Finance & Administration Committee February 6, 2019 1 Agenda - - PowerPoint PPT Presentation

Finance & Administration Committee

February 6, 2019

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Agenda

• Call to Order/Roll/Declaration of Quorum
• Consent Agenda
• Vice President’s Report
• ERP Update
• FY19-21 State Budget Update
• TRAC Update Report

○ Status and Future Plans ○ Student Member Comments (ASPSU President Luis Balderas Villegrana)

• Establishing FY19-20 Tuition & Budget Parameters

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Approval of Minutes

November 13, 2018 Meeting

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Vice President’s Report

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F&A Committee 2018-19 Current Workplan

• Review internally prepared financial statements on a

quarterly basis, including budget to actual performance

• Tuition and budget setting
• Multi-year enrollment forecasting
• Enterprise systems

Bold indicates item to be discussed at today’s meeting

Vice President’s Report

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Employee Engagement

85% participation (366/430) 57% increase in engaged employees from 2015-2018 Follow up: Surveys, focus groups & department discussions to gather more feedback and information Actions & Approach: ○ Greater focus on professional development ○ Expanded manager & leadership training ○ Collaboration across FADM & OIT leadership teams ○ Division-wide events twice per year

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Vice President’s Report

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National Average

Upcoming Events

• 4th & Montgomery

○ Broke ground in December, ceremony in January ○ PSU providing accounting and contracts support for all owners ○ Q Bond sale 2/21/2019 ○ Preparing for G and F Bond Sale in March 2019

• Acquisition of 4th & Lincoln Property
• 724 Harrison (old Neuberger Hall) - continued

construction

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Vice President’s Report

ERP Update

Kirk Kelly

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Enterprise Resource Planning

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Enterprise Resource Planning (ERP) in Higher Education

Enterprise Resource Planning

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Goal 5: Innovate for Long-term Stability

Initiative 3.1: Eliminate or modernize practices or systems that are duplicative, inefficient or add unnecessary costs, taking into account costs generated by units and paying particular attention to costs incurred by students. Initiative 3.2: Improve campus infrastructure and systems. Initiative 2.3: Follow principles of improving quality, performance, efficiency and outcomes, and supporting our core operations.

Enterprise Resource Planning

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Modernization of Administrative Processes and Systems (MAPS)

• Evaluate and recommend a portfolio of improvements
• Adopted a holistic approach to change management through the

lens of Process, Culture, and Systems

Enterprise Resource Planning

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Next Generation ERP Readiness

Enterprise Resource Planning

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Outcome

• Recommendation to continue with current Banner platform

○ Transition costs are very high - $20 million over five years ○ Next Generation ERP Student Information Systems are not mature yet ○ Risk of failure is high without campus-wide commitment and appropriate staffing resources ○ PSU has identified higher priority projects for the next 2-4 years Enterprise Resource Planning

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Thanks to All Involved

MAPS Steering Committee: Kevin Reynolds (Chair) John Fraire, Sukhwant Jhaj, Kirk Kelly MAPS Cost/ROI Committee: Andria Johnson (Chair), Jim Adkins, Jason Abbott, Dawn Boatman, Derek Davis, Isaac Dixon, Jennifer Kahl, Christina Kraus, Amanda Nguyen, Hans VanDerSchaaf, Ellen Weeks MAPS Guides: Around 100 employees from schools, colleges, and administrative departments who attended focus sessions, vendor demonstrations, and provided feedback at multiple points during the evaluation process.

Enterprise Resource Planning

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FY19-21 State Budget Update

Kevin Neely Kevin Reynolds

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Looking Forward to FY19-20 Budget (2019-21 Biennium): Key Dates and Challenges

Fall 2018 General Fund Expenditure and Enrollment Forecasting September - January General Fund Scenario Planning Early December 2018 Governor’s Recommended Budget February - March 2019 Co-Chairs’ Budget Framework February 2019 Budget Context and Initial Guidance April 2019 Tuition Proposal April - June 2019 Budget Building

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FY19-21 State Budget Update

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FY19-21 State Budget Update

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FY19-21 State Budget Update

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FY19-21 State Budget Update

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FY19-21 State Budget Update

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FY19-21 State Budget Update

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FY19-21 State Budget Update

Tuition Review Advisory Committee Update

Andria Johnson

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Tuition Review Advisory Committee (TRAC): Purpose

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• The TRAC is established to provide a written report to the President
• f the University with recommendations regarding tuition and

mandatory enrollment fees.

