Financial Analysis of Rutgers: Revenue Distribution and the State - PowerPoint PPT Presentation

New Jersey Higher Ed Appropriation vs. Other States: -20% -10% 10% 20% 30% 40% 50% 0% Change from 2012 to 2017 per Grapevine Study New Hampshire California Oregon Idaho Washington Colorado Utah Wisconsin South Dakota Massachusetts Hawaii South Carolina 5-Year change 2012 to 2017 Virginia Florida Montana Tennessee Maryland North Dakota Connecticut Georgia Michigan Nevada Minnesota • US average is +16.4% • NJ is 39 th at +4.3% New York Nebraska Texas Rhode Island Missouri Iowa Ohio Indiana Wyoming Maine North Carolina Delaware New Mexico Mississippi Alabama New Jersey Pennsylvania Vermont Arizona Kansas Arkansas Kentucky Alaska West Virginia Louisiana Illinois Oklahoma 23

Politics Matter: State Legislative Control All U.S.: 2009 2017 Change Governors 26-24 33-16-1 +9.5 State Senates 28-21-1 36-14 +14.5 State Houses 34-15-1 33-17 +17.5 All U.S.: 2009 2017 Change States All Red 9 25 +16 States Split 25 20 -5 States All Blue 16 5 -11 All U.S. State Houses 2009 2017 # Change % Change Senate Dem. 1,021 795 (226) -22% Senate Rep. 893 1,124 231 26% House Dem. 3,026 2,340 (686) -23% House Rep. 2,353 3,053 700 30% All U.S. 2009 2017 # Change % Change Senate and House Dem 4,047 3,135 (912) -23% Senate and House Rep 3,246 4,177 931 29% 24

Wall Street Editorial on New Jersey November 7, 2017 The Sorry State of New Jersey • After Christie, Trenton is headed toward more tax-and-spend decline. • New Jersey (like Connecticut) was once a tax haven for New Yorkers, but in 1968 the • state allowed collective bargaining by public unions. Eight years later the state adopted an income tax with a 2.5% top rate to boost spending on education and reduce property taxes. Thus began the state’s road to fiscal perdition. Politicians captive to public unions have repeatedly raised income taxes to sweeten • worker salaries and benefits. The state’s 8.97% top rate on households earning more than $500,000 is the highest in the Northeast after New York City. All of this has hurt the economy, which has depressed tax revenues. • Scaling back public workers platinum health benefits to levels offered by private • employers, which could save $3.7 billion. Replacing defined-benefit plans for current workers with a defined-contribution hybrid could yield an additional $1.5 billion. Yet after winning re-election in 2013 in a 22-point landslide, Mr. Christie invested • little political capital into persuading the legislature and public to support more reforms. He instead hit the road to run for President. Sorry to say, New Jersey’s tax-and-spend decline seems likely to accelerate. • 25

Rutgers Biomedical and Health Sciences (RBHS): Financial Information in Audited Statements, Budget and IPEDS 26

Composition of RBHS Schools Centers and Institutes Ernest Mario School of Pharmacy Brain Health Institute New Jersey Medical School Center for Advanced Biotechnology and Medicine Robert Wood Johnson Medical School Environmental and Occupational Health Sciences Institute Rutgers School of Dental Medicine Institute for Health, Health Care Policy and Aging Research School of Graduate Studies Rutgers Cancer Institute of New Jersey School of Health Professions Rutgers Institute for Translational Medicine and Science School of Nursing School of Public Health Behavioral Health Care Network University Behavioral Health Care 27

RBHS From Audited Statements In Millions 2014 2015 2016 Patient Service Revenues $487.6 $518.0 $533.9 All Other Revenues $2,987.7 $3,032.6 $3,069.3 Total Rutgers Revenues $3,475.3 $3,550.6 $3,603.2 Patient Revenue as % of Total Revenue 14.0% 14.6% 14.8% Dollar Change 2014 to 2015 2015 to 2016 Patient Service Revenues $30.4 $15.9 All Other Revenues $44.9 $36.7 Total Rutgers Revenues $75.3 $52.6 Percentage Change 2014 to 2015 2015 to 2016 Patient Service Revenues 6.2% 3.1% All Other Revenues 1.5% 1.2% Total Rutgers Revenues 2.2% 1.5% 28

Specifics of RBHS Revenues • Revenues generated within: – RBHS behavioral healthcare – Faculty practice operations – Community healthcare centers – Cancer and contract activities, under contractual arrangements with governmental payers and private insurers 29

Breakdown of RBHS Revenues per Audited Statements In Millions 2015 2016 $ Change % Change Faculty Practice Plans $233.7 $239.0 $5.3 2.3% NJ Dept.. of Corrections $145.9 $149.4 $3.5 2.4% $80.0 $77.8 ($2.2) -2.8% Other Professional Contracts UBHC $58.4 $67.7 $9.3 15.9% Total Patient Care Revenues $518.0 $533.9 $15.9 3.1% Percent of Total: 2015 2016 Faculty Practice Plans 45% 45% NJ Dept.. of Corrections 28% 28% 15% 15% Other Professional Contracts UBHC 11% 13% Total Patient Care Revenues 100% 100% UBHC is University Behavioral Health Care, and provides care to patients often without charges or at amounts less than their established rates 30

Different Breakdown of RBHS Revenues Why Patient Revenues are Less than Patient Expenses 2014 2015 2016 Gross Charges $776.1 $820.3 $848.8 Deductions from Gross Charges: Contractual and Other Allowances ($260.7) ($271.4) ($294.7) Provisions for Bad Debts ($27.8) ($30.9) ($20.1) Total Deductions ($288.5) ($302.3) ($314.8) Net Patient Service Revenues $487.6 $518.0 $533.9 Deductions as a % of Revenues: 2014 2015 2016 Contractual and Other Allowances 33.6% 33.1% 34.7% Provisions for Bad Debts 3.6% 3.8% 2.4% Total Deductions 37.2% 36.8% 37.1% 31

