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Fiscal Year 2008 Budget Fiscal Year 2008 Budget Report Report Oakland University Senate Oakland University Senate November 15, 2007 November 15, 2007

Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

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Page 1: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Fiscal Year 2008 Budget ReportFiscal Year 2008 Budget Report

Oakland University SenateOakland University SenateNovember 15, 2007November 15, 2007

Page 2: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Michigan’s Budgetary Morass

• 7 years of spending cuts

• FY2007 General Fund revenues lower than in FY1996

• School Aid fund annual growth since 2000: 1.4%

• $8 billion in one-time resources used

• Reserves exhausted

• Weakened connection between revenue structure and the economy

• Spending pressures growing faster than revenues

Source: Citizens Research Council of Michigan, Michigan’s Fiscal Future: Long-term Analysis of Michigan’s Economy and State Budget, September 2007

Page 3: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Spending Pressures

Analysis covers nine major areas:

• School Aid• Higher education• Medical care• Corrections• Human services• Mental health• Revenue sharing with local governments• Employee compensation and benefits• Transportation

Source: Citizens Research Council of Michigan, Michigan’s Fiscal Future: Long-term Analysis of Michigan’s Economy and State Budget, September 2007

Page 4: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Population in 2017Major Changes in Demographic Composition Ahead

• Total Population - Down 41,000 (0.4%)

• School Age (5-17) - Down 257,000 (14%)

• Higher Education (18-24) - Down 84,000 (9%)

• Labor Force (16-64) - Down 262,000 (4%)

• Seniors (65+) - Up 413,000 (31%)

Source: Citizens Research Council of Michigan, Michigan’s Fiscal Future: Long-term Analysis of Michigan’s Economy and State Budget, September 2007

Page 5: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

5-17 18-24 16-64 65+

Age Groups

Thousands

2007

2017

-14.3%

-8.5%

-3.9%

+31.5%

Michigan’s Changing Population2007-2017

Source: Citizens Research Council of Michigan, Michigan’s Fiscal Future: Long-term Analysis of Michigan’s Economy and State Budget, September 2007

Page 6: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Reasons for Sluggish Revenue Growth

• Increasing Senior Citizen Population - Retirement Income not taxed and spend less on goods

• Consumption taxes goods oriented - economic growth is in service sector

• Slow or no growth revenues drag down overall growth (e.g. tobacco, gambling, alcohol)

• Flat rate income tax

Source: Citizens Research Council of Michigan, Michigan’s Fiscal Future: Long-term Analysis of Michigan’s Economy and State Budget, September 2007

Page 7: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

The Future

• Projections seldom made beyond the current budget year

• Failure to estimate the future consequences of current actions leads to unpleasant surprises

• Knowing where we are headed helps justify actions to change the future

Source: Citizens Research Council of Michigan, Michigan’s Fiscal Future: Long-term Analysis of Michigan’s Economy and State Budget, September 2007

Page 8: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Higher Education

• Enrollments at all-time high

• Increased participation needed to make Michigan competitive

• State support has lagged behind costs placing pressure on tuition

• Increased state support required to produce more college graduates

• Revenues will not grow fast enough to maintain state share of costs without cuts elsewhere

Source: Citizens Research Council of Michigan, Michigan’s Fiscal Future: Long-term Analysis of Michigan’s Economy and State Budget, September 2007

Page 9: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Making the Case in Lansing

• Despite progress made to restructure Michigan’s revenuebase and spending priorities through tax collections, reformsand budget cuts, the well-respected Citizens Research Councilprojects that the state will fall $350 million short in FY2009and $1 billion in FY2010.

• Aggressive and divisive initiatives to separate the state’slargest universities (MSU, UM-AA and WSU) from the other 12 by proposing and supporting two separate higher education budget bills, has the potential to greatly diminish the value and importance of the latter to Michigan’s future. The good news is these efforts have been thwarted for two consecutive years. The bad news is such efforts are expected to continue in future years.

Page 10: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Making the Case in Lansing

• The recently announced partnership between OU and Beaumont Hospitals to create the state’s first private medical school sent a powerful message to state elected and appointed officials regarding the breadth and depth of the university’s academic and research capabilities.

