May 4, 2011

Office of the President

May 4, 2011

PARADIGM SHIFT: The New Face of a “Public” University.


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ACCOMPLISHMENTS FY 2011• Record enrollments: 25% growth (in FTE) since fall 2008• Four Forest Restoration Initiative agreement – the largest forest

restoration project in the U.S., possible in the world • Centralized student transfer system• Princeton Review: NAU in the guide to ‘green colleges’• e-Planning• e-PAR• Top grant awards FY 2011:

– The Partnership for Native American Cancer Prevention: $1.7 million– Microbial Forensics (Dr. Keim): $1.6 million– ERI: $1.5 million– American Indian Air Quality Training Program: $1.5 million– Northern Arizona University Noyce Fellows Program: $1.5 million

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ECONOMIC RECOVERY• AZ sales revenue up by 8.4 % in Feb 2011 (compared to Feb 2010)

• JLBC projects FY 2012 surplus of $5.2M

BUT

• 1% temporary sales tax sunsets on 5/31/2013

• AZ’s structural deficit has not been addressed (FY 2014 deficit

projected to be $600M)

• Nationally, “economic growth slowed to a crawl”

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NAU’S PLANNING ENVIRONMENT• Enrollment in FTE grew by 25% since

the budget cuts started in FY 2008

– Amounts to $33 million today.

• State General Fund decreased by

36% since FY 2008

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• No enrollment growth support since

FY 2009

• State General Fund Appropriation per

FTE is lower than it was over 20 years

ago (1989-90)


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STATE GENERAL FUND + GROSS TUITION AND FEE SUPPORT PER FTE

9

*Estimate

2008 2009 2010 2011 2012*$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

0

5,000

10,000

15,000

20,000

25,000

30,000

$7,052$8,904 $9,354

$8,477 $5,595 $4,196

21,352

25,20426,263*

Gene

ral F

und

and

Tuiti

on/F

ee S

uppo

rt p

er

FTE

Fall

Enro

llmen

t Hea

dcou

nt

Student

State

Enrollment


HIGHER EDUCATION MARKETPLACE

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$0 $100 $200 $300 $400 $500 $600 $7000

2,000

4,000

6,000

8,000

10,000

12,000VT

NJND PAIL

MISC MNDEMAOH ME CTRI VA MDINMO KYWI

IAOR TX NE NDARSDKS

WACO TNAZ

ALMT HICANY OK AKMSWVIDNM

NCGAUT

LANVFL

WY

Per Capita State Support for Higher Education

Aver

age

Tuiti

on a

t Pub

lic 4

-yea

r Ins

tituti

ons

Low tuitionHigh public support

High tuitionLow public support

Low tuitionLow public support

Low to Moderate tuitionModerate public support

Sources: • Average FY 2009 Tuition – IPEDS• Population 2009 – U.S Census Bureau• FY 2011 State Support for Higher Education – Grapevine Project


CURRENT FY11 BUDGET SITUATION

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Green shaded pieces are the basic university expenditure supports Yellow shaded pieces provide some university supportRed shaded pieces are not generally available for direct support

State Gen'l Fund134.330%

Tuition & Fees144.533%Grants & Contracts

4711%

Fed Fin Aid $33 7%

Private Gifts13.43%

TRIF

112%

Auxil-iary Revenue

4510%

Other Revenue

16.1

4%

Estimated all funding sources: Total = $444 million


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FY12 BUDGET SCENARIO


Tuition & Fees15436%

Grants & Contracts48

11%

Fed Fin Aid $36 8%

Private Gifts

153%

TRIF123%

Auxil-iary Rev-enue

4611%

Other Rev-enue

164%

Estimated total = $430 million


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FY11 ESTIMATED $444M

FY12 ESTIMATED $430M


Tuition & Fees15436%

Grants & Contracts

4811%

Fed Fin Aid $36 8%

Pri-vate Gifts

153%

TRIF123%

Aux-iliary Rev-enue

4611%

Other

Rev-enue

164%


Tuition & Fees144.533%

Grants & Contracts4711%

Fed Fin Aid $33 7%Private Gifts

13.43%

TRIF112%

Auxiliary Revenue4510%

Other Revenue16.14%


CHANGES IN REVENUE SOURCES

14Tuition and Fees State Appropriation All Other (most restricted)0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2006

2006

2006

2011

Est

2011

Est

2011

Est

2012

Pro

j

2012

Pro

j

2012

Pro

j

46%

14%

40%38% 38%

33%30%

37%

2020??

2020

??

2020

??