RBHS Expenses per Audited Statements 2014 2015 2016 Patient Care Expenses 613.5 653.4 684.2 Gross Patient Care Revenue 776.1 820.3 848.8 Net Patient Care Revenue 487.6 518.0 533.9 Dollar Changes 2014 to 2015 2015 to 2016 Patient Care Expenses 40.0 30.8 Gross Patient Care Revenue 44.2 28.5 Net Patient Care Revenue 30.4 15.9 Percentage Changes 2014 to 2015 2015 to 2016 Patient Care Expenses 6.5% 4.7% Gross Patient Care Revenue 5.7% 3.5% Net Patient Care Revenue 6.2% 3.1% 32

RBHS Revenues from the 2018 Budget 2018 Budget Dollars % of total Healthcare Revenue 546.1 31.0% Affiliated and House Staff 266.0 15.1% State Fringes 249.3 14.2% Grants and Contracts 240.3 13.7% NJ State Appropriation 183.3 10.4% Student Tuition and Fees 173.8 9.9% Facilities and Admin Recoveries 52.0 3.0% Other 14.2 0.8% Auxiliary 13.8 0.8% Gifts and Contributions 11.9 0.7% Investment Income 8.9 0.5% Total Revenue 1,759.6 100.0% 33

RBHS 2018 Budget Graphically Healthcare Revenue Affiliated and House Staff State Fringes 3% 10% Grants and Contracts 31% 10% NJ State Appropriation Student Tuition and Fees Facilities and Admin Recoveries 14% 15% Other 14% Auxiliary Gifts and Contributions Investment Income 34

RBHS 2016 vs. 2018 Budget Not Entirely Comparable 2016 Campus Summary 2018 Healthcare Revenue 735.9 546.1 Affiliated and House Staff 266.0 State Fringes 249.3 Grants and Contracts 240.3 NJ State Appropriation 130.2 183.3 Student Tuition and Fees 155.8 173.8 Facilities and Admin Recoveries 35.7 52.0 Other 223.1 14.2 Auxiliary 7.7 13.8 Gifts and Contributions 11.9 Investment Income 8.9 Restricted 226.2 Healthcare University Support (1.1) TOTAL RBHS REVENUES 1,513.6 1,759.6 35

� � � RCM Example from RBHS Campus Summary FY 2016 % OF % OF % OF % OF EXPENSES BUDGET UNRESTRICTED EXP TOTAL EXP CAMPUS EXP UNIVERSITY EXP DIRECT EXPENSES UNRESTRICTED Personnel $ 361,665,659 86.8% 23.6% 23.9% 9.6% Non Personnel $ 54,868,338 13.2% 3.6% 3.6% 1.5% TOTAL UNRESTRICTED $ 416,533,997 100.0% 27.1% 27.5% 11.0% RESTRICTED Sponsored Research $ 204,278,388 13.3% 13.5% 5.4% Scholarships and Fellowships $ 8,717,078 0.6% 0.6% 0.2% Other Sponsored Programs $ 13,333,973 0.9% 0.9% 0.4% TOTAL RESTRICTED $ 226,329,439 14.7% 15.0% 6.0% HEALTHCARE (excludes indirect) $ 692,627,575 45.1% 45.8% 18.3% TOTAL DIRECT EXPENSES $ 1,335,491,011 87.0% 88.2% 35.3% INDIRECT (COST POOL) EXPENSES Academic Support $ 9,781,834 0.6% 0.6% 0.3% Debt Service $ 32,690,523 2.1% 2.2% 0.9% Facilities O&M $ 32,174,591 2.1% 2.1% 0.9% General and Administrative Service $ 61,620,982 4.0% 4.1% 1.6% Information Technology $ 13,396,741 0.9% 0.9% 0.4% Libraries $ 8,745,091 0.6% 0.6% 0.2% Research Support $ 9,319,238 0.6% 0.6% 0.2% Strategic Funds $ 22,911,152 1.5% 1.5% 0.6% Student Service $ 2,417,937 0.2% 0.2% 0.1% Utilities $ 37,298,255 2.4% 2.5% 1.0% TOTAL INDIRECT (COST POOL) EXPENSES $ 230,356,344 15.0% 15.2% 6.1% ADJUSTMENTS Transfers (unrestricted) $ 9,254,361 0.6% 0.6% 0.2% Provision for Initiatives and Contingencies $ (17,356,973) � 1.1% � 1.1% � 0.5% Use of one time funds $ (22,370,374) � 1.5% � 1.5% � 0.6% TOTAL ADJUSTMENTS $ (30,472,986) � 2.0% � 2.0% � 0.8% TOTAL EXPENSES $ 1,535,374,369 100.0% 101.4% 40.6% COST POOL ALLOCATION/ REALLOCATION $ (10,216,419) � 0.7% � 0.7% � 0.3% STRATEGIC FUNDS $ (11,545,740) � 0.8% � 0.8% � 0.3% TOTAL NET EXPENSES $ 1,513,612,210 98.6% 100.0% 40.0% NOTES: � University Support consists of state appropriation and other President/Chancellor revenues. 36 � State paid fringe benefits and Federal/State student aid are shown at the campus level.

