Budget Update Open Forums February 27, 2018 March 1, 2018 OUTLINE - PowerPoint PPT Presentation

Budget Update Open Forums February 27, 2018 March 1, 2018

OUTLINE • Current year budget cut • Assumptions for FY19 (2018-19) budget • FY 2018-19 budget scenarios • FY 2018-19 budget planning • Advocacy efforts • Status of ideas from past years

Current Year Budget Cut

Impact of Budget Cut • 1% State Appropriation cut or $516,200 • Cuts by division as follows: • Academic affairs - $331k • Admin & Finance - $123k • Student Affairs - $25k • Advancement - $19k • Athletics - $19k • Divisions addressing primarily through salary savings

FY 2018-19 Budget Assumptions

Enrollment and retention challenges remain ... 17,000 16,000 15,748 15,738 15,660 15,405 15,283 15,109 15,114 14,807 15,000 14,720 14,566 14,488 14,000 13,000 12,000 11,000 10,000

KERS Contribution Rates Current and Proposed FY 2018-19 90% 84% 80% 70% 60% 49% 49% 50% 39% 39% 40% 27% 30% 24% 20% 20% 17% 12% 10% 9% 10% 0% 84% based upon 2018-2020 Office of State Budget Director Salary and Benefit Defined Calculation report

KERS Contribution Amounts Current and Proposed FY 2018-19 $’s in millions $35 $31.0 $30 $25 $20 $18.3 $17.7 $15.3 $14.1 $15 $10.4 $9.3 $10 $7.4 $5.9 $3.9 $5 $3.3 $2.6 $0

Assumptions for FY 2018-19 Budget • Enrollment declines of 0.5% to 2.5% • Tuition increase of 2% to 5% • Scholarship increases • State appropriation cut of 6.25% • KERS increase $12.8 million • Other fixed cost increases • Health Innovation Center operating costs

FY 2018-19 Budget Scenarios

Scenario 1 Scenario 2 Tuition Percent Increase 4% 4% Enrollment Change .5% Decline 1.5% Decline No Equity No KERS No Equity No KERS Funding Funding $ $ Source of Funds Tuition rate increase 4,900,000 4,900,000 FY18 Net tuition shortfall (650,000) (650,000) FY19 Tuition shortfall (575,000) (1,725,000) FY19 Scholarship incr (1,500,000) (1,500,000) Net Tuition Incr(Decr) 2,175,000 1,025,000 State cut of 6.25% (3,200,000) (3,200,000) ½ KERS Increase funded 0 0 Equity Funding for FY19 0 0 Net State Appropriation (3,200,000) (3,200,000) TOTAL FUNDS (1,025,000) (2,175,000)

Scenario 1 Scenario 2 Tuition Percent Increase 4% 4% Enrollment Change .5% Decline 1.5% Decline No Equity No KERS No Equity No KERS Funding Funding $ $ (1,025,000) (2,175,000) TOTAL FUNDS Use of Funds KERS Rate Increase (12,810,000) (12,810,000) (to 84%) Fixed Cost Estimate (1,800,000) (1,800,000) HIC Operating Cost Estimate (2,000,000) (2,000,000) Net Use of Funds (16,610,000) (16,610,000) SURPLUS (DEFICIT) (17,635,000) (18,785,000)

Scenario 1 Scenario 2 Tuition Percent Increase 4% 4% Enrollment Change .5% Decline 1.5% Decline $ $ SURPLUS (DEFICIT) (17,635,000) (18,785,000) Equity funding 5,100,000 5,100,000 SURPLUS (DEFICIT) (12,535,000) (13,685,000) SURPLUS (DEFICIT) (17,635,000) (18,785,000) ½ KERS Increase Funded 6,405,000 6,405,000 SURPLUS (DEFICIT) (11,230,000) (12,380,000)

Budget Variables Across-the-board pay increase of 1% = $1.1 million Tuition rate increase of 1% (net) = $1.2 million Enrollment increase of 1% = $1.15 million Average compensation/benefits for FT Faculty = $93 K Average compensation/benefits for FT Staff = $91 K * * Assumes KERS at 84%

FY 2018-19 Budget Planning

FY 2018-19 Budget Planning/Timeline • Budget update presentations to campus constituencies (Deans, Staff Congress, Chairs, Faculty Senate, SGA) • Open Forums in late February/early March • Parking/Dining/Housing fee recommendations to Board in March • Division budget planning – ongoing • Tuition recommendation to Board in May • Budget recommendation to Board - TBD • Possible special board meeting in May or June

Advocacy Efforts • Equity funding • Pension reform • Pension relief

NKU - Pension Reform Requests 1. 2. Place all new hires into Create a one-time a defined contribution window to give system employees opportunity to transfer out of KERS and into a defined contribution system