24%


PERFORMANCE FUNDING (ABOR)

Base +

Adjustment to the Base+

Performance Funding=

University Funding

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Components of Performance Funding1. Increases in SCH completed2. Increase in number of degrees

produced3. Increases in research funding4. Success in meeting the state’s

economic development goals5. Maintaining or enhancing quality


ADDRESSING STATE BUDGET CUTS & PREPARING FOR A DIFFERENT BUDGET

STRUCTURE

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FY 2008: $2,595,300 • Hiring and travel freeze• Layoffs, contract reductions• Retirements

FY 2012: $30,100,000• Salaries and benefits• Operating efficiencies• Diversion of one-time funds

+ tuition and fee collections

Managed a total of $63M of state support cuts since 2008

Stimulus- Replacing state funded salaries

- Moderating tuition increases

Enrollment Growth

University Budget Cuts

Moderate Tuition

Increases

FY 2009: $24,500,700• Reduced operating budgets• Layoffs, contract reductions• Retirements• Closed Center for High Altitude

Training, Social Research Laboratory

• Closed several community campuses; reduced services

• Increased faculty and staff workloads and limited hiring despite enrollment growth

FY 2010: $6,096,200• All employee furloughs; VSRP• Offered fewer courses and

increased class sizes• Decreased tenure density

FY 2011: $30M Rollover continues• Implemented business

processes, financial strategies, and academic policies to maximize efficiencies

• VSRP II.


IMPLICATIONS OF BUDGET CUTS• $230 million in unfunded building renewal

• Change in faculty composition

• Faculty, staff, and administrative salaries

• Total expenditures in personal services and benefits have not kept up with

enrollment growth

• Class sizes

• Faculty workload

• Changes in academic programs

• Technology efficiencies17


FULL-TIME INSTRUCTIONAL FACULTY COMPOSITION

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Tenured

44363%

Tenure Track12918%

Lec-turers/

In-struc-tors13619%

Fall 2002

N=708; FTE Students per Faculty = 24:1

Tenured40749%

Tenure Track11814%

Lectur-ers/ In-struc-

tors31137%

Fall 2010 N=836; FTE Students per Faculty = 27:1


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2010-2011 AAUPRANKED FACULTY PEER COMPARISON

• Good progress(went from avg $69K to $74K)

• Still Last

Rank Peer Average for

Order Institution All Ranked Faculty

1 George Mason University 95,800 2 University of Nevada-Las Vegas 94,600 3 The University of Alabama 92,500 4 Georgia State University 92,000

5 University of North Carolina at Greensboro 85,800 6 Kent State University Kent Campus 85,300 Weighted Average (Peer Mean) 85,200 50th Percentile (Peer Median) 84,400 7 Old Dominion University 83,400 8 Southern Illinois University Carbondale 81,400 9 Ohio University-Main Campus 81,100

10 Western Michigan University 80,300 11 University of Akron Main Campus 79,000 12 University of Maine 78,700 13 Northern Illinois University 76,800 14 Bowling Green State University 75,900 15 Wichita State University 75,000 16 Northern Arizona University 74,300 Percentage to Market 14.6 Percentage from Market -12.8


SALARY MARKET COMPARISONS

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2003 2004 2005 2006 2007 2008 2009 2010

-20

-15

-10

-5

0

5

-14 -14

-7-10

-16

-3

-8

-16

-13

% fr

om M

arke

t


ENROLLMENT GROWTH

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2003 2004 2005 2006 2007 2008 2009 20100

5,000

10,000

15,000

20,000

25,000

30,000

13,027 12,71714,766

17,5295,048 4,359

4,517

4,033462 1,318

2,593

2,956662 675

631

686

Flagstaff

Community Campuses

Online

Yuma


GRADUATE AND UNDERGRADUATE ENROLLMENTS

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2005 2006 2007 2008 2009 20100

5,000

10,000

15,000

20,000

25,000

30,000

13,472 14,526 15,569 16,787 18,301 20,194

5,5976,036 5,783 5,720

5,2995,010

Graduate Undergraduate


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All Diverse Students

Latino Students

Native American Students

2003 2004 2005 2006 2007 2008 2009 20100

200

400

600

800

1,000

1,200

1,400

1,1881,292

1,2121,318

1,265 1,277 1,2811,214

2003 2004 2005 2006 2007 2008 2009 20100

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2,0762,233 2,301

2,559 2,6472,908

3,271

3,843

2003 2004 2005 2006 2007 2008 2009 2010 2020 Goal

20%

22%

24%

26%

28%

30%

32%

34%

31%

33%

2003 2004 2005 2006 2007 2008 2009 2010300

400

500

600

700

800

900 866

International Students

DIVERSITY


FY 2012 BUDGET PLAN REDUCTION OF $198MNAU SHARE IS $30.1M

Strategy Approx. Amt DiscussionTuition and Fee Collections

$6-8M ($6 million with

stable enrollment)