RBHS Responsibility Centers per 2016 Budget There is no 2017 or 2018 Budget on the Budget Website Total Revenues Personnel NEW JERSEY MEDICAL SCHOOL 313,826,957 75,409,237 ROBERT WOOD JOHNSON MEDICAL SCHOOL 305,499,298 57,525,410 UNIVERSITY BEHAVIORAL HEALTH CARE 288,949,582 0 RBHS HYPERION BUDGET RECONCILED TO BOG 188,750,168 0 Cancer Institute of New Jersey 105,678,897 749,817 SCHOOL OF NURSING 79,888,250 20,540,308 RUTGERS SCHOOL OF DENTAL MEDICINE 58,911,816 33,015,274 ERNEST MARIO SCHOOL OF PHARMACY 45,490,461 13,310,341 SCHOOL OF HEALTH RELATED PROFESSIONS 37,077,543 19,112,739 PUBLIC HEALTH RESEARCH INSTITUTE 24,453,417 2,878,420 SCHOOL OF PUBLIC HEALTH 20,724,380 9,468,590 GRADUATE SCHOOL OF BIOMEDICAL SCIENCES 13,919,435 3,559,674 CENTER FOR ADVANCED BIOTECHNOLOGY AND MEDICINE 13,001,176 1,826,182 10,958,890 1,688,391 INSTITUTE FOR HEALTH, HEALTH CARE POLICY AND AGING RESEARCH ENVIRONMENTAL AND OCCUPATIONAL HEALTH SCIENCES INSTITUTE 7,802,710 1,567,381 Parking 3,441,000 258,456 Brain Health Institute 1,223,644 534,988 RBHS Office of the Chancellor (COST CENTER) (5,985,413) 12,755,116 Sum of the above 18 items 1,513,612,211.0 254,200,324 RBHS Campus Summary 1,513,612,211 361,665,659 37

Financial Condition of Rutgers: Ratio Analysis 38

Rutgers Balance Sheet Source: Audited Financial Statements; Amounts in Millions Total Assets Total Liabilities Net Assets 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2008 2013 2014 2015 2016 39

Rutgers Asset Breakdown (Does not include the $119 million in the Rutgers Foundation and UPA) Source: Audited Financial Statements; Amounts in Millions Cash and Investments Capital Assets Receivables/Other 7.0 6.0 5.0 4.0 3.4 3.0 2.3 1.7 2.0 2.1 1.0 1.6 1.3 0.0 2008 2013 2016 40

Offshore Investments? Investment Portfolio of Rutgers per Audited Statements In Millions 2015 2016 2015 2016 Level 1 Investments 287.0 406.8 21% 27% Level 2 Investments 683.6 705.8 50% 47% Level 3 Investments 7.6 12.5 1% 1% Alternative Investments 387.0 361.5 28% 24% Total Investments 1,365.2 1,486.5 100% 100% 2015 2016 Fixed Income Fund 24.8 0.0 Private Equity 47.6 48.7 Real Estate 49.6 57.1 Real Assets 21.6 22.9 Venture Capital 33.7 33.5 Credit Hedge Funds 41.1 44.6 Long/Short Equity Hedge Funds 45.9 47.9 Global Macro Hedge Funds 27.8 12.8 Multi-Strategy Hedge Funds 94.4 93.6 Other Hedge Funds 0.4 0.3 Total Alternative Investments 387.0 361.5 41

What Are These Alternative Investments? • Private Equity – Funds that typically invest in private companies or engage in buyouts of public companies with the intent of improving their portfolio companies by investing in their • Real Estate –funds that invest in the equity or debt of real estate assets or businesses related to the real estate industry. • Real Assets –invest in businesses or physical commodities in a wide variety of asset classes including energy, infrastructure, metals and mining, and other commodity-related industries. • Venture Capital – Funds that invest in early, mid and late stage high growth companies, which are typically at the cutting edge of innovation in their specific fields. These are typically higher risk/reward opportunities in the fields of technology and medicine of which the companies will generally have negative cash flow at the start. • Credit Hedge Funds – invest both long and short in high yield and high grade bonds, structured products, and distressed debt strategies that take advantage of corporate securities in default, under bankruptcy protection, in distress, or in liquidation. • Long/Short Equity Hedge Funds –primarily in publicly traded equities. • Global Macro Hedge Funds –strategy bases its exposures on economic and political views and outcomes from around the world and in many markets. • Multi-Strategy Hedge Funds convertible bond arbitrage, credit, merger and statistical arbitrage, event driven, etc. in order to lower and diversify risk as well as reduce volatility. 42

Summary of Ratio Definitions and Benchmarks 43

Rutgers Net Assets Broken Down Source: Audited Financial Statements; Amounts in Millions In Millions 2014 2015 2016 Invested in Capital Assets 1,351.4 1,457.5 1,601.5 Restricted Non-Expendable 548.1 563.9 582.0 Restricted Expendable 460.0 470.9 471.9 Unrestricted 708.8 770.6 804.4 Total Net Assets 3,068.4 3,263.0 3,459.8 In Millions 2014 2015 2016 Unrestricted 708.8 770.6 804.4 Restricted Expendable 460.0 470.9 471.9 Total Reserves 1,168.8 1,241.5 1,276.3 • The first two categories of net assets do not tell us anything about the financial health or flexibility of Rutgers • The latter two categories – expendable and unrestricted, tell us something, as they are the two components of reserves 44

Rutgers Reserves Source: Audited Financial Statements; Amounts in Millions Unrestricted Restricted Expendable 1400 1200 471.9 1000 470.9 460.0 800 600 400 804.4 770.6 708.8 200 0 2014 2015 2016 45

Rutgers Reserves in Context: Primary Reserve Ratio: Solid Reserves for RU 50% Excellent 40% Very Good 30% Rutgers Solid 20% OK 10% Questionable Trouble 0% 2014 2015 2016 In Millions 2014 2015 2016 Total Reserves 1,168.8 1,241.5 1,276.3 Total Operating Expenses 3,407.1 3,424.0 3,502.2 Primary Reserve Ratio 34% 36% 36% 46

