Budget Update March 5, 2010

Today’s Presentation

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State of the State (FY 2012)

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Impact on Southern’s Budget

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Next Steps

*Presentation Prepared for the Appropriations Committee and the Finance, Revenue, and Bonding Committee by the Office of Policy and Management November 18, 2009

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Drivers for FY 2012 SUMMARY *

Based on the enacted budget, the state is projected to experience significant deficits at the end of FY2011-12, FY2012-13 and FY2013-14 that are unprecedented in our history.

• The use of one-time revenues including federal ARRA dollars to support on-going programs and projects adds over $2.5 billion to these projected deficits.

• The budget reserve fund balance will be exhausted during FY2011.

• Debt service will continue to grow and consume a significant portion of the budget.

• The state faces significant long-term obligations including debt, unfunded pension liabilities and unfunded post-employment retirement benefits that are estimated to exceed $61 billion in total.

• Budgeted “below the line” savings targets may be difficult to achieve.

• Stagnant economic conditions and low-growth revenue projections will continue to be the most significant challenges facing the State.

*

Presentation Prepared for the Appropriations Committee and the Finance, Revenue, and Bonding Committee by the Office of Policy and Management November 18, 2009

PROJECTED DEFICITS FOR THE STATE OF CONNECTICUT

FY 2012 FY 2013 $ 3.28 Billion $ 2.6 Billion

What are the challenges to Southern’s financial situation in FY 2012 ?

FY 2012 Challenges:

 Declining Revenue State Appropriation as percentage of Southern’s E & G Budget:

2010 2009 2008 2007

43.3% 44.7% 46.3% 46.0%

2006

46.6%

FY 2012 Challenges:

 – – – – – Increasing Expenses 27 th payroll Salary Increases Inflationary increases CSUS 2020 Public Safety No Furlough Days (3 Days)

TOTAL

– Deferred Payout, RIP $2,894,945 3,426,000 549,585 347,465 750,000

$7,967,995

TBD

The CSUS Universities are to plan for a projected 5, 10, 15 and 20% reduction in their State Appropriation and how it may impact the institution.

5% 10% 15% 20%

$3,820,928 $7,294,386 $ 10,767,850 $14,241,311

Is this just Southern?

N O

All of Higher Education

One Scenario of a 20 % State Appropriation Reduction Full Time Fringe Benefits Lecturer Teaching Lecturer Non Teaching Part Time PS UA GA Student Worker OT OE Total Reduction $ (2,764,032) $ (2,434,855) $ (3,135,193) $ (886,626) $ (33,640) $ (1,035,973) $ (33,900) $ (253,097) $ (10,690) $ (3,686,305) $ (14,241,311)

State Appropriation reduced 20% or $14,241,311

also reduces other revenues

• The $14,241,311 provides state support for 1,512 full time students.

• If we reduce the number of students, our budget is reduced by over twice that amount.

• Total Impact of a 20% Reduction in Southern’s State Appropriation • • • 20% Reduction Loss of Tuition/UGF Loss of Auxiliary Revenue •

Total Impact

$14,241,311 10,647,492 4,670,860

$29,559,663

Unacceptable

• There is no silver bullet.

• There is no one fix.

• The reality is that closing the gap will be with positions and programs.

How do we make these decisions?

Guiding Principles (March 2009)

• • • • • • • • Support and enhance the student academic experience Support and enhance the student life experience on campus – – Provide for sufficient qualified faculty and staff and an academically sound faculty/student ratio to support the teaching-learning mission of the university Prevent lay-offs of full-time faculty and staff Address budgetary gaps caused by vacancies (e.g., early or scheduled retirements) in a manner consistent with advancement of the USP Maintain enrollment to reflect appropriate mix of students (11,800 and 12,300 students – distributed through retention, transfer students, part-time students and a growing graduate student population, with a maximum enrollment of 1,350 for full-time entering freshman) Maintain a healthy (both physical and psychological) campus environment Maintain appropriate student, faculty, and staff access to the campus and University services, such that student success and learning are not impinged Ensure that University assets are safeguarded Comply with all governing laws, policies and procedures set forth by governing bodies (Federal, State, NEASC, CSUS BOT) and accrediting bodies for academic programs/schools within the University

