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Fiscal Year 2008 Budget ReportFiscal Year 2008 Budget Report
Oakland University SenateOakland University SenateNovember 15, 2007November 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
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
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
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
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
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
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
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.
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.
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.
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
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
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
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 $9,391,138
Financial StewardshipBudget Reductions and Cost Containment
Cumulative FY 2003 – 2008
Academic Affairs – FY 2008Incremental Budget Allocations
Does not include FY 2008 compensation adjustments
Program Funding (Incentive and New Programs growth):
Faculty 2,113,542$
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$
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
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.
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$
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
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