Does Rutgers Have Too Much Debt? Viability Ratio: RU Has Lots of Debt 250% 200% Excellent Very Good 150% Average 100% Rutgers Questionable 50% Trouble 0% 2014 2015 2016 In Millions 2014 2015 2016 Total Reserves 1,168.8 1,241.5 1,276.3 Debt 2,186.7 2,074.8 2,034.9 Viability Ratio 53% 60% 63% 47

Revenues vs. Expenses: Net Income Ratio: Solid Results 2014 2015 2016 Total Revenues 3,475.3 3,550.6 3,603.2 Total Expenses 3,407.1 3,424.0 3,502.2 Change in Net Assets 68.2 126.6 101.0 Net Income Ratio 2.0% 3.6% 2.8% • A net income ratio above 2% is considered solid; above 5% is excellent • We will also examine cash flows, as the change in net assets uses the accrual method of accounting 48

What is the Difference Between The Change in Net Assets and Cash Flows? Add back The change in net depreciation assets = Total expense and other Revenues – Total non-cash Expenses for the Operating Cash Flows; expenses year; Total net This includes all cash assets (some of coming in, less all cash which are reserves) going out for recurring get built up if the items change in net assets Add or subtract is positive paper gains on investments 49

Cash Flows Generated: Very Strong Cash Flows Source: Audited Financial Statements Excess Operational Cash Flows in Millions 229.5 250 200 171.2 150 100 35.5 50 0 2014 2015 2016 In Millions 2014 2015 2016 Cash from Operations (584.2) (459.4) (404.2) Cash from Non-cap financing (mostly state appropriation) 707.2 722.2 731.7 Interest Paid on Debt (87.6) (91.7) (98.0) Total Operational Cash Flows 35.5 171.2 229.5 Total Revenues 3,475.3 3,550.6 3,603.2 Cash Flow Ratio 1.0% 4.8% 6.4% 50

Fichtenbaum-Bunsis Ratios • The weights are 40.0%/22.5%/12.5%/25.0% • A perfect score is 5 • To be in financial exigency, there needs to be two consecutive years below 1.50 51

Rutgers Ratios Detail (5 is the highest for each category) 2014 2015 2016 Primary Reserve Ratio 34% 36% 36% Viability Ratio 53% 60% 63% Net Asset Ratio 2.0% 3.6% 2.8% Cash Flow Ratio 1.0% 4.8% 6.4% Primary Reserve Score 3.87 3.95 3.96 Solid reserves Viability Score 2.28 2.49 2.57 Net Asset Score 2.98 3.78 3.40 Lots of debt Cash Flow Score 2.51 4.41 5.00 Cash Flow best Rutgers Composite Score 3.13 3.69 3.78 52

Rutgers Composite Ratio Scores in Context 5.00 4.50 Perfect 4.00 Very Good 3.50 Rutgers 3.00 2.50 Solid 2.00 Ok 1.50 Trouble 1.00 2014 2015 2016 53

Rutgers Strengths and Weaknesses per Moody’s: June 2017 Aa3 Rating and Outlook Upgraded to Stable https://www.moodys.com/research/Moodys-revises-Rutgers-the-State-Univs-NJ-outlook-to-stable--PR_904077660 Modest operating cash flow growth; stabilizing operations at slightly High leverage (debt level) better than break-even levels The university will be able to absorb some reductions in state Increasingly pressured state and federal funding environment Large scale operations; critical role in the State of New Ambitious capital plan and Jersey's; flagship and land aging facilities require grant university and member significant capital investment of the Big Ten Increase the university's already sizeable financial resources through fundraising 54

Moody’s Public University Ratings 70 RU is at Aa3 60 50 40 30 20 10 0 3 Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 55

Using Budget Data: 2017 to 2018 The 2017 Budget is from the Bond report; The 2018 budget is from the RU website In Millions 2017 2018 $ Change % Change Tuition and Fees 1,108,283 1,249,060 140,777 12.7% State Fringes 349,508 633,588 284,080 81.3% Healthcare Revenue 599,819 546,092 (53,727) -9.0% Grants and Contracts 575,586 465,776 (109,810) -19.1% Admin Recoveries 0 106,047 106,047 State Appropriation 439,929 428,420 (11,509) -2.6% Auxiliary Revenue 366,459 304,173 (62,286) -17.0% Affiliated and House Staff 0 266,038 266,038 Student Aid 189,191 186,798 (2,393) -1.3% Other 196,284 104,433 (91,851) -46.8% Investment Income 40,086 54,432 14,346 35.8% Gifts and Contributions 34,661 40,086 5,425 15.7% Federal Appropriation 6,500 5,335 (1,165) -17.9% TOTAL REVENUE 3,906,306 4,390,278 483,972 12.4% RU Operating Appropriation per State Legislature 374.1 373.1 (1.0) -0.3% 56

Rutgers Revenue and Enrollment Analysis 57

Total Revenues Over Time, in Billions 2017 Audited statements not available 5.0 4.390 4.5 3.906 4.0 3.603 3.551 3.475 3.5 3.0 2.5 2.0 1.5 1.0 2014 Audit 2015 Audit 2016 Audit 2017 Budget 2018 Budget In Billions 2014 Audit 2015 Audit 2016 Audit 2017 Budget 2018 Budget Total Revenues 3.475 3.551 3.603 3.906 4.390 $$ Change 0.076 0.053 0.303 0.484 % Change 2.2% 1.5% 8.4% 12.4% 58

