Budget Update Open Forums February 27, 2018 March 1, 2018 OUTLINE - - PowerPoint PPT Presentation

Budget Update

Open Forums

February 27, 2018 March 1, 2018

OUTLINE

• Current year budget cut
• Assumptions for FY19 (2018-19) budget
• FY 2018-19 budget scenarios
• FY 2018-19 budget planning
• Advocacy efforts
• Status of ideas from past years

Current Year Budget Cut

Impact of Budget Cut

• 1% State Appropriation cut or $516,200
• Cuts by division as follows:
• Academic affairs - $331k
• Admin & Finance - $123k
• Student Affairs - $25k
• Advancement - $19k
• Athletics - $19k
• Divisions addressing primarily through salary savings

FY 2018-19 Budget Assumptions

Enrollment and retention challenges remain ...

14,807 15,109 15,405 15,748 15,738 15,660 15,283 15,114 14,720 14,566 14,488 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000

KERS Contribution Rates Current and Proposed FY 2018-19

9% 10% 12% 17% 20% 24% 27% 39% 39% 49% 49% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

84% based upon 2018-2020 Office of State Budget Director Salary and Benefit Defined Calculation report

KERS Contribution Amounts Current and Proposed FY 2018-19

$2.6 $3.3 $3.9 $5.9 $7.4 $9.3 $10.4 $14.1 $15.3 $17.7 $18.3 $31.0 $0 $5 $10 $15 $20 $25 $30 $35

$’s in millions

Assumptions for FY 2018-19 Budget

• Enrollment declines of 0.5% to 2.5%
• Tuition increase of 2% to 5%
• Scholarship increases
• State appropriation cut of 6.25%
• KERS increase $12.8 million
• Other fixed cost increases
• Health Innovation Center operating costs

FY 2018-19 Budget Scenarios

Tuition Percent Increase Enrollment Change 4% .5% Decline 4% 1.5% Decline No Equity No KERS Funding No Equity No KERS Funding $ $

Source of Funds Tuition rate increase 4,900,000 4,900,000 FY18 Net tuition shortfall (650,000) (650,000) FY19 Tuition shortfall (575,000) (1,725,000) FY19 Scholarship incr (1,500,000) (1,500,000) Net Tuition Incr(Decr) 2,175,000 1,025,000 State cut of 6.25% (3,200,000) (3,200,000) ½ KERS Increase funded Equity Funding for FY19 Net State Appropriation (3,200,000) (3,200,000) TOTAL FUNDS (1,025,000) (2,175,000)

Scenario 1 Scenario 2

Tuition Percent Increase Enrollment Change 4% .5% Decline 4% 1.5% Decline No Equity No KERS Funding No Equity No KERS Funding $ $

TOTAL FUNDS (1,025,000) (2,175,000) Use of Funds KERS Rate Increase (to 84%) (12,810,000) (12,810,000) Fixed Cost Estimate (1,800,000) (1,800,000) HIC Operating Cost Estimate (2,000,000) (2,000,000) Net Use of Funds (16,610,000) (16,610,000) SURPLUS (DEFICIT) (17,635,000) (18,785,000)

Scenario 1 Scenario 2

Tuition Percent Increase Enrollment Change 4% .5% Decline 4% 1.5% Decline $ $

SURPLUS (DEFICIT) (17,635,000) (18,785,000) Equity funding 5,100,000 5,100,000 SURPLUS (DEFICIT) (12,535,000) (13,685,000) SURPLUS (DEFICIT) (17,635,000) (18,785,000) ½ KERS Increase Funded 6,405,000 6,405,000 SURPLUS (DEFICIT) (11,230,000) (12,380,000)

Scenario 1 Scenario 2

Budget Variables

Across-the-board pay increase of 1% = $1.1 million Tuition rate increase of 1% (net) = $1.2 million Enrollment increase of 1% = $1.15 million Average compensation/benefits for FT Faculty = $93 K Average compensation/benefits for FT Staff = $91 K *

* Assumes KERS at 84%

FY 2018-19 Budget Planning

FY 2018-19 Budget Planning/Timeline

• Budget update presentations to campus constituencies

(Deans, Staff Congress, Chairs, Faculty Senate, SGA)

• Open Forums in late February/early March
• Parking/Dining/Housing fee recommendations to Board in

March

• Division budget planning – ongoing
• Tuition recommendation to Board in May
• Budget recommendation to Board - TBD
• Possible special board meeting in May or June

Advocacy Efforts

• Equity funding
• Pension reform
• Pension relief

NKU - Pension Reform Requests

1. Place all new hires into a defined contribution system 2. Create a one-time window to give employees opportunity to transfer out of KERS and into a defined contribution system

Council on Post Secondary Education 2018-20 Biennial Budget Recommendation KERS Cost Relief

Institution FY 2018 Total General Fund KERS Cost Increases Budgetary Impact University of Kentucky $267,089,200 $0 0.0% University of Louisville 132,758,000 0.0% Eastern Kentucky University 65,045,200 9,714,400 14.9% Kentucky State University 26,729,600 1,358,600 5.1% Morehead State University 41,642,600 3,283,800 7.9% Murray State University 45,802,100 4,777,300 10.4% Northern Kentucky University 51,621,100 12,810,700 24.8% Western Kentucky University 74,653,800 7,263,300 9.7% KCTCS 181,605,000 8,039,400 4.4% TOTAL $886,946,600 $47,247,500 5.3%

