FINANCE PACKAGE - BOT 24 MAY 2018 TABLE OF CONTENTS 1. Preamble 2. - PDF document

FINANCE PACKAGE - BOT 24 MAY 2018 TABLE OF CONTENTS 1. Preamble 2. Main options to be validated in YE Forecast 2017-2018 3. Main V0 Budget Assumptions a. Income b. Expenses c. Campaign Funds d. Quai d’Orsay Cost and Financing e. 4Y P&L and Cash Forecast 4. Progress Reports on Projects Underway a. Faculty Working Conditions Negotiations b. RNCP Savings and ERP Financing c. Student Housing Project d. Rolling Campus Renovation Plan e. Permanently Restricted Funds investment 5. List of Appendices a. Budget 17-18 versus Forecast 17-18 b. Budget 18-19 versus Forecast 17-18 c. 4Y P&L and Cash Forecast d. Capital Budget e. Campaign Budget and Revenue f. Cash Position and Cash Chart as of End of April g. History of Premises h. Indebtedness at the End of the Campaign Page 1 of 28

1. Preamble The annual and three-year budget was particularly complex to build this year as many elements came together with varying degrees of uncertainty on multiple fronts. As for the RNCP: we obtained the certification and achieved a cost savings that began in December 18, this savings will be repeated every year for the duration of the certification. This economy is therefore recurrent and we can use it every year until we have reinvested that money in salaries. After this reinvestment, the amount of the savings will be consumed by a recurrent charge and will no longer be available. During the FY 17-18 we benefited from 7 months of cost savings and reinvested this savings in non- recurring expenses (the options we have taken in this respect are presented in paragraph 2 Main options to be validated on YE forecast 17/18). For the 18-19 budget, however, as the President will explain in her report, we are going to reinvest our savings in salaries after having finalized an agreement with the Unions Delegates (see paragraph 4.a RNCP and 4.b faculty working conditions). Therefore, we have decided to present a budget that includes the assumptions that can be easily measured and to generate a surplus sufficient to cover the salary measures that are being negotiated. This is why the V0 Budget is stands today at € 460,000. For the Campaign, Donors have been informed in the AUP Ascending flyer that overheads costs can be funded by gifts within the limit of 7% of gifts. Following the recruitment of a senior fundraiser and the extension of the campaign until 2023, the campaign costs will be from 18-19 onward financed by the operating result. Finally , a certain uncertainty as to the pace of collection of campaign funds and the final amount of the overage of the Quai d’Orsay renovation (as explained in paragraph 3.c) require to plan the future with a good level of security, which is why several costs which were initially planned to be funded by the Campaign Gifts, have been moved temporarily to the operating results. All of these points have been detailed as clearly as possible in the attached package to enable board members to measure the impacts of decisions made and those to be taken in the coming year. 2. Main Options to be Validated in YE Forecast 2017-2018 The Board and the BA Committee have been regularly informed of developments in the budget during the year and the most significant differences appear in Appendix 5.a. In addition to these, the following options will need BA Committee and Board approval for the YE Forecast 17.18. These options are already included in Appendix 5.a to make the resolutions easier to manage: • Increase in the year-end bonus provision for all employees from 500 € to € 1000 gross per employee (cost: 130 K€) • Financing of a part of the overage of the Quai d'Orsay Renovation: + 265 K€ Page 2 of 28

• Taking over the financial costs of the Quai d'Orsay loan to reduce pressure on the gifts collection pace: + 228k€ • Provision for charges related to a future retirement: + 430 K€ loaded (to be explained by the Legal Committee to the Board) • Provision to shorten the amortization period of our current CAMS software in anticipation of Board approval to acquire new software: 120 K€. This Board decision will only take place if and when funds to purchase a new software will be available. If we take the decision to proceed this year, it is wise as it allows to spread the amortization over two years. These options were funded through a positive results above the original budget (revenue + 667 K€) and the use of the RNCP savings of 17-18 FY (724 K€). 3. Main V0 Budget Assumptions All the figures below are taken from Appendix 5.b to which you can refer to for a better understanding (Budget Numbers 18-19 are compared to FY 17-18 Year End Forecast) 3.a/ Income: + 968 K€ Enrollment Undergraduate Tuition + 1 678 K€ • 36 Additional FTEs + 1082 K€ • Tuition fee increase: 2.59 % from 29 320 € to 30 080 € = 704 K€ (including health fees) • Additional Billing 17-18 - 109 K€ Summer Undergraduate Tuition + 176 K€ • 150 Additional credits (AUP students, visitors and COOP) Graduate Tuition -319 K€: Minus 10 FTE Financial Aid 14.8 %: - 371 K€ • Yearly Budget 14.8 % and Forecast 14.3% • Financial Aid on additional tuition fees Page 3 of 28