Rutgers: Main Revenue Sources Over Time Source: Audited Financial Statements 1,000 Tuition and Fees, Net 900 800 Grants and Contracts 700 Patient Services 600 State Appropriation 500 400 State Appropriaiton, Fringes 300 Auxiliaries 200 2014 2015 2016 59

Dollar and Percentage Changes, 2014 to 2016 12% Percentage Changes 2014 to 2016 10% 8% 6% 4% 2% 0% -2% -4% Tuition and Patient Auxiliaries State Total Grants and State Fees, Net Services Appropriaiton, Revenues Contracts Appropriation Fringes 2014 to 2016 $ Changes % Changes Tuition and Fees, Net $85.5 10.4% Patient Services $46.4 9.5% Auxiliaries $26.0 8.9% $13.5 4.2% State Appropriation, Fringes Grants and Contracts ($4.5) -0.8% State Appropriation ($15.3) -3.4% Total Revenues $127.9 3.7% 60

Research Grants and Contracts, Pre and Post Merger per Audit and Bond Report Grants and Contracts (Revenue) per Audit 2012 2013 2014 2015 2016 Rutgers 448.6 439.4 UMDNJ 296.0 293.9 0.0 0.0 0.0 Total 744.6 733.3 597.7 584.4 575.2 Research and Sponsored Grants and Contracts per Bond Report (not audited) 2012 2013 2014 2015 2016 Federal 237.8 221.8 272.1 303.2 335.5 State of New Jersey 57.5 35.5 130.0 177.8 148.9 Corporate 19.3 19.8 23.8 31.0 39.7 Foundation/Other 82.6 84.3 91.8 100.5 113.8 TOTAL 397.2 361.4 517.7 612.5 637.9 61

Research Expenses: The Changes Since the Merger are Mixed Sponsored Research Expense 2012 2013 2014 2015 2016 Sponsored Research 222.0 228.9 358.2 355.8 348.1 Separately Budgeted Research 74.3 84.7 76.5 95.8 101.7 Other Sponsored Programs 88.8 82.9 88.0 206.8 196.7 Total 385.1 396.5 522.7 658.3 646.4 UMDNJ 169.0 159.6 Total 554.1 556.2 522.7 658.3 646.4 62

Tuition vs. The State Over Time Up to 2013, RU + UMDNJ Combined State Operating Appropriation Tuition and Fee Revenue 1,000 900 800 700 600 500 400 300 2008 2009 2010 2011 2012 2013 2014 2015 2016 63

Tuition and Fees, Rutgers NB Source: Bond Report and RU Today for 2018 $15,000 9% 8% $13,000 7% 6% $11,000 5% 4% $9,000 3% 2% $7,000 1% $5,000 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 64

Rutgers Press Release, 10/31/2017 Announcing the 1.85% Tuition Increase “Tuition increases at Rutgers, with a $4.39 billion budget in 2017-2018, are driven by increasing expenditures, primarily personnel salaries, and moderated by any increased appropriations in the annual state budget.” 65

Tuition, Fees, Room and Board for 2017-18 Undergraduates Tuition and Fees Room and Board $30,000 $25,000 $12,452 $13,264 $12,093 $20,000 $15,000 $10,000 $14,638 $14,501 $14,085 $5,000 $0 New Brunswick Camden Newark New Brunswick Camden Newark Tuition and Fees $14,638 $14,501 $14,085 Room and Board $12,452 $12,093 $13,264 Total $27,090 $26,594 $27,349 66

Tuition and Fees, 2016-17 Source: RU Bond Report $70,000 $64,261 $60,622 $60,000 $50,000 $39,661 $37,791 $40,000 $27,059 $30,000 $16,536 $20,000 $10,000 $0 NJ Dental NJ NJ Dental NJ UG Non- Grad Resident Non-Res Med/RWJMS Resident Med/RWJMS Resident Non-Res Resident 67

Tuition and Fees, Big Ten Public AAU Institutions (Excludes Nebraska and Northwestern) UG Resident Room and Non-Resident Tuition and Fees Board Tuition and Fees Penn State $18,436 $11,280 $33,664 Illinois $15,868 $11,308 $31,988 Michigan $14,826 $11,198 $47,476 Rutgers $14,638 $12,452 $30,059 Michigan State $14,460 $9,976 $39,405 Minnesota $14,417 $9,852 $26,603 Ohio State $10,591 $12,252 $29,659 Indiana $10,533 $10,258 $34,845 Wisconsin $10,533 $10,842 $34,782 Maryland $10,399 $12,082 $33,606 Purdue $10,002 $10,030 $28,804 Iowa $8,575 $10,108 $28,813 Peer Average $12,604 $10,835 $33,604 Rutgers vs. Peer Average in $$ $2,034 $1,617 ($3,545) Rutgers vs. Peer Average in % 16.1% 14.9% -10.5% Rutgers Rank (of 12) 4 1 8 68

Percentage Changes in Tuition and Fees, 2016 to 2018 Big Ten Peer Average = +3.9% 8% 7.0% 6.6% 7% 5.8% 5.5% 5.4% 5.3% 6% 4.5% 5% 3.6% 4% 3% 1.4% 1.1% 2% 1% 0.1% 0.0% 0% 69

Tuition Discounting Source: Audited Financial Statements 2014 2015 2016 Tuition and Fees, Gross 1,011.7 1,068.4 1,121.0 Scholarship Allowances 191.5 205.3 215.2 Tuition and Fees, Net 820.2 863.1 905.8 Discount Rate (Scholarship Allowances / Tuition and Fees Gross) 18.9% 19.2% 19.2% 70

Total Headcount Enrollment Source: Bond Report, December 2016 75,000 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Total Enrollment 58,788 65,512 66,013 67,556 68,942 # Change 6,724 501 1,543 1,386 % Change 11.4% 0.8% 2.3% 2.1% 71

