February 14, 20018:30 – 10:00 AM

David K. Scott, ChancellorUniversity of Massachusetts Amherst

374 Whitmore Administration Building

Amherst, MA 01003

413-545-2211

dkscott@chancellor.umass.edu

Budget and Planning Update

Budget and Planning Update

2

Agenda

8:30 AM Welcome

8:35 – 8:50 Background

8:50 – 9:30 Financial Projections FY02 and FY 03

9:30 –10:00 Questions

Agenda

Meeting to discuss next steps:

March 13, 2001, 8:30 –10:00 AM

Campus Center Auditorium

Budget and Planning Update

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Background

Background

•Strategic Action FY96-01Strategic Action FY96-01 was designed to identify key areas for investment and to realize funds for those investments through new revenues and planned reallocation and restructuring of the base budget. For further

information, please see: Strategic Action -Towards a Commonwealth of Learning - A Six Year Retrospective – FY 1996-2001 http://www.umass.edu/chancellor/vision

•In addition, a variety of investments were made in the long-neglected campus infrastructure, in financial aid to increase access, in information technology to maintain competitive advantage and in other major programmatic initiatives.

•The overall institutional budget has not been reduced and we do not anticipate reductions in the near future. While the state appropriation to the campus has increased on average 5.8% per year over the past five fiscal years, it is unlikely to do so in the immediate future.

Budget and Planning Update

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Revenue Factors Leading to Ongoing Need for Reallocation and Restructuring

• The state appropriation to the campus has increased an average of 5.8 percent over the past five fiscal years. The anticipated increase for FY02 is 3.5 percent. The anticipated increase for FY03 is 3 percent.

• Fees have been held level or have been increased minimally in past six years.

 • While some increases are expected in overhead from grants and

other activities, no major increases are expected from distance learning or licensing/patents in the next several years, beyond the initial investment needs.  

• Continued increases in private fund-raising are expected, but much of this revenue is earmarked to specific areas or projects and, as such, will not help address the shortfall for at least several years.  

Revenue-based Factors

Budget and Planning Update

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UMass Amherst State Appropriations Projection (in $ millions) Based on History of State Tax Revenues and UMass Amherst Appropriations

Includes all state appropriations

Base INCREASE UMASS STATE % state 6-YR %Amherst 6-YR Compare

Salary Other TOTAL AMHERST TAX REV change AVG change AVG UMA w/State

FY2000 5.2 4.6 9.8 228.8 15,688 9.8% 6.8% 4.5% 5.8% -1.0%FY99 5.6 9.7 15.3 219.1 14,291 1.9% 7.5%FY98 4.9 8.9 13.8 203.8 14,026 9.1% 7.2%FY97 4.9 6.3 11.2 190.0 12,861 6.7% 6.3%FY96 3.2 4.9 8.1 178.8 12,050 7.9% 4.7%FY95 0.0 7.6 7.6 170.7 11,165 5.3% 4.7%FY89 - FY94 4.4% -0.9% -5.3%FY83 - FY88 10.3% 9.8% -0.5%FY77 - FY82 9.9% 7.3% -2.6%

UMA State Appropriations Projection

State Appropriations

Budget and Planning Update

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State Tax Revenue and UMA State Appropriation

Estimated Change in Tax Revenue - FY2002•Governor’s Office – 3.5% •Massachusetts Tax Payers Association – 0 to 2%•UMass President’s Office – 3.5%

State Appropriations

GOV

MTF

UMA

UMPO0%

2%

4%

6%

8%

10%

12%

14%

FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02Projection

Percent Increase

$-

$5

$10

$15

$20

$25

$30

Approx. Millions

State Tax RevenueUMA State AppropriationSalary ExpendituresOther Expenditures

General Operations Budget Sources and UsesFY01 to FY03

* FY01 and FY02 salary increases (COLA/Merit): Includes annualization from prior year

State increase= 3.5% 3.0%FY01 FY02 FY03

BASE REVENUE 289,070 303,678 313,882

INCREASE IN BASE REVENUEState Appropriation (3.5%,3% in FY02,FY03 ) 12,658 8,081 7,169

