Fall Budget Forum:2015 Fiscal Results, 2016 Budget,

Performance Funding, Enrollment, and Future Prospects

David L. Eisler, president

Sally DePew, director, budgetary planning & analysis

October 22, 2015

Outline for Today

• Federal and State economic trends, budget

• Ferris budget information– Look back at 2015 fiscal results; Impact of GASB 68– Information on 2016 budget

• Higher education formula funding

• Enrollment

• Looking forward to 2017

Federal Budget

• No Federal Budget for 2016– Continuing Appropriations Resolution through December 11

– Issues affecting movement on the budget include:• Debt limit increase; planned parenthood controversies; export-import bank

controversies; Iran nuclear deal; Highway Trust Fund funding; House leadership

• Continued support for Federal Pell Grants– FY 2015 funding of $33.3 Billion

– Scheduled to increase to $34.4 Billion for 2016

– Maximum award $5,775 for 2016

• Perkins Loans

• Unemployment 5.1 percent in August

Michigan Economy & Budget

• Michigan unemployment rate fell to 5.1% in August – matching Federal rate

• State revenues are slowly improving– General fund 1.6% growth estimate for FY15– School Aid Fund 3.0% growth

• FY 16 State budget of $53.6B (all sources)

• General Fund/General Purpose budget $9.9B (18% of total)

• Higher Education funding $1.5 billion– Federal $ 97 million 6%– School Aid Fund $ 205 million 14%– General Fund $1,232 million 80%

Michigan Budget PrioritiesOne-Year (2015) and Ten-Year (2005-2015) Change in

State Appropriations from State Resources

6.3%-3.0% 1.2% 2.0% 0.5%

1.3%

37.7%

4.0%8.7% 7.2%

10.2%

-16.

9%

Com

mun

ity

Col

lege

s

Cor

rect

ions

Tot

al

K-1

2

Hea

lth

and

Hum

an S

ervi

ces

Hig

her

Edu

cati

on

1-yr Change 10-yr Change

General Fund, $209

Designated Fund, $15

Auxiliary Fund, $40

Expendable Restricted Fund, $32

2014-2015 University Fiscal ResultsOperating Funds Revenues

$296 MillionAmounts in Millions

2014-2015 University Fiscal Results $210M General Fund Spending

Purpose of ExpenseAmounts in Millions

Compensation$143.5

Operating Support$45.7

Financial Aid$21.1

2014-2015 University Fiscal Results $210M General Fund Spending

Purpose of ExpenseAmounts in Millions

$0

$20

$40

$60

$80

$100

$120

$140

$160

Compensation Operating Support Financial AidFY10 FY11 FY12 FY13 FY14 FY15

2014-2015 University Fiscal ResultsGeneral Fund Expenditures

$210 MillionAmounts in Millions – State Reported HEIDI

Instruction and Academic Support

$121.0 57%

Student Services$16.08%

Plant$14.47%

Institutional Support $22.9 11%

Research/Public Service $0.4 0%Transfers

$14.57%Financial Aid

$21.1 10%

Michigan Public University Spending PatternsFiscal year 2014 Percent of General Fund Expenses by Function of Expense

45%

13%

6% 7%

11%

0%

7%10%

2%

37%

12%

5%

10% 9%7%

8%

12%

1%

Instruction AcademicSupport

Student Services Plant InstitutionalSupport

Research/PublicService

Transfers Financial Aid Auxiliary

FSU Average

Net Position

• Net Position – difference between assets and liabilities– Accumulated one-time balance June 30th

– Includes actual dollars and paper transactions

• Classifications– Capital Assets (net of debt) – infrastructure assets

– Restricted – by outside agencies or persons, i.e. Federal and State restricted scholarships and loans

– Unrestricted – without external restriction to use or purpose.

2014-2015 University Fiscal Results Net Assets / Net Position

$276.9 MillionAmounts in Millions

Invested in Capital Assets

$175.8

Restricted for Nonexpendable

Scholarships $23.9

Restricted for Expendable

Scholarships, Loans and Grants

$29.2Unrestricted

$48.1

GASB 68

• GASB (Governmental Accounting Standards Board) statement addressing reporting for pensions provided to state employees.

• Ferris, as a MPSERS university, must abide by this statement.

• Impact is to record on financial statements $65M of pension liability as of June 30, 2015

• Future statement will require reporting of health liabilities as well

MPSERs

• Michigan Office of Retirement Services and Auditor General’s Office have determined MPSERS university GASB 68 pension liability amounts

• In doing so ORS found an error dating back to 1997 in how university MPSERS unfunded liabilities were assessed

• Universities overcharged every year beginning in 1997

• $112 million of overcharges were rebated to Universities in September – Ferris received $17.3 million representing our overcharges through fiscal year 2014 with additional adjustment forthcoming for fiscal year 2015

• Plan is to endow student scholarships with the rebate amount

2014-2015 University Fiscal Results Unrestricted Net Assets

– Development (including Foundation)– Plant projects in progress– Maintenance reserve

• Held for University maintenance needs (all funds)• Ferris’ Facility Condition Index stands at 27.6% - new assessment

underway • Reserves are 5% of physical plant replacement value

– Auxiliary operations– Student loan funds– Fiscal year-end balances (encumbered and unencumbered)– Other unrestricted amounts (provision for self insurance, booked

unrealized gains, legal contingency, unallocated investment income waiting for distribution)

– Net pension liability – new for 2015

2014-2015 University Fiscal ResultsUnrestricted Net Asset

ComparisonAmounts in Millions

$36.4

$14.9

$37.4

$10.6

$11.8

$2.0

$0.2

-$65.2

$41.4

$23.1

$38.6

$17.0

$11.6

$2.0

$0.3

Maintenance Reserve

Plant Projects in Planning

Development

All Other

Divisional Carryover/Encum.

