars
  485
• MSU graduation rate approaches 70 percent
• Leads Big Ten in exceeding predicted graduation
  rates as reported in U.S. News World Report
• Michigan Residents 89 of undergraduate
  enrollment 55 of graduate enrollment
• Level Mix 78 undergraduates 22 graduates
• DCL showing steady rise in academic quality

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GOOD NEWS
Affordability / Access

• Federal Family Education Loan Program (FFELP)
  change from direct lending to federally insured
  program, which includes provision that after 3
  years of timely payments, the loan becomes
  interest free
• MSU Tuition Grants provides funding in 2003-04
  for continuing students with need to hold tuition
  increases to approximately 3 and ensure timely
  graduation Approximately 60 of 25,000
  returning students qualified

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GOOD NEWS
MSU Financial Aid Outpaces Student Costs
Average Annual Increase 6.3 Compared to Tuition
Increase of 4.6
(Millions)
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GOOD NEWS
EnrollmentsPreliminary Data for Fall 2003
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GOOD NEWS
Student/Faculty Ratios(U.S. News World Report)
SCH per General Fund Ranked Faculty
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GOOD NEWS
Changes in Class Size
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GOOD NEWS
Total RD Expenditures Reported to NSF
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GOOD NEWS
Michigan State UniversityExpenditures for
Externally Sponsored ProgramsResearch
Only1994-2003
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GOOD NEWS
Capital CampaignProgress Toward 1.2 Billion Goal
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21st Century Land-Grant University
MSU was created in 1855 because society needed a
different kind of university
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21st Century Land-Grant University
FAST FORWARD TO 2005

• If we did it all over again today
• What kind of university would society create?
• What are the challenges it would respond to?
• What kind of place would it be?

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21st Century Land-Grant University

• Budgets and affordability matter affordability
  and accessibility go together
• MSUs competitive strength is our willingness to
  meet the challenges and meet them better than
  anyone else
• Advancing knowledge and transforming lives is
  about integrating values of scholarship with
  outreach and support of communities

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Advancing Knowledge.Transforming Lives.
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This presentation, along with the Enrollment
Report and the MULTI Presentation from September
18 will be posted on the Provosts web site
http//www.msu.edu/unit/provost/