Financial Topics

Cost of Education Committee 9/04/2009 1

Outline

    Formula Funding Financial Ratios Debt Capacity Academic Cost Limits 2

Formula Funding

   

Conference Committee Report on SB1 (May 2009) Available at

http://www.lbb.state.tx.us/

Article III, Page 74 – UTPA Appropriations Article III, Page 233 – Funding Matrix Instruction & Operations Support

Calculated according to matrix weights and base period semester credit hours.

Liberal arts = 1.00

Teaching Experience Supplement

Additional 10% weight added to undergraduate hours taught by tenure and tenure-track faculty.

Infrastructure Support

Based on predicted Educational & General (E&G) space.

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Instruction & Operations Support – Example

The funding for each class is calculated as follows:

SCH (semester credit hour) count * matrix weight (per discipline and level)* funding rate.

For example, if 20 upper-division undergraduates each take a 3-hour course funded under the Business Administration discipline, the formula funding calculation would yield:

60 SCH * 1.73 * $62.19 = $6,455.32

. (If taught by a tenured or tenure-track professor, an extra 10% would be generated from the teaching experience supplement.) Note: The

lower

of the student level or class level is used.

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Key Financial Ratios

Source: FY 2008 Analysis of Financial Condition (AFC) submitted with Annual Financial Report.

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Debt Capacity

Must equal or exceed two of three benchmarks:  Debt Service Coverage ( ≥ 1.8x) - UTPA 1.4x

 Debt Service to Operations ( ≤ 5%) – UTPA 6.4%  Expendable Resources to Debt ( ≥ 80%) – UTPA 92.7% As of 8/31/08, UTPA is unsatisfactory on 2 of the 3 ratios used to substantiate ability to issue additional debt.

(Source: FY 2008 AFC)

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Types of Debt

 Tuition Revenue Bonds (TRB)  Revenue Financing System (RFS)  General Institutional Debt  Self-Supporting Activities Debt  Commercial Paper  HEAF Debt 7

FY 2010 Budgeted Debt Service

Property

Academic Service Bldg Existing Science Renovation Equipment Financing Land Student Health Clinic Student Housing Student Union Wellness-Rec Sports Center Tuition Revenue Bonds Other (commercial paper) Total ► ( Principal-$8,356,703; Interest - 4,079,632)

Amount Repayment Source

$235,200 HEAF 616,875 HEAF 357,551 HEAF 199,000 HEAF 89,600 Medical Service Fee 1,356,437 Housing Revenue 478,725 Student Union Fee 1,514,763 Recreation Fee 7,583,956 State Appropriation 4,228 Interest Income $12,436,335 8

Academic Cost for FY11 and FY12

 House passed non-binding resolution (HCR 288, 81 st Legis.) urging public universities to limit annual increases in academic costs to the greater of 3.95% or $280 .

(Limit applies to the total average academic cost for 15 resident undergraduate hours for Fall and Spring terms combined. Limit for one long term would be the greater of 3.95% or $140.)

 Pending UT System guidelines for Tuition & Fee Proposals are expected to address concerns raised by HCR 288.

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Academic Cost if House Resolution Limit Used

Fall 2009 Fall 2010 Fall 2011 UTPA – Average Academic Cost of 15 Resident Undergrad Hrs $ Increase % Increase $2,761

-

$ 2,901

$140 5.07%

$ 3,041

$140 4.83% If this proposed limit were to be applied to Designated Tuition, the rates would increase by $10 per semester credit hour. For undergraduates the rate would increase from $97/hr to $107/hr (Fall 2010) and $117/hr (Fall 2011). Because DT is capped at 14 hours, the maximum designated tuition increase would be $140 per term .

Assuming enrollment growth remains constant, this would result in annual revenue increases of approximately $4.3M

of which approximately $800k would be set aside for need-based student financial assistance.

Goal is the smallest possible increase required to meet institutional needs.

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Contact Information UTPA Budget Office website: www.utpa.edu/budget/ Email: [email protected]

[email protected]

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