Auxiliary Operations

Student Loan Funds

Net Pension Obligation

FY 2015 - $48.1M FY 2014 - $134.0M

2015-2016 General Fund Budget - $213.6MAmounts in Millions

State$51.324%

Tuition$159.275%

Other$3.1 1%

Revenue

Compensation, $149.3, 70%

Operating Support, $41.5,

19%

Student Aid,

$22.7, 11%

Expense

2015-2016 General Fund Budget - $213.6MCompared to 2014-15 Budget

Amounts in Millions

$148

$39

$21

$149

$42

$23

Compensation Operating Support Student Aid

Expense

$50

$153

$5

$51

$159

$3

State Appropriation Tuition Other

Revenue

FY 15

FY 16

Academic Affairs $110.3

Administration and Finance $27.9

Executive $2.6

General Expenses$36.7

Governmental Relations General

Counsel $1.5

Kendall College of Art and Design

$21.5

Student Affairs $8.5

University Advancement and

Marketing $4.5

2015-2016 BudgetGeneral Fund Allocations

Amounts in Millions

Housing$19.057%

Dining$14.643%

$33.6M Total

2015-16 Budget Housing/Dining Allocations

In Millions

$19.4

$14.8

$19.0

$14.6

Housing Dining

FY 2015

FY 2016

2015-16 BudgetHousing/Dining Budget Revenues

Compared to 2014-15 BudgetIn Millions

Higher EducationFerris State

• Funding Formula Supports Ferris’ Mission

• Ferris received third-highest percentage increase in appropriations for FY 16 (2.3 percent)

• Ferris ‘16 General Fund budget is $213.6 million

– $50.3 (23.6%) base funding from state• Additional State MPSERS funding of $900k

– Tuition supports majority of General Fund

Higher EducationPerformance Fundingand Tuition Restraint

• Higher education budget included $21.6 million increase– $20.1 million – performance funding

– $ .5 million – Indian Tuition Waiver (FSU received $32k)

– $ 5.1 million - MPSERS

• Performance funding– Critical Skills Undergraduate Degrees/Certificates

– Research and Development Expenditures

– Three measures scored against Carnegie Peers

• Six-Year Graduation Rate

• Total Degree Completions

• Institution Support

• Percent of Students Receiving a Pell Grant

• Requirement to not increase tuition more than 3.2%

Higher EducationFerris State University Appropriation FY 11 to FY 16

(Amounts in Millions – Includes MPSERS Funding)

$48.6

$41.3$44.3

$46.1

$50.2 $51.3

FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

FSU Appropriation HistoryFinancial Statement Amounts – Base Appropriations plus MPSERS – In Millions

$56 $56

$50 $49 $49 $50

$44

$50

$54$50 $49 $49

$41$44 $46

$50 $51

FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 07Paid

FY 08 FY 08Paid

FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Higher EducationFY 16 Performance and Other Funding

FY 2015-16

Performance Measures

Critical Skills DegreesResearchCarnegie Metrics(FSU 9 of 117 points – 7.8%)Total

Redistribution -Tuition Restraint

Other State IncreasesIndian Tuition WaiverMPSERS

Total FSU State Change - 2.6%

*Estimated portion

Appropriated

$4,466,533$2,233,267

$13,399,600

$20,099,400

$500,000$5,160,000

FSU Amount

$360,261 $ 0$748,443

$1,108,700$142,000

$32,100$900,000*

$2,182,800

FSU %/Total

8.1%0%

5.6%

5.5%

6.4%17.4%

Including MPSERS

Tuition Rate Increase History

2.4%

3.5%

1.9%

4.4%

6.4%

5.3%4.7% 5.1%

2.6% 2.2% 2.2% 2.40%

FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16

Resident Undergraduate Lower Division TuitionPercentage Increase

Fall Headcount Enrollment andAnnual Full Time Equivalent (FYES)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

FSU FYES

Average Student Debt BS Graduates with DebtFerris State University

$28,483$31,356

$34,767 $35,468 $35,476$36,930 $37,325

$35,720

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Michigan Public UniversityAverage Debt of Graduates with Debt

And Proportion of Graduates with Debt2012-13

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Avg Debt Graduates with Debt

Looking ForwardIssues to Watch

• Desire for greater legislative control• Performance funding formula stability

– Measures– Political pressures– Perceived inequity

• General Fund Support for Roads• Competition in the School Aid Fund• Community College Baccalaureate• MPSERS• Strong pressure to restrain tuition• Federal support for Pell grants• Tuition Incentive Program• Capital Outlay

FY 2017 FSU Priorities

• Strategic Plan

• Enrollment Plan and Student Success

• Student Debt

• Engagement in West Michigan

• External Support

Questions, Comments, Discussion

Thank you……

Thank you for your continued efforts for our students

and to move Ferris State University forward

David L. Eisler