• • • • •

Guiding Principles (March 2009)

Make budget decisions that are driven by facts, data, and reasonable projections without ignoring core values as identified in the USP – – – Do not eliminate a function that we think would have to be reinstated in the near future (2 years) No use of reserves (balanced budget FY2010) Reduce costs in areas that focus on one time expenditures and can be reinstated quickly when the economy changes (positively) – – Establish alternative revenue streams Before functions (resources, services, programs) are cut, alternative ways of meeting the needs those functions provide must be determined as expeditiously as possible Support faculty and staff efforts to receive external grants In dire budget crises where functions that advance the University Strategic Plan are adversely impacted by cost saving or revenue producing measures (e.g. increased student enrollment with decreased human resources to meet academic and support needs of those students), those functions will be given priority consideration for reallocation/allocation of resources when the economy changes positively Continue support for our University’s academic and/or programmatic “unique strengths” Maintain efforts to prepare students to meet the workforce needs of the Nation, and particularly the State of Connecticut

These Principles give us guidance but do not solve (close) the gap.

Closing the Gap (Systemwide Discussion) Increase Revenue Increase Tuition Increase Fees Increase # of Students Increase Out-of-State Students Increase Summer School Entrepreneurial Increase Life Long Learning CEU’s (non-credit) Mega Class Sections Increase Class Size by 3-5 Students Revenue Generating Centers Lyman Center Increase Clinic Fees (Marriage, Speech, Hearing) Adanti Student Center Athletics Playing Fields, Swimming Pool, Gym Faculty/Staff Parking Fee Residence Halls

Closing the Gap (Systemwide Discussion) System Wide - Academic On-line Delivery 4 Campuses Graduate Programs Consolidate System Wide – Student Affairs Veteran’s Affairs Career Services – Joined with Advising Enrollment Services (Admissions, Registration, Financial Aid, Cashiering, Student Collections, Etc.) System Wide - Administration Payroll Purchasing Accounts Payable Human Resources Accounting Information Technology Changes that Require Investments Swipe Card Parking Telephone Service Thin Client & Other Technologies Voice Over Internet Phone Reduce Payroll (Contract Negotiations) Salary Increases ($3.2M) Adjust to cost of living Continue Furlough Days ($250,029 / Day) Close School Campus (Spring Break; Christmas) Centralize Functions 10 mos staff instead of 12 mos positions PT instead of Full Time 4 Day Workweek – replace with on-line Use Grad Asst rather than FT employees

Closing the Gap (Systemwide Discussion) Decrease Service/Programs Student Health Services Athletics Outsource Email Copy Center Eliminate/Reduce Service Contracts Pre-College Programs Reduce Landscape Work Campus Security Academic Programs Eliminate Low Enrollment Programs/Offer at other CSUS’

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Reassigned Time

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Fewer Courses

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Sabbatical Cut

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Tutoring Center

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Cap on Adjuncts

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Reduce Library Expenses

Next Steps

• The University Budget & Planning Committee will go through a budget exercise

HOW?

• Building the University-wide budget from the bottom up.

• A budget starting from zero and systematically adding in dollars to cover those services and costs that we are mandated to support.

Where do we start?

1. Current contractual commitments (personnel, energy, debt service, etc.) 2. Required health and safety 3. What must all students have access to obtain a degree (classes, admission, registrar, financial aid, bursar, etc.) This would be our starting point and we would then build the budget by what we believe the students need using the guiding principles and strategic plan.

• The Budget & Planning Committee will extend an invitation to USPaAC to attend their next meeting on March 16, 2010.

• The budget information developed by the budget exercise will be presented at a second Town Hall meeting.

(Tentatively scheduled on April 30, 2010).

Questions?