Research Indirect Recovery (6%) 900 923 978

Curriculum Fee/ other 1,050 1,200 1,000

TOTAL BASE REVENUE 303,678 313,882 323,029

BASE USES 292,443 306,845 313,882

INCREASE IN BASE USESMajor Initiatives 354

Athletics Programmatic 1,682

Waiver Loss 1,130

Tech Administrative Systems 1,443 2,500 1,300

Infra General Operations share of capital plan 1,200 1,300 1,800

Cost of new space 475

Fin Aid Need/Merit 960 250

Salary * Increase 10,144 9,200 7,250

Academic VC Research:Faculty start up; matching funds and 1,520 1,877 593

Research investment

Other Utilities 300 150

Central Univ Assessment & mandatory increases 1,542 982 1,000

TOTAL BEFORE RESTRUCTURING 309,606 325,816 326,700

RESTRUCTURING (2,761) (11,934) (3,671)

TOTAL BASE USES 306,845 313,882 323,029

Net (use one-time funds) (3,167) ? ?

Budget and Planning Update

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Financial Projections FY02 and FY03

Proposed Reallocations

Estimated Combined FY02 and FY03 Shortfall -15,605(In Thousands)

Steps Taken Executive area reductions 5,667 Academic Affairs - $2.4M/1.5%

Other Areas, except UA - $3.2M/5.0%

Increase Administrative Overhead Rate 600

Steps Under Consideration 3,507 Financial Aid, Athletics, charging curriculum fee waivers to grants and contracts, University Advancement

Total Reductions 9,774

Remaining Shortfall -5,831

Other Possible Actions Elimination of President's Reserve 1,000 Athletic Waiver Reinstatement 1,130

Budget and Planning Update

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Summary – Key points

• It is anticipated the overall state allocations will increase by smaller percentages in FY02 and FY03 than in preceding five years. Currently, the approximate shortfall for FY02 and FY03 is $15M. A more precise number will be known in late spring.

• Over the course of FY02 and FY03, the reallocation for Academic Affairs will be $2.4M/1.5% and for other executive areas* it will be $3.2M/5.0%. It is possible that the percentages will be increased in FY03 depending on state appropriations and other factors.

*University Advancement still under review

Summary

Budget and Planning Update

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Fiscal Management – Summary 10 Year Financial Plan

Summary 10 Year Plan

FY2001 to FY2010 Financial Plan

New Base Revenue Sources New Base Uses These Uses Will:(In Millions)

11.4 RTF Research Overhead 4.9 Fund Balance Raise financial cushion to 12%

3.0 Fundraising Tax 13.3 Faculty renewal and Invest in curriculum, advising, faculty Living and Learning renewal and five departments to rankings

7.6 Entrepreneurial8.1 Library Increase ARL ranking from 87 to 50

3.1 Athletic IA programs 1.6 Athletics Maintain current program thru FY04

16.1 Lifelong Learning5.5 Technology Fund PeopleSoft implementation

18.5 Student Fee Increases and instructional technologies16.1 Cost of new activities Support new revenue activities

82.4 State (3.0% inc)127.5 Salary/ other inflation Fund inflationary and mandated

45.8 State Special Ask Over cost increases Nine Years 42.8 Infrastructure Fund the general operations share

of capital plan63.5 Restructuring 8.3 Financial Aid Maintain current level of met need

for in-state students20.0 Research support Support 6% / yr growth in awards

3.3 Address FY01 deficit

251.3 Total New Revenues 251.3 Total New Uses

Key Performance IndicatorsStrategic Action Reference

FY96-01 PointFiscal Year 1996 1997 1998 1999 2000 2001 Change 1994

Enrollment (including Continuting Education)Undergraduate 19,164 19,467 19,065 18,752 19,372 19,061 -0.5% 18,375Graduate 6,103 5,955 5,819 5,793 5,659 5,355 -12.3% 5,859Total 25,267 25,422 24,884 24,545 25,031 24,416 -3.4% 24,234

ALANA %First-Year 17.2% 20.7% 20.8% 19.1% 16.8% 16.7% -0.5 pts. 15.3%Undergraduate 14.8% 16.3% 17.3% 17.8% 17.8% 17.3% +2.5 pts. 12.6%

Academic Indicators of First-Year StudentsOne-Year Retention 77.0% 78.3% 79.3% 79.4% 80.6% 83.6% +6.6 pts. 76.6%Acceptance Rate 78.5% 74.4% 73.0% 74.5% 68.9% 67.3% -11.2 pts. 86.0%Honors Students/Commonwealth College 1,245 1,510 1,642 1,805 2,227 2,479 99.1% 701