Enrollment by Campus and Level Over Time Source: Bond Report, December 2016 40,000 35,000 New Brunswick UG 30,000 New Brunswick Grad/Prof 25,000 Newark UG 20,000 Newark Grad/Prof Camden UG 15,000 Camden Grad/Prof 10,000 RBHS UG 5,000 RBHS Grad/Prof 0 2013 2014 2015 2016 2017 72

2017 Enrollment Distribution by Campus and Level Source: Bond Report, December 2016 New Brunswick UG 2% 4% 8% New Brunswick Grad/Prof Newark UG 7% Newark Grad/Prof 6% 49% Camden UG 12% Camden Grad/Prof 13% RBHS UG RBHS Grad/Prof 73

Changes in Enrollment by Campus: Solid Increases Change 2014 to 2017 2014 2015 2016 2017 Number Percent New Brunswick UG 31,400 32,206 33,060 33,653 2,253 7% 8,553 8,514 8,639 8,661 108 1% New Brunswick Grad/Prof Newark UG 7,217 7,408 7,713 8,170 953 13% Newark Grad/Prof 3,995 3,906 4,007 4,151 156 4% Camden UG 4,842 4,857 4,899 5,021 179 4% Camden Grad/Prof 1,422 1,464 1,509 1,454 32 2% RBHS UG 2,501 2,338 2,424 2,515 14 1% RBHS Grad/Prof 5,582 5,320 5,305 5,317 (265) -5% TOTAL 65,512 66,013 67,556 68,942 3,430 5% 74

Changes in Tuition Price, Enrollment, and Tuition Revenue (2017 and 2018 tuition revenue are budget amounts’ We do not have the 2017 audit – though the admin has it) Total Enrollment Tuition and Fee Price Tuition Revenue 14% 13% 12% 10% 8% 5% 5% 6% 4% 2% 2% 2% 2% 2% 2% 2% 1% 0% 2014 to 2015 to 2016 to 2017 to 2015 2016 2017 2018 75

Transparency at Rutgers – Public Availability of Basic University Data 76

Data Issues • The 2017 audited financial statements are complete, but not formally printed. The admin has them, we requested them, but the admin would not provide them. This is very disturbing • The RU website has no 2017 budget; the 2018 budget is one page; there is no detail of the different colleges, divisions, or departments • There is no Fall 2017 enrollment report that is publicly available 77

More Data Issues • We requested the 2016 IPEDS (Integrated Postsecondary Data System of the U.S. Dept.. of Education). This data was submitted to the Feds in April of 2017, but will not be on the IPEDS website until January of 2018. We requested the data, and were denied. • The common data set, which has data on degrees, number of part time employees, enrollment and class size, is not publicly available • The Fact book, which has data on enrollment, number of employees and salaries, is not publicly available. There are some ”Fast Facts” available, but those are not significant. The most recent Fact Book behind the firewall seems to be 2015-16 78

Priorities of the Administration: Are They Being True to the Core Academic and Research Mission? 79

Expense Distribution for 2014 to 2016 per Audited Statements 2014 2015 2016 2014 2015 2016 Instruction 849,438 853,879 871,492 25.6% 25.5% 25.5% Patient Care Services 613,492 640,942 669,267 18.5% 19.2% 19.6% Research/Sponsored Programs 522,675 658,329 646,392 15.7% 19.7% 18.9% Auxiliary 292,991 284,349 282,701 8.8% 8.5% 8.3% General Administration 260,811 236,294 254,052 7.8% 7.1% 7.4% Plant 207,167 200,607 209,647 6.2% 6.0% 6.1% Depreciation 147,629 152,525 151,254 4.4% 4.6% 4.4% Academic Support 123,342 122,398 124,799 3.7% 3.7% 3.7% Student Services 107,332 90,717 101,834 3.2% 2.7% 3.0% Scholarships 52,517 53,986 58,316 1.6% 1.6% 1.7% Public Service 146,128 48,945 48,166 4.4% 1.5% 1.4% Other 494 784 398 0.01% 0.02% 0.01% Total Operating Expenses 3,324,016 3,343,755 3,418,318 100.0% 100.0% 100.0% 80

Natural Classification Expense Distribution: Source: Audited Financial Statements In thousands of dollars 2014 2015 2016 Salaries 1,752,152 1,775,349 1,824,819 Fringe Benefits 543,132 514,457 536,735 Supplies and Services 815,680 838,553 838,059 Scholarships 65,423 62,871 67,451 Deprecation 147,629 152,525 151,254 Total Operating Expenses 3,324,016 3,343,755 3,418,318 As a % of total 2014 2015 2016 Salaries 52.7% 53.1% 53.4% Fringe Benefits 16.3% 15.4% 15.7% Supplies and Services 24.5% 25.1% 24.5% Scholarships 2.0% 1.9% 2.0% Deprecation 4.4% 4.6% 4.4% Total Operating Expenses 100.0% 100.0% 100.0% Salaries + Fringe Benefits 69.1% 68.5% 69.1% 81

Natural Classification Expense Distribution Graphically for 2016 2% 4% Salaries 25% Fringe Benefits Supplies and Services 53% Scholarships 16% Deprecation 82

Salary Only Component of Expenses Source: Audited Financial Statements Salaries Only 2014 2015 2016 Instruction 582,823 574,345 582,735 Sponsored Research 147,174 141,231 141,094 Other Research 51,287 51,066 58,535 Other Sponsored Programs 33,810 101,931 114,081 Public Service 95,991 27,771 29,647 Academic Support 72,658 70,847 70,863 Student Services 51,172 47,745 49,117 Plant 80,254 80,928 90,744 General Admin and Institutional 133,363 139,508 149,946 Scholarships 680 4,706 4,464 Patient Care 393,078 424,107 425,791 Auxiliary 109,862 111,164 107,802 TOTAL 1,752,152 1,775,349 1,824,819 83