• The state’s ongoing budget crisis was cited in December 2006 when the governor vetoed capital outlay projects for state universities and community colleges, including OU’s Engineering and Human Health Buildings. This rationale took on a new twist when approval was granted this year for a new Michigan State Police headquarters in Lansing.

Page 11: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Making the Case in Lansing

• The increasingly competitive, demanding and divisive environment in Lansing requires the university to move forward with additional staff support for the Office of Government Relations.

Page 12: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Comparison of State Appropriation Average Percentage Increase Versus OU Percentage

4.4% 5.0%

3.0% 3.0%

5.4%

8.6%

6.5%

9.2%

1.5%1.7%

-3.5% -3.5%

-6.3%

-2.9%

-2.0% -2.0%

0.9%

7.2%

1.2%1.4%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07

State average OU

Source: Per original enacted state appropriation bills

Page 13: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Appropriation per FYES

$3,272

$3,774

$4,712

$4,376$4,290

$3,000

$3,500

$4,000

$4,500

$5,000

1998

Oakland University’s FY 2008 appropriation per FYES is budgeted to be $1,018 per FYES less than the FY 1998 level.

200620032001 2008 Budgeted

Page 14: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Since 1992, Oakland University’s relative reliance on tuition and fees in the General Fund has grown from 41% to a budgeted 72% in 2008.

Comparison of General Fund Revenue Sources

FY 1992, FY 2002 and FY 2008 Budget

41%

56%

3%

54%

44%

2%

72%

26%

2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1992 2002 2008

Tuition State Appropriations Other Budgeted

Page 15: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Category Base One-Time

Budget Reductions $ 6,412,400 $ 6,096,000

Cost Containment 9,809,757 3,295,138

Total Reductions/Containment $16,222,157 $9,391,138

Financial StewardshipBudget Reductions and Cost Containment

Cumulative FY 2003 – 2008

Page 16: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Academic Affairs – FY 2008Incremental Budget Allocations

Does not include FY 2008 compensation adjustments

Program Funding (Incentive and New Programs growth):

Faculty 2,113,542$

Other Operating 1,087,450

New Faculty Positions 374,074

Graduate Admissions Staff 54,525

Grants and Contracts Staff 69,970

Fund Administrative Search Completion for: 108,503

Associate Provost - Research

Dean Kresge Library

Dean Business Administration (Interim)

Dean College of Arts and Sciences

Postage Adjustment 4,300

3,812,364$

Page 17: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

408 410421

441 452 442 452 473490

520

0

100

200

300

400

500

600

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Oakland UniversityFall Full-Time Faculty Headcount

Page 18: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

FY 2008 New & ReplacementFaculty Positions

College of Arts and Sciences 31

School of Business Administration 4

School of Education and Human Services 8

School of Engineering and Computer Science 4

School of Health Sciences 2

Kresge Library 1

School of Nursing 18

Total 68

Note: 44 positions were originally approved. Includes visiting faculty.

Page 19: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Academic Affairs – FY 2007One-Time Budget Allocations

Network Access Control 189,000$

UTS File Storage Environment 185,000

Secondary Storage Array 168,000

Wireless Network 154,000

Touchnet - Early Registration 150,491

Sungard Custom Software Project 123,310

Graduate Program Marketing 101,860

Grad. Ed-Adult Learners Branding 61,000

1,132,661$

Page 20: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

10,691,734

5,555,832

9,419,491

4,745,917

12,084,976

8,569,890

10,451,733

8,833,887

9,535,036

7,667,791

9,378,393

5,847,623

12,811,503

8,075,317

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007

Total Awards Federal Awards

Oakland University Grant and Contract ActivityFiscal Years 2001 - 2007

Page 21: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007

Capital Campaign Dollars to UnitsOctober 2007

• College of Arts and Sciences $8,121,793• School of Business Administration 5,014,498• School of Education and Human Services 6,226,914• School of Engineering and Computer Science 25,959,992• School of Health Sciences 251,163• School of Nursing 5,660,103• Academic Affairs - other 10,534,985• Athletics 1,206,314• Student Affairs 647,543• Office of the President 1,434,111• Auxiliaries 8,399,768• Other 8,400,517 Total $81,857,701

Page 22: Fiscal Year 2008 Budget Report Oakland University Senate November 15, 2007