The University of Southern Mississippi

1
The University of Southern Mississippi

• Budget Financial Affairs Committee
• June 7, 2004

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Reasons why we need a tuition rate increase.

• Annual increases in fixed costs.
• Southern Miss does not receive per student
  funding consistent with the funding formula since
  it is overridden by the hold harmless concept.
• Over the past five years, we have been able to
  provide one 2 raise for Southern Miss employees.
  This has been more than offset by increased
  health care benefit costs. This year alone, some
  costs have increased 23.
• Faculty salaries at Southern Miss are well below
  SUG, UM, and MSU averages.

3
Our tuition rate increase proposal is just 6

• This recommendation is a recognition of the
  political, rather than business, nature of the
  process of budgeting revenues.
• This amount, while far short of our needs, will
  hopefully allow some form of a salary increase
  for faculty and limited staff.
• We will continue to aggressively pursue cost
  savings at our university.

4
Estimated Increase in Fixed Costs Fiscal Year
2004-2005

• Totaling 3 Million
• Utilities and other built-in requirements not
  funded
• Tort liability
• Workers compensation
• Unemployment insurance
• FEMA insurance
• Faculty promotions

5
Faculty Salary Comparison
Source IHL System Profile January 2004
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Points to Consider

• To cover increases in fixed costs of 3 million
  in the next fiscal year alone, a 7 tuition rate
  increase is required.
• In order to give a 5 pay raise for faculty and
  staff, an additional 12 increase in tuition
  rates is required.
• Thus, a 20 tuition increase is required to cover
  the cost of fixed increases and salaries (5).

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A 6 increase in tuition over the next five
years generates sufficient funds to cover an
estimated increase in fixed costs of 3 million
per year, assuming there is a 1 increase in
enrollment each year. For planning purposes, we
ask the board to consider allowing us a
multi-year tuition increase from 4-8.
8
The University of Southern MississippiEnrollment
vs Total State Appropriation per FTE
Source IHL
9
Source IHL
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Conclusions

• The business model for Southern Miss is
  challenging.
• Revenues are a combination of appropriations of
  state funds as well as tuition charged to
  students.
• Total appropriations for higher education are
  insufficient further we do not receive an
  equitable share, based on enrollment increases.
• Tuition must be increased in order to make up the
  deficit.
• As a result, a continuous focus has been placed
  on reducing expenses.
• Since payroll is our largest expense, the
  employees of the university have borne the brunt
  of these efforts.
• A multi-year approach to planning on revenue
  increases would improve our ability to manage.

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Increase in Housing RatesWhy do we need an
increase?

• Fixed costs continue to rise
• Aging infrastructure
• Ongoing maintenance

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Proposed Rate Increases for HousingEffective
Fall 2004
Occupancy 2,934 Occupancy Percentage 85
13
Increase in Board Rates

• Cost of meal plans will increase slightly but
  more flexibility in meal plans will be offered to
  students.
• If Food Services were to remain under university
  management, the requested increase would have
  been comparable to Aramarks rates but with less
  flexibility in meal plans.

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Meal Plan IncreaseEffective Fall 2004
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Food Services

• As self-operated, average net income for last
  four years was 504,184.
• Expected annual commission and capital investment
  from Aramark 2.3 million.
• Guaranteed raises for employees as well as
  improved benefits.

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Proposed Tuition IncreaseEffective Fall 2004
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Ratio of full-time employees to FTE students
Source IHL Management Report January 2003
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Source West Virginia University SUG/SREB Peer
Institution Survey Fall 2003