Percent Change in Salary Component of Expenses, 2014 to 2016 Admin Salaries Increasing; Instruction Salaries Decreasing 14% 12.4% 12% 10% 7.7% 8% 6% 4% 2% 0% -0.02% -2% -4% -4.13% -6% Administration All Other Salaries Instruction Sponsored Research 84

IPEDS Expense Distribution by Campus 60% 55% Rutgers 50% University- 45% Camden 40% Rutgers 35% 30% University- 25% Newark 20% Rutgers 15% University-New 10% 5% Brunswick 0% Instruction Research Inst Hospital Support 85

Number of Employees and Employee Compensation 86

Number of Employees, October 2017 Data Obtained by AAUP/AFT Per Open Records Request Union Non-Union AAUP-AFT FT Faculty 3,113 2,537 Hourly Employee AAUP-AFT PTL 2,115 2,234 Admin Assembly AAUP-AFT TA/GA 1,665 806 Coadjutants AAUP-AFT Postdocs 518 502 MPSC (Mgrl. Prof, Supervisory) AAUP-AFT EOF Counselors 25 430 Health Care Prof Per Diem Total AAUP-AFT 7,436 340 Faculty Administrators AAUP-BHSNJ 1,223 253 Short term assignments URA-AFT Admin 2,568 153 Executives and Directors HPAE-AFT (Health Professionals) 2,561 151 Admin Confidential AFSCME 2,465 145 Pre Post doc Teamsters 97 1,700 122 Contract Administrators CIR (Committee Interns Residents) 1,072 117 Faculty Ineligible CWA 1031 and 1040 543 73 Senior Administrators IUOE (Operating Engineers) 165 62 Sr Exec Central Admin FOP 136 267 Other (Ineligible) OPEIU 153 (Office and Prof Employees) 95 8,192 Total Non-Union Employees NJEA 24 Inter Assoc Firefighters 15 Doctors Council 11 Total Union Employees 20,014 Total Union 20,014 Total Non-Union 8,192 Total Employees 28,206 87

Salaries of Union and Non-Union Employees, 2017 All Non-Union Employees Number Dollars Average 0 to 50% 3,347 $27,753,070 $8,292 50% to 99% 401 $12,140,973 $30,277 Full Time 4,433 $471,401,980 $106,339 TOTAL 8,181 $511,296,023 $62,498 All Union Employees Number Dollars Average 0 to 50% 2,279 $5,493,218 $2,410 50% to 99% 659 $20,026,609 $30,389 Full Time 17,087 $1,247,753,579 $73,024 TOTAL 20,025 $1,273,273,407 $63,584 88

AAUP/AFT PTL Compensation in Context Total 2017 Salaries $2,000,000,000 $1,784,569,431 $1,800,000,000 $1,600,000,000 $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $17,143,320 $0 Total PTL Salaries Total Rutgers Salaries Total PTL Salaries $17,143,320 Total Rutgers Salaries $1,784,569,431 PTL as % of Total 0.96% 89

2017 Average Salaries of Different Employees $350,000 $305,014 $300,000 $284,191 $250,000 $203,247 $200,000 $166,043 $157,861 $150,000 $121,076 $100,000 $50,000 $25,850 $8,106 $0 Sr Exec Central Faculty Sr Exec Directors AAUP BHSNJ AAUP/AFT AAUP/AFT AAUP/AFT PTL Admin Admins Administrators Faculty Faculty Teaching/Grad Assts 90

Newark: Number of Full Time Instructional Employees per IPEDS and AAUP Compensation Survey Newark per IPEDS 2013 2014 2015 2016 Professor 160 179 191 181 Associate 104 109 125 127 Assistant 139 118 158 142 Instructor 63 70 59 50 Lecturer 5 8 14 14 No Rank 0 0 0 1 Total Full Time Instructors 471 484 547 515 Tenured 227 260 275 274 Tenure-Track 132 123 120 111 Total T/TT 359 383 395 385 Non-Tenure Track 112 101 152 130 Total Full Time 471 484 547 515 Newark per AAUP SURVEY 2013 2014 2015 2016 2017 Professor 162 179 N/A 181 183 Associate 107 109 N/A 127 144 Assistant 141 118 N/A 142 150 Instructor 64 70 N/A 50 52 Lecturer 5 8 N/A 14 2 No Rank 0 0 N/A 1 0 TOTAL 479 484 N/A 515 531 91

Camden: Number of Full Time Instructional Employees per IPEDS and AAUP Compensation Survey Camden per IPEDS 2013 2014 2015 2016 Professor 104 103 102 103 Associate 76 71 69 73 Assistant 71 87 95 90 Instructor 20 27 31 25 Lecturer 2 3 0 0 No Rank 0 0 0 1 Total Full Time Instructors 273 291 297 292 Tenured 154 151 149 151 Tenure-Track 65 80 87 84 Total T/TT 219 231 236 235 Non-Tenure Track 54 60 61 57 Total Full Time 273 291 297 292 AAUP Survey Camden 2013 2014 2015 2016 2017 Professor 107 103 N/A 103 104 Associate 79 71 N/A 73 78 Assistant 74 87 N/A 90 102 Instructor 18 27 N/A 25 21 Lecturer 2 3 N/A 1 5 No Rank 1 0 N/A 0 0 TOTAL 281 291 N/A 292 310 92