Ugrad In-State Tuition & Fees $5,514 $5,413 $5,329 $5,229 $5,212 $5,212 -5.5% $5,467Consumer Price Index (CPI)

Index (FY 1996=100) 100.0 102.9 104.8 106.5 109.5 - - -Change 2.7% 2.9% 1.8% 1.7% 2.8% - 9.5% 2.3%

Higher Education Price IndexIndex (FY 1996=100) 100.0 103.0 106.6 110.3 114.4 - - -Change 3.0% 3.0% 3.5% 3.5% 3.7% - 14.4% 3.4%

Financial (in thousands)Total Operating Budget (Revenues) $473,405 $492,740 $511,345 $526,916 $555,102 $557,893* 17.8% $428,391State Appropriation $170,937 $182,200 $196,707 $211,245 $219,826 $232,219* 35.9% $156,437Financial Aid as % of General Operations Budget 5.1% 4.9% 5.7% 6.4% 7%* 6.8%* +1.7 pts. 4.5%Sponsored Activities $69,500 $69,500 $72,100 $75,800 $79,300* $90,000 29.4% $57,200Financial Cushion 12.8% 11.8% 11.9% 12.2% 12.4% - - 7.8%Campaign UMass $16,400 $26,700 $23,100 $23,900 $19,800 $24,000* $133,900** -

Library Acquisitions Expenditures $4,108 $4,434 $4,269 $4,541 $5,272 - - $3,327

EmployeesFaculty† 1,364 1,391 1,393 1,395 1,454 1,431 +67 1,390

Tenure System 1,070 1,058 1,065 1,038 1,048 1,032 -38 1,101Non-Tenure System 294 333 328 357 406 399 +105 289

Staff 3,897 3,919 3,956 4,079 4,098 4,046 +149 3,939Graduate Assistants 2,615 2,591 2,633 2,614 2,650 2,543 -72 2,539Total 7,876 7,901 7,982 8,088 8,202 8,020 +144 7,868

Salaries of Full-Time EmployessFaculty Salary Increases - %†† - 6.5% 5.2% -1.0% 4.5% 6.8% - -Average Faculty Salary $60,275 $64,195 $67,546 $66,894 $69,902 $74,658 23.9% $60,680Professional Staff Salary Increases - %†† - 7.5% 5.4% -0.8% 3.0% 7.7% - -Average Professional Staff Salary ††† $40,840 $43,917 $46,274 $45,901 $47,287 $50,912 24.7% $41,172Classified Staff Salary Increases - %†† - 5.5% 1.9% 3.5% 6.2% 4.3% - -Average Classified Staff Salary $23,901 $25,207 $25,682 $26,574 $28,224 $29,430 23.1% $23,918

Campus Network Ports (Internet) 2,100 3,321 5,148 3,554 5,887 3,363 20,010** -

* Projected or preliminary.

** Cumulative

† Includes faculty with administrative (e.g., Associate Deans) and research responsibilities; includes part-time faculty; excludes faculty on leave without pay.

†† Decreases are likely due to retired employees being replaced by new hires at junior level. Annual increases fluctuate due to delayed increases and, among classified staff, step raises.††† Excludes Executive, Administrative, and Managerial positions.

Budget and Planning Update

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Change in Resources and InvestmentsFY 1996 - 2001

APPENDIX

$0

$20

$40

$60

$80

$100

$120

Change in Resources ($108.2M) Change in Investments ($108.2M)

Mill

ions

Reallocation - $11.6M

Restructuring - $15.5M

Other Revenue - $11.0M

State Appropriation -$67.0M

One-time Strategies - $3.1M)

Program Investments -$11.6M

Info Technology - $8.9M

Infrastructure - $8.7MDevelopment / Athletics - $2.6M

Major Initiatives - $13.0M

Financial Aid - $8.8M

Central / Mandated - $11.3M

Salary Increases - $43.3M

Budget and Planning Update

13

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Financial Model Options

FCI = total cost of existing deficiencies

current replacement value

= 0.25 at UMass Amherst

= $ 1.69 billion

$ 431 million

An

nu

al Fu

nd

ing

Facilit

y C

on

dit

ion

In

dex (

FC

I)Facilit

y C

on

dit

ion

In

dex (

FC

I)

Fiscal Year

Ex. 1 - Current funding

Ex. 2 - Maintain FCI

Ex. 3 - Reduce FCI to .10

‘01 ‘02‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20

APPENDIX