Other Revenue Assumptions Other income: - 164 K€ • Student health insurance (now integrated into new tuition fees) - 112 K€ • Bookstore (minus sale income) - 51 K€ • Cultural Program (Same amount in expenses) + 33 K€ • Investment earnings -21 K€ • Miscellaneous - 13 K€ Gifts and Grants: + 66 K€ • Annual Giving (Corporate Sponsorships) + 66 K€ 3.b/ Expenses: + 791 K€ Salaries: +76 K€ As we do each year, the leadership team meets several times to prioritize salary requests in 2 or 3 priority levels. In the V0 budget, only level-1 priorities are integrated, as we want to make sure that final numbers will allow for those expenses (Level-2 priorities are described below). Page 4 of 28

French salaries + 139 K€ General salary raise 2%: +177K€ • • Year-end bonus provision • In July 18 for December 18: 1000 € per employee • In July 19 for December 19: 500 € per employee : -130 K€ • Provision for Retirement in Forecast 17/18: - 283 K€ (still under discussion with the Legal Committee) • Academic Salaries other than General Raise: + 299 K€ • Promotions + 55 K€ • 8 new hires + 123 K€ (difference between current salaries and replacement salaries, both loaded) • Assessment staffing changes + 29K€ • Faculty workload adjustment (Addl CDDs and Overloads) + 93 K€ • Administrative salaries other than general raise + 228 K€ • Promotions + 38 K€ • 4 New hires + 119 K€ • New coordinator of learning and instructional design • Web developer ITS • New maintenance crew member • New night guard for Quai d’Orsay • Returns from leave of absence + 71 K€ • Allowance for retirement indemnities: - 152 K€ for 18-19 US Salaries + 154 K€ US campaign salary moved to operational budget as French salaries were in 17/18: + 132 K€ • • New admission counsellor full-time effect + 37 K€ • General and individual raise + 16 K€ • Retirement: - 31 K€ Social Charges: - 215 k€ New social charges rate of 53 % (in comparison to 63 % in FY 17-18) applied to salaries Salaries Level 2: (Those expenses will be included in the October Budget V1, depending on final revenue) • Individual Bonuses + 22 K€ • Recruitment of new technologist (partially covered by Mellon grant): + 17 K€ • Raises + 6 K€ Page 5 of 28

Other Expenses: + 715 K€ Premises: - 17 k€ Although the variation is negative, this actually represents an increase in the costs related to the opening of the Quai d'Orsay, but it is masked by the exceptional costs of 261 K€ borne in 17/18 to finance the overage on the QO renovation (subject to Board approval), and the insurance cost for the renovation work (73 K€). The budget provides for the delivery of the Quai d'Orsay building at the end of 2018, beginning 2019. At that date, we plan to leave both Montessuy (Library) and Amelie (Bookstore), but we will keep Pierre Villey until we are sure to obtain the 102 St Dominique ground floor space (our budget assumption is that we could rent at 650 € HT per square foot for the ground floor and 325 € HT for the basement). Conferences, Travel & Entertainments + 177 K€ • Faculty Development + 15 K€ • Campaign Costs moved to operational expenses + 120 K€ • Bonding week-end for freshmen (common trip) + 25 K€ • Miscellaneous + 17 K€ Contingency & Depreciation + 441 K€ • Bookstore - 67 K€ (Last year provision rose to 75 K€) • Depreciation new assets + 474 K€ (+ 421 K€ for Quai d’Orsay) • Depreciation IRIS Project +34 K€ ( Motion needed when ready to move ) Books, Database & Cultural Program + 176 K€ • IRIS Project Softwares + 94 K€ ( Motion needed when ready to move ) • Other Software + 26 K€ • Cultural Program Export + 33 K€ • Library + 11 K€ • Miscellaneous + 12 K€ 3.c/ Quai d’Orsay – Cost and Financing Significant changes have been reflected in the financing plan below. They mainly concern: 1 / Campaign Costs , a large part of which is and will be now financed by operating result as described in the next chapter on Gifts. 2 / The financial costs of the Quai d'Orsay loan, which will be financed by the operating result for the next 3 years (17-18 to 19-20), whereas it was planned they were financed entirely by Gifts until 22-23, date of early refund. This choice was made to reserve the maximum amount of the gift collection during the renovation period for the financing of the building. It will be maintained as long as the result allows it. Page 6 of 28