New Brunswick: Number of Full Time Instructional Employees per IPEDS and AAUP Compensation Survey New Brunswick per IPEDS 2013 2014 2015 2016 Professor 733 791 799 823 Associate 434 513 525 529 Assistant 306 447 455 514 Instructor 167 267 250 235 Lecturer 74 77 30 34 No Rank 0 0 1 2 Total Full Time Instructors 1,714 2,095 2,060 2,137 Tenured 1,068 1,387 1,389 1,387 Tenure Track 326 410 376 366 Total T/TT 1,394 1,797 1,765 1,753 Non Tenure Track 320 1,325 1,333 1,405 Total Full Time 1,714 3,122 3,098 3,158 Does not match AAUP Survey 2013 2014 2015 2016 2017 Professor 748 1076 N/A 823 827 Associate 439 773 N/A 529 523 Assistant 311 901 N/A 514 511 Instructor 169 356 N/A 235 233 Lecturer 75 77 N/A 34 42 No Rank 0 4 N/A 2 0 TOTAL 1,742 3187 N/A 2,137 2,136 93

Number of Part Time and Grad Instructors per IPEDS For All Campuses Change 2013 to 2016 Newark 2013 2014 2015 2016 Number Percent Part Time Teaching 326 364 396 333 7 2% Part Time Research 92 18 14 22 (70) -76% Grad Asst Teaching 178 186 181 170 (8) -4% Grad Asst Research 53 53 54 66 13 25% Camden 2013 2014 2015 2016 Number Percent Part Time Teaching 252 286 306 345 93 37% Part Time Research 9 8 5 23 14 156% Grad Asst Teaching 20 28 43 40 20 100% Grad Asst Research 41 39 38 42 1 2% New Brunswick 2013 2014 2015 2016 Number Percent Part Time Teaching 1,127 1,485 1,558 1,676 549 49% Part Time Research 701 130 183 180 (521) -74% Grad Asst Teaching 967 1,260 1,139 1,157 190 20% Grad Asst Research 559 513 475 471 (88) -16% 94

Percentage Change in Full Time Instructors 2014 to 2016 per IPEDS: Trend towards NTT Tenured Tenure Track Non-Tenure Track 40% 29% 30% 20% 6% 5% 10% 5% 0% 0% 0% -10% -5% -10% -11% -20% Newark Camden New Brunswick 95

Percentage Change in Part Time Lecturers and Graduate Assistants 2014 to 2016 per IPEDS Newark Camden New Brunswick 35% 29% 30% 25% 21% 20% 15% 10% 6% 5% 0% -5% -10% -8% -8% -15% Part Time Grad Asst Grad Asst Teaching Teaching Research 96

Employee Categories per IPEDS, 2016 by Campus New Brunswick Newark Camden Instruction 868 637 5,695 Business and Finance Ops 184 95 1,972 Service 159 150 1,927 Office Admin support 148 103 2,019 Student/Acad Affairs 80 73 403 Research 69 29 824 Computer Eng 65 40 1,726 Community Legal Arts 58 26 757 Librarians 43 32 182 Maintenance 40 23 656 Management 32 15 370 Healthcare 12 11 2,907 All Other 0 0 102 Total FT Employees 1,758 1,234 19,540 97

2016 Employee Distribution per IPEDS by Campus Newark Camden New Brunswick 60% 50% 40% 30% 20% 10% 0% Instruction Research Biz/Fin/Svc/Office Healthcare All Other Support 98

2017 Top 25 Administrators per OPRA Document: Busch, Livingston, Off Campus Comp Campus Job Title Department RECRUITING ASSISTANT Football $1,250,000 Busch COORD OLYMPIC SPORTS OPERS Football $575,000 Busch RECRUITING ASSISTANT Football $500,000 Busch DEPT ADMIN OPTHALMOLOGY UBHC-Administration $465,000 Busch ASST COACH Football $463,500 Busch PRESIDENT SAS - Dean's Office $444,565 Busch Vice Chancellor Enrllmt Mgt-NB Intercollegiate Athletics $615,000 Livingston HEAD COACH Mens Basketball $550,000 Livingston HEAD COACH Womens Basketball $550,000 Livingston DEAN Intercollegiate Athletics $459,000 Livingston Asst Coach Strength & Cond Mens Basketball $455,000 Livingston ASSOC. DEAN NJMS-Radiology $625,000 Off Campus CHAIR NJMS-Orthopaedics $463,357 Off Campus VICE PRESIDENT Institutional Planning & Ops $450,000 Off Campus 99

2017 Top Administrators, Newark ASST DEAN NJMS-Ophthalmology $632,131 Newark ASST DEAN NJMS-Surgery $620,217 Newark ASST DEAN $596,307 Newark NJMS-ENT-Otolaryngology Head N DIV CHIEF NJMS-Anesthesiology $570,933 Newark DIV CHIEF NJMS-Surgery $568,886 Newark DIV CHIEF NJMS-Medicine-Cardiology $568,300 Newark DIR NJMS-Medicine-Gastroenterology $550,572 Newark DIR NJMS-Dean's Office $532,039 Newark CHAIR NJMS-Ob/Gyn $525,000 Newark ASSOC DIR NJMS-Anesthesiology $498,735 Newark ASSC DEAN NJMS-Cell Biology & Molecular $463,849 Newark ASSOC DEAN NJMS-Anesthesiology $463,204 Newark ASST DEAN NJMS-Emergency Medicine $450,000 Newark DEAN Newark Chancellor's Office $408,565 Newark ASST PROF-PROF PRAC VICE CHAIR NJMS-Office of Education $403,637 Newark ADJ PROF - BS - DIRECTOR NJMS-Pathology $400,000 Newark EXEC VP STRATEGIC PLNG OPS&COO Camden Chancellor's Office $338,130 Camden DEAN Sch of Law-Cmd, Dean's Office $305,000 Camden 100