Status of Ideas

Past Years: Suggestions Acted Upon or in Progress

REVENUE GENERATION

• Entered into partnership with Academic Partnerships to increase enrollment in online programs

and enhance online course offerings

• Have involved the entire campus in improving student recruitment and retention efforts
• Entered into U.S. 27 development project that will help bring in people and revenues to campus
• Increased parking fee structure for visitors
• Continuing advocacy for state equity funding
• Have realigned student aid programs to improve recruitment and retention
• Continuing to develop strategies for recruiting non-traditional, part-time students, and out-of-

tristate students

Past Years: Suggestions Acted Upon or in Progress (Cont)

COST SAVINGS

• Continue to re-evaluate contracts with external vendors and seek competitive bids
• Converting more users' computers to cloud-based desktops
• Continually explore options to reduce KERS costs, e.g., moving more employees to TIAA

when possible and transition staff jobs to faculty when appropriate

• Close university over holidays to save on electricity and other resources
• Carefully considering “outsourcing” possibilities
• Targeting facilities investment into asset preservation rather than new buildings
• Promoting and expanding participation in online W-2s
• Continually analyze health and wellness-related costs, including costs of health insurance
• Continue to review job vacancies and make sure these duties are still needed
• Evaluated the need for using search firms and did not use them for some positions, e.g.,

Arts & Sciences Dean, CFO, General Counsel

• Offered shortened work week to eligible staff

Current Year: Revenue Generation Suggestions

• Utilize BB&T for major conferences or events outside of athletic cycles
• Create a Norse Alumni membership group with an annual fee and some perks (e.g., free

drink/snack at basketball games)

• Charge students fees for missing advising appointments
• Charge a fee to faculty/staff for using the Recreation Center – reduce for frequent users
• Develop and offer more events and courses to the community and advertise these strategically

through social media

• Increase local advertising presence, e.g., billboards on I-275 near campus
• Sell naming rights to areas, places, or items on campus, e.g., rooms, green areas
• Begin a grassroots & social media campaign to highlight existing revenue generation, e.g.,

Planetarium birthday parties, NKU Theatre

• Sell assets that are not being used - such as the old Covington campus in Park Hills

• Evaluate organizational structure - look for ways to increase efficiency and create

synergies

• Have fewer phones on campus; many office phones are rarely or never used
• Create stricter guidelines on office furniture purchasing and encourage the "swapping" of

furniture between departments

• Make dental and vision employee-paid benefits only
• Offer early retirement incentives
• Reduce the number of days/week that trash is collected and/or have employees empty
• wn trash in a central location
• Institute a 4-day work week/class schedule and reduced summer operating hours
• Use solar panels; replace current lights with LED lighting; install reflective sheets above

halogen light bulbs; install more motion lights

• Eliminate color postcards; make double-sided printing the default; let students opt-in to

electronic rather than paper communications

Current Year: Cost Saving Suggestions

We want your input

• Link to Website for Revenue Generation and Cost

Saving Ideas https://inside.nku.edu/cfo/ideas.html

APPENDIX

2016-17 Progress

• 1. 2016 Session: General Assembly

addresses historic funding disparities impacting NKU and WKU, and appropriate $5.1 million to NKU to fix half

• f disparity.
• 2. 2017 Session: development of a rational,

strategic performance based funding model

KERS Contribution Rates

8% 9% 10% 12% 17% 20% 24% 27% 39% 39% 49% 49% 0% 10% 20% 30% 40% 50% 60%

KERS Contribution Amounts

$2.6M $3.3M $3.9M $5.9M $7.4M $9.3M $10.4M $14.1M $15.3M $17.7M $18.3M $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20

Millions

KERS as % of State Appropriation

4.9% 6.4% 7.7% 11.6% 15.9% 20.4% 24.3% 32.2% 32.0% 38.2% 35.4% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

What If…KERS Contribution Rates

9% 10% 12% 17% 20% 24% 27% 39% 39% 49% 49% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 84% based upon 2018-2020 Office of State Budget Director Salary and Benefit Defined Calculation report

KERS Contribution Amounts

$2.6M $3.3M $3.9M $5.9M $7.4M $9.3M $10.4M $14.1M $15.3M $17.7M $18.3M $31.0M $0 $5 $10 $15 $20 $25 $30 $35 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Millions

KERS as % of State Appropriation

4.9% 6.4% 7.7% 11.6% 15.9% 20.4% 24.3% 32.2% 32.0% 38.2% 35.4% 60.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Postsecondary Pension Reform Requests

1. Place all new hires into a defined contribution system 2. Create a one-time window to give employees opportunity to transfer out of KERS and into a defined contribution system

Positive for NKU:

• All new hires enter DC

plan

• Existing KERS employees

may opt out of DB plan and opt in to DC plan

• Tier 3 employees (hired after

1/1/14) roll over to DC plan

• Voluntary opt-out of KERS if

full actuarial cost paid in full More Information Needed:

• How will the actuarial cost

be determined?

• Ability to use NKU’s DC plan

(TIAA) v. PERS

Pension Reform Assessment (Gov. Bevin’s Proposal)

HB200 Budget Proposal Budget Reduction: 6.25%

($3.2M)

Eliminate Mandated Programs (Kentucky Center for Mathematics)

($1.3M)

No Pension Relief/Reform

($13M)

Total Impact

($17.5M)

% Cut to State Appropriation

34%

Invest in Success Campaign

• Launched November 19, 2015 at NKUF Semi-Annual

Meeting