• Rebate new resident 2011-2012 Pledge students $350 (estimated $1.2M)• Additional financial aid (RSA and scholarships) to be provided estimated to be $3.5M• Graduate Assistant Waivers from 75% to 100% of Tuition

Reductions, savings, revenue growth from Divisions, Debt Service, Salaries and Benefits (Employee Related Expenses – ERE)

$15M • FY 2011 Voluntary Retirement Program for Tenured Faculty should bring in $1,2-$1.6M with ERE• Debt service reduction of $1.9M• Changes/increases in benefits prices for employees • Divisional/central budget reductions

Operating Efficiencies in all Divisions

$0-$2M • Innovations that reduce costs per FTE

Reduce state budget flexibility and one time expenditures, reserves, auxiliary accounts

$4-7M • Diverting one-time funds for FY12 and FY13 knowing our base or structural deficit must be corrected by FY14


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Provost94.947%

EMSA (Enrl Mgmt & Student

Aff)28.114%

Extended Campuses

24.312%

Capital Assets15.28%

Information Technology

Services14.87%

Finance & Administration8.74%

President6.73%

Advancement2.81%

Research2.71%

Institutional Effectiveness1.61%

State and Local Resources (Millions)

Cabinet Level Target Reduction (Millions)

Provost $3.8 EMSA (Enrl Mgmt & Student Aff) 1.1Extended Campuses 0.97Capital Assets 0.6Information Technology Services 0.6Finance & Administration 0.3President 0.3Advancement 0.1Research 0.1Institutional Effectiveness 0.1


POSSIBLE BUDGET STRATEGIES UNDER STUDY

• Reductions in benefits

• Hiring freeze

• Furloughs

• Increases in summer school and winter term

• Cost/benefit analysis of Community Campuses

• Review of centers, institutes and public service offices 26


LEVERS FOR ADJUSTING THE ACADEMIC AREA BUDGET

• Reallocation of faculty work efforts

• Additional use of technology in delivering course materials –

requires less faculty time

• Academic coaches/advocates to provide support/motivation

to students

• Increase minimum class sizes where practical

• Offset additional expenses to class and program fees

• Renewed emphasis on summer school/winter session 27


Investing in Strategic Initiatives is Critical for NAU’s Long-term Health

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HOW DID THE FY11 BASE BUDGET CHANGE?

Major Additions (new funds) for Budget

• Over $3 Million from Voluntary Retirement Incentive Program (VSRIP)• Over $8 Million from enrollment growth and tuition and fees• Approximately $2 Million of debt payment reduction

Major Budget Investments

• Nearly $6 Million for Market Adjustments, Workforce Planning, and Minimum Wage• $5M for Class Coverage and Undergraduate Support

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FY11 SIGNIFICANT ONE-TIME INVESTMENTS

• Debt Repayment

• South Beaver School Lease/Liberal

Arts Staircases and FF&E

• Police Radio

• Academic Building Repairs

• Skydome/Athletics Temporary

Moving/Locations, etc.

• Quad

• Roofs, Other Building Maintenance,

Fire Life Safety Issues

• Retention Initiatives

• Operations for Colleges and Units

• Software Systems

• Research

• Transportation Spine

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STRATEGIC INVESTMENTS

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LEADERSHIP DAY RECOMMENDATIONS

• Investments in Capital Assets

• 100% graduate assistant tuition waivers

• Oracle/PeopleSoft Financial System

• Efficiencies (grants, paperless campus)

• Compliance (bio-safety auditor)


• Cline Library

• ….

APPROVED

• 100% Graduate Student Waivers

• Oracle/PeopleSoft Financials


(Coaches/Advocates)

UNDETERMINED

• Capital Assets

• Part-time Faculty Salaries

• Admissions

• Cline Library

• Branch Campuses


CAMPUS INFRASTRUCTURE PROJECTSCompletion Fall 2011• Health and Learning Center• Skydome• Liberal Arts• North Plant• Native American Cultural Center• North Quad• Transportation Spine• Science Lab Facility

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Completion 2012• San Francisco Parking Garage• Residence Halls• Ardrey Auditorium Seating• Classroom Upgrades

Potential Future Projects• Multi-purpose Facility• Science/ Health Facility


SUMMER CONSTRUCTION

PROJECTS

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WHAT IS THE NEW FACE OF A “PUBLIC” UNIVERSITY?

• Mission and Accountability

• Technology

• Funding

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Thank you.Questions?

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Documents

May 4, 2011