Board of Regents2016-17 Budget PresentationMay 18, 2016

State AppropriationsFY 2008 to FY 2018

Note: FY2015 included state funded KERS contributions of $2.4M (@ 50% of increase)

$55.1$50.0

$46.8 $48.5 $48.5 $46.4 $46.4

$5.1

$55.1

$50.0$46.8 $48.5 $48.5

$46.4

$51.5

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2007-08 2011-12 2012-13 2014-15 2015-16 2016-17 2017-18 Projected

Mill

ions

of D

olla

rs

Fiscal Year

State Appropriations Equity Adjustment

KERS Contribution Rates

6% 6% 6% 6%8% 9% 10%

12%

17%20%

24%27%

39% 39%

49% 50%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Fiscal Year

NKU’s KERS Contribution

$3.9

$5.9

$7.4

$9.3$10.4

$14.1$15.3

$19.1 $19.4

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Mill

ions

of D

olla

rs

Fiscal Year

Total Fixed Costs

$36.2$39.4

$41.9$46.3

$48.8$53.5

$58.5$62.7

-$5.0

$5.0

$15.0

$25.0

$35.0

$45.0

$55.0

$65.0

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Estimated

2016-17 Budget

Mill

ions

of D

olla

rs

Fiscal Year

Fall Total Enrollment

13,921 14,02514,638 14,807

15,10915,405

15,748 15,738 15,66015,283 15,114

14,720

5,000

7,000

9,000

11,000

13,000

15,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Num

ber

of S

tude

nts

YearData source: Office of Institutional Research

Budget Assumptions• FY17 tuition rate increases as approved by the

BOR on April 27, 2016• State appropriation cut of 4.5% in FY17• $5.1M equity adjustment in FY18• Substantial KERS rate increases in FY17 & FY18• Projected enrollment declines of 2.5% FY17 and

1.5% FY18• Possible compensation increase of 3% in FY18• Savings from METS closing in FY17

Budget GapSources and Uses of Central Funds FY2017

Sources of Central FundsGross tuition & fee revenue from rate increase $4,066,000 Less: decline in enrollment (5,600,000)Less: increase in scholarships and waivers (1,928,000)Less: 4.5% cut in state appropriation (2,184,000)Plus: METS closing 300,000

Change in Sources of Central Funds ($5,346,000)Uses of Central Funds

KERS rate increases 3,817,000 Increase in other fixed costs 400,000 Decrease in recurring budgeted reserve (1,500,000)

Change in Uses of Central Funds 2,717,000 Balance ($8,063,000)

NKU

EKUMoSU

MuSU

WKU

Ky Comps Avg

-

1

2

3

4

5

6

7

8

9

FY10 FY11 FY12 FY13 FY14 FY15

Thou

sand

s ($

)

NKU EKU MoSU MuSU WKU

Moody's A1 Median

Unrestricted Net Position per Student (FTE)

April 18, 2016 Moody’s Report Highlights

• Maintained rating of A-1 stable

• Good liquidity, with 192 days cash on hand compared to 132 days in 2011

• Spendable cash and investments cover nearly 10 months of expenses, up from 8 months in 2011

• Size and pace of growth of financial reserves are slightly stronger than similar A1-rated peers

Budget Development Principles• Maintain student access and affordability• Use NKU’s strategic plan as a guide• Protect the University’s instructional mission • Seek advice from the campus community• Make data-supported decisions• Minimize the impact of position eliminations on staff workload• Minimize the negative impact of reduced service levels• Look for efficiencies, cost savings, productivity improvements, and

cost avoidance strategies• Develop a two-year strategy that allows for investment in the

University’s most important asset – our people• Position the University for both short-and long-term success

Student, Faculty, and Staff Headcounts & FTEs

Status Fall 2012

Fall 2013

Fall 2014

Fall 2015

3-Year % Change

Student Headcount 15,660 15,283 15,114 14,720 -6.0%

Student FTE 12,339 12,138 11,849 11,713 -5.1%

Full-Time Faculty 587 590 594 583 -0.7%

FTE Faculty 803 803 801 793 -1.2%

Full-Time Staff 922 928 903 866 -6.1%

Management 90 90 81 76 -15.6%

Data source: Office of Institutional ResearchNote: 2012 and 2013 are adjusted to reflect current definitions. Part-time faculty adjusted to include full-time staff and management who taught courses that semester. Faculty FTE is calculated as reported in the Academic Snapshot

FTE Staff per 1,000 FTE Students, Fall 2014

Source: IPEDS, Fall Enrollment component and Human Resources component (Fall 2014)Note: FTE is full-time equivalent.

