2016-17 Budget Development

June 15, 2016

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Investment in Intellectual Capital Necessary to sustain our state’s economic

framework • Existing appropriation to higher education lags inflation-

adjusted 2011 appropriation by approximately $140M

• Michigan ranks 47th of 48 states reporting for 10-year

change in appropriations, lags the national average for

change by 25 percentage points

• Since 2007, State spending reduced for higher

education, only major budgetary component to

experience reduction

• Michigan ranks 32nd nationally for proportion of

residents with a Bachelor’s, lags national median for

per capita income and 7 year change in per capita

income

3

Big Ten Appropriations Per StudentMSU lags the Big Ten average by over $3,775 per student,

approximating $174 million in resources

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$5,408

Big Ten Average: $9,186*

Source: IPEDS 2014

* Does not include Wayne State

4

Appropriations Overview• Main campus operating appropriation increase 2.6%

• Tuition restraint provision caps resident increases to 4.2%

• Overall state appropriations increase by 2.9%, formula outcomes range

from 2.4% to 4.5%

• MSU AgBioResearch and MSU Extension increase 2.3%, restored to

unadjusted 2011 levels, but lag overall higher education increase of 2.9%

• An additional $0.5M non-recurring for DCPAH

• An additional $0.4M recurring and $0.5M non-recurring for Animal

Initiative

5

Appropriations Support – Change since 2011

Of the institutions complying with tuition restraint provision, MSU lags 2011 formula appropriation by more than any state peer

Collectively, the University Research Corridor institutions comprise over 85% of lost appropriations since 2011

($20,000,000)

($15,000,000)

($10,000,000)

($5,000,000)

$0

$5,000,000

$10,000,000

GVSU CMU FSU UM-F SVSU NMU LSSU MTU UM-D OU Western EMU UM-AA MSU Wayne

$6.25M

$3.79M$3.64M

$1.65M$1.39M

$1.14M $0.87M $0.17M $0.1M

-$0.84M

-$2.17M-$2.43M

-$7.62M

-$7.82M

-$18.11M

Institutions complying with tuition restraint provisions

Institutions in violation tuition restraint provisions (FY15 or FY16)

Cost Pressures• Over ten years, MSU STEM credit hours increased by over 30%, related cost increases

exceed $20 million

• State disinvestment in capital outlay and financial aid

• National regulation governing research and sponsored programs

• Change in Fair Labor Standards Act (FLSA) requirements concerning overtime work -

Employees earning less than $47,476 must be paid over time for authorized work over 40

hours

• Major areas of concern include 282 Research Associates and 158 MSU

Extension Specialists - Approximately $5 million necessary to increases

salaries in these areas above Federal eligibility threshold of $47,476

• In lieu of salary increases, employee work schedules will be closely

monitored, authorizing only the most essential overtime work

• IT support necessary to address escalating data needs, cyber-security, networking and other

infrastructure

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2015-16 Faculty Salaries

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$1

10

,38

3

Big Ten average*: $116,373

MSU Rank in AAUP Big10 Institutions for Faculty Salary

Rank 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16²

Professor 10 9 9 10 10 8 9 9 11 10 8 8

Associate Professor 7 8 8 7 7 5 8 6 9 9 9 9

Assistant Professor 13 13 14 14 13 14 13 14 14 14 14 14

All Ranks Average 10 10 11 11 11 9 12 12 13 13 13 11

*Does not include Northwestern – average including Northwestern $119,365

1 Maryland has not responded to survey – data form 2014

2 Rankings overtime adjusted to include Rutgers and Maryland

Michigan State University

the most resident undergraduates in the State

Over 10,000 more than nearest peer

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0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

MSU GVSU CMU Western EMU Wayne UM-AA OU FSU SVSU UM-D UM-F NMU MTU LSSU

Source: HEIDI headcount 2015

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MSU success indicators

all improved over 10 years ↑ Six year graduation rate up 3 percent over 10 years

↑ Undergraduate retention approximates 91 percent, also

improved

↑ Degrees/certificates up 1,200 over ten years, approximate

12,000 annually

↑ 93% of graduates employed or continue education within six months of graduation

↑ 92% of students rate their educational experience as good or excellent

↑ Total sponsored programs exceed $583M, an increase of 53% over the period

↑ Grant dollars per faculty member exceeds $277,000, an increase of 43%

↑ MSU benchmarks for net cost approximate national average, far exceed outcomes for

graduation rate and salary upon completion

Sustained AccessOver ten years, MSU financial aid increments have outpaced

resident undergraduate by 42 percentage points

10

8.8%8.0%

5.2% 4.9%

6.9%

3.5%2.8%

2.8% 2.7%3.7%

14.6%13.3%

17.0%

13.0%

10.0%

5.5%4.5% 4.0%

4.5% 4.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Tuition Financial Aid

Sustained AccessMSU maintaining the proportion of students from families

across income levels over time

0

200

400

600

800

1,000

1,200

1,400

1,600

2015

Five Year Average

# of Fam

ilies

Families with income of over $200,000 truncated for purposes of this analysis

Distribution represented in 2015 inflation adjusted dollars

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Sustained AccessLess students graduating with debt than ten years ago

Over ten years, the proportion of students with debt has decreased from 56% to 45%, in

stark contrast with the national average increasing to 69% from 57%

Avg. Student Debt (2014)

MSU lags the State and National average

for average debt load by 11.3% and 9.8%

respectively

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

MSU State National

$26,122

$29,450 $28,950

Proportion with Debt (2014)MSU lags the State and National average

for proportion of students with debt by 17

and 24 percentage points respectively

0%

10%

20%

30%

40%

50%

60%

70%

MSU State National

45%

62%

69%

12

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Energy & Efficiency• FY17 fuel and energy production expenditures

anticipated to decline 5.5% or $3.5M, reflected in budget

planning

• Budgetary increments for FY16 – FY18 acknowledge

cost mitigation in natural gas market while preserving

long-term flexibility and addressing infrastructure needs

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

FY14 FY15 FY16 FY17 FY18 FY19 FY20

Projected ExpenseActual Expense

Budget Trend

Operational Fuel Expenditures

FY14-FY20 • Greenhouse gas emissions

down 25% since 2010

• Energy consumption per capita

reduced over 10 years

FY17 & FY18 Budget PlanningBudget Item 2016-17

Proposal2017-18

Pro-Forma

State Appropriations 2.6% 4%Includes restoration

Tuition & Fees 3.7% Res Lower Div3.9% Res Upper Div4.2% Non-Res UG

4.0% Res Lower Div4.0% Res Upper Div4.0% Non-Res UG

Financial Aid 4.5% 4.5%

Faculty Salaries 2.5% 2.5%

Utilities -5.5% 0.0%

Health Care 5.0% 5.0%

Competitive Programs - $5.0

Competitive Talent 0.5% Provost Market0.5% Special Retention

0.5% Provost Market

Technology $5.0 $5.0

Base Budget Reduction 0.0% -1.0%

Total Budget $1,317.0 $1,363.4

Preliminary 2016-17 budget approved by the BOT in June 201514