Council on Post Secondary Education 2018-20 Biennial Budget Recommendation KERS Cost Relief FY 2018 Total KERS Cost Budgetary Institution General Fund Increases Impact University of Kentucky $267,089,200 $0 0.0% University of Louisville 132,758,000 0 0.0% Eastern Kentucky University 65,045,200 9,714,400 14.9% Kentucky State University 26,729,600 1,358,600 5.1% Morehead State University 41,642,600 3,283,800 7.9% Murray State University 45,802,100 4,777,300 10.4% Northern Kentucky University 51,621,100 12,810,700 24.8% Western Kentucky University 74,653,800 7,263,300 9.7% KCTCS 181,605,000 8,039,400 4.4% TOTAL $886,946,600 $47,247,500 5.3%

Status of Ideas

Past Years: Suggestions Acted Upon or in Progress REVENUE GENERATION • Entered into partnership with Academic Partnerships to increase enrollment in online programs and enhance online course offerings • Have involved the entire campus in improving student recruitment and retention efforts • Entered into U.S. 27 development project that will help bring in people and revenues to campus • Increased parking fee structure for visitors • Continuing advocacy for state equity funding • Have realigned student aid programs to improve recruitment and retention • Continuing to develop strategies for recruiting non-traditional, part-time students, and out-of- tristate students

Past Years: Suggestions Acted Upon or in Progress (Cont) COST SAVINGS • Continue to re-evaluate contracts with external vendors and seek competitive bids • Converting more users' computers to cloud-based desktops • Continually explore options to reduce KERS costs, e.g., moving more employees to TIAA when possible and transition staff jobs to faculty when appropriate • Close university over holidays to save on electricity and other resources • Carefully considering “outsourcing” possibilities • Targeting facilities investment into asset preservation rather than new buildings • Promoting and expanding participation in online W-2s • Continually analyze health and wellness-related costs, including costs of health insurance • Continue to review job vacancies and make sure these duties are still needed • Evaluated the need for using search firms and did not use them for some positions, e.g., Arts & Sciences Dean, CFO, General Counsel • Offered shortened work week to eligible staff

Current Year: Revenue Generation Suggestions • Utilize BB&T for major conferences or events outside of athletic cycles • Create a Norse Alumni membership group with an annual fee and some perks (e.g., free drink/snack at basketball games) • Charge students fees for missing advising appointments • Charge a fee to faculty/staff for using the Recreation Center – reduce for frequent users • Develop and offer more events and courses to the community and advertise these strategically through social media • Increase local advertising presence, e.g., billboards on I-275 near campus • Sell naming rights to areas, places, or items on campus, e.g., rooms, green areas • Begin a grassroots & social media campaign to highlight existing revenue generation, e.g., Planetarium birthday parties, NKU Theatre • Sell assets that are not being used - such as the old Covington campus in Park Hills

Current Year: Cost Saving Suggestions • Evaluate organizational structure - look for ways to increase efficiency and create synergies • Have fewer phones on campus; many office phones are rarely or never used • Create stricter guidelines on office furniture purchasing and encourage the "swapping" of furniture between departments • Make dental and vision employee-paid benefits only • Offer early retirement incentives • Reduce the number of days/week that trash is collected and/or have employees empty own trash in a central location • Institute a 4-day work week/class schedule and reduced summer operating hours • Use solar panels; replace current lights with LED lighting; install reflective sheets above halogen light bulbs; install more motion lights • Eliminate color postcards; make double-sided printing the default; let students opt-in to electronic rather than paper communications

We want your input • Link to Website for Revenue Generation and Cost Saving Ideas https://inside.nku.edu/cfo/ideas.html

APPENDIX

2016-17 Progress 1. 2016 Session: General Assembly addresses historic funding disparities impacting NKU and WKU, and appropriate $5.1 million to NKU to fix half of disparity. 2. 2017 Session: development of a rational, strategic performance based funding model

KERS Contribution Rates 60% 49% 49% 50% 39% 39% 40% 27% 30% 24% 20% 17% 20% 12% 10% 9% 8% 10% 0%

KERS Contribution Amounts $20 $18.3M Millions $17.7M $18 $15.3M $16 $14.1M $14 $12 $10.4M $9.3M $10 $7.4M $8 $5.9M $6 $3.9M $3.3M $4 $2.6M $2 $0

KERS as % of State Appropriation 45% 40% 38.2% 35.4% 35% 32.2% 32.0% 30% 24.3% 25% 20.4% 20% 15.9% 15% 11.6% 10% 7.7% 6.4% 4.9% 5% 0% 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18