82.7

98.0

100.2

102.8

125.0

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0

Northern Kentucky University

Morehead State University

Western Kentucky University

Murray State University

Eastern Kentucky University

Number of FTE Staff per 1,000 FTE Students

FTE Management per 1,000 FTE Students, Fall 2014

6.7

6.7

7.5

9.2

14.7

- 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

Northern Kentucky University

Western Kentucky University

Murray State University

Morehead State University

Eastern Kentucky University

Number of FTE Management per 1,000 FTE Students

Source: IPEDS, Fall Enrollment component and Human Resources component (Fall 2014)Note: FTE is full-time equivalent.

FTE Faculty per 1,000 FTE Students, Fall 2014

47.2

54.0

54.1

55.3

60.7

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

Morehead State University

Eastern Kentucky University

Murray State University

Western Kentucky University

Northern Kentucky University

Number of FTE Faculty per 1,000 FTE Students

Source: IPEDS, Fall Enrollment component and Human Resources component (Fall 2014)Note: FTE is full-time equivalent.

Academic Snapshot

Academic Snapshot

Campus Consultation• Objective

• Educate campus on University’s current and projected financial condition and engage faculty and staff in conversations about budget development

• Stakeholder Meetings• Faculty Senate, Faculty Senate budget committee, Staff

Congress, department Chairs, and Deans• Survey

• Faculty budget priorities survey conducted by Faculty Senate budget committee used for ideas and feedback

• Open Forums• Two open forums were held in March• Sessions included breakout sessions for ideas and

feedback

Faculty Positions Eliminated• Elimination of 37

faculty positions• 31 confirmed &

anticipated vacant• 25 Tenure/Tenure-

track (T/TT)• 6 Non-tenure/Tenure-

track Renewable (NTTR)

• 6 filled• 6 NTTR

• Total dollar impact of $3.5M

550

6, 1%25, 4% 6, 1%

Faculty587 total positions

TTT/NTTR Retained NTTR Filled

TTT Vacant NTTR Vacant

Staff/Management Positions Eliminated

• Elimination of 68 total staff/mgmt. positions

• 32 vacant• 36 filled

• Total dollar impact of $4.5M

918

32, 3% 36, 4%

Staff/Management986 total positions

Retained Vacant Eliminated

Filled Eliminated

Process - Reduction in Force • Provide for an equitable transition in staffing when a work force

reduction is necessary• Balance the financial needs of the university and minimizes any

disruption of services while respecting the dignity of the employees affected

• HR/Legal Services will conduct a thorough review of every position reduction

• Objectives:• To protect the standards and quality of services• To exercise fiscal responsibility• To preserve the dignity and respect the contributions of employees

affected• To support the university’s commitment to equal employment

opportunity• To provide appropriate notice, alternative employment opportunities

when possible, and transition services for employees affected• Consider vacant positions and attrition where possible

Transition Support• Most of the notifications to affected employees will take place

over the summer • Employees will receive a minimum of 30-day notice• Severance (continuation of pay and benefits) will be based on

length of service; minimum of 4 weeks severance• Vacation payout• HR will work one-on-one with employees to provide additional

transitional support services• Employees will have the ability to apply as an internal

candidate at the university for one year

Other Reductions• Graduate/professional student financial

assistance: $209K

• Operating funds: $1.1M

Examples of Cost Savings Ideas• Voluntary reduction in work hours• Voluntary furlough days• Campus closures/holiday breaks• Expanded student work opportunities• Limited options for health insurance to least costly plans• Travel limitations• Cloud computing• Centralized software purchases• Replacement of direct mail with electronic communications• Curtailment of food and beverage purchases • Campus-wide initiative to save on utilities costs

Changes in Revenue

2015-16 Revenue Budget $220,500,000

Revenue

State Appropriation (2,184,000)

Gross Tuition & Fees Revenue (1,534,000)

Other Sources (121,000)

Auxiliaries 839,000

Net Change (3,000,000)

2016-17 Revenue Budget $217,500,000

Expenditure Reallocations2015-16 Expenditure Budget $220,500,000

Expenditure IncreasesScholarships 1,900,000KERS 3,800,000Other Fixed Costs 400,000Revenue Supported Expenditures 700,000

Subtotal 6,800,000

Adjusted Expenditure Budget $227,300,000Expenditure Decreases

Budget Reductions (8,000,000)Decrease in Budgeted Reserve (1,500,000)Closure of METS (300,000)

Subtotal (9,800,000)

2016-17 Expenditure Budget $217,500,000

Summary• Combination of reduction in State appropriation,

KERS and other fixed cost increases, and modest projected enrollment declines will require significant budget reductions to balance the budget

• Decisions for budget reductions followed certain principles, including using NKU’s strategic priorities as a guide

• The 2016-17 operating budget spending authorization is recommended at $217,500,000