• In compliance with HB4141, TRAC is responsible for:

○ Providing opportunities for ASPSU and other students to participate in the tuition setting process ○ Gaining an understanding of PSU’s budgeting process and the HECC allocation mechanism ○ Providing recommendations/observations about tuition & fees that consider the impact on historically underserved students, the mission of PSU and alternative scenarios

TRAC Update Report

Tuition Review Advisory Committee (TRAC): Membership

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• TRAC membership consists of:

○ VP for Finance & Administration, Chair ○ Provost and VP for Academic Affairs ○ Director of Student Financial Services ○ University Budget Director ○ Faculty Senate Budget Committee Co-Chairs/Faculty ○ ASPSU President ○ ASPSU Legislative Affairs Director ○ 5 students at large

• All meetings are open to the public

TRAC Update Report

Tuition Review Advisory Committee (TRAC): Progress To Date

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• Set up a website that is accessible to the public and includes meeting

times and agendas, materials and minutes

• Met five times so far and discussed topics such as PSU Budget Basics

and the HECC Student Success & Completion Model

• Provided requested analysis and figures including hard copies of the

Budget Overview Book and the Financial Dashboard

• Student Success team presented on the actual impact of investments

in student success at PSU

• Several robust conversations sparked by the following question:

○ “Given PSU cost drivers, what are alternatives to increasing tuition while maintaining quality?”

TRAC Update Report

Tuition Review Advisory Committee (TRAC): Future Plans

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• Four more committee meetings
• Three student-focused budget forums throughout March and

early April

• One faculty/staff-focused budget forum in March
• Finalized report to the President and Board of Trustees that

includes a statement from ASPSU and any minority opinions of committee members TRAC Update Report

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TRAC Update Report

TRAC Student Member Comments

ASPSU President Luis Balderas Villegrana

Establishing FY19-20 Tuition & Budget Parameters

Kevin Reynolds

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Current Service Level (CSL) Based on FY19 General Fund Budget

Personnel Expenses $15.5 million Services and Supplies Inflation $1.6 million Estimated Recurring Innovation & Student Success Investments* $1.5 million Total Estimated Annual Expenditure Increase $18.6 million Current Service Level for FY20 is budget +5.6%, overall estimated cost increases 6.1%

* Strategic Investment planning process underway - estimated completion March 2019

Establishing FY19-20 Tuition & Budget Parameters

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Tuition Setting Choices

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• When (April or later)
• Where (% and $ reduction)
• Rules of movement
• Consequences for each

Establishing FY19-20 Tuition & Budget Parameters

HECC Approval and HB4141

“The governing board may not increase the total of tuition and mandatory enrollment fees by more than five percent annually unless the board first receives approval from: (A) The Higher Education Coordinating Commission; or (B) The Legislative Assembly.” For HECC approval “A plan for how resident tuition and mandatory enrollment fees could be decreased if the public university receives more moneys from the state than anticipated.”

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Establishing FY19-20 Tuition & Budget Parameters

Typical Time Frame

April*: Tuition Proposal May/June: HECC Approval (if necessary) June: Budget proposal

36 *Later changes to tuition require financial aid repackaging

Establishing FY19-20 Tuition & Budget Parameters

Set Resident Undergraduate Tuition Above 5% in April: Considerations

• Triggers HECC arduous approval process that may not be

necessary

• Immediate negative impact on current and future students -

Recruitment and retention

• Transparent about consequences of low increases in PUSF on

tuition rates

• Potential to set at 5%, and to add a trigger to raise tuition later if

PUSF is lower than anticipated

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Establishing FY19-20 Tuition & Budget Parameters

Delay Setting Resident Tuition to Close to End of Session: Considerations

• May avoid HECC approval process until necessary
• Potentially less transparent about consequences of low increases

in PUSF on tuition rates

• Avoids a damaging and potentially unnecessary message which

would impact current and future students

• Final tuition decision, which may be an increase > 5%, made late

in the spring or early summer (reduces student participation in final decision)

• Complications with budget setting - many unknowns

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Establishing FY19-20 Tuition & Budget Parameters

Establishing Large Reduction Targets and Implementing Without Clarity of State Funding: Considerations

• Another round of difficult reductions
• Negative impact on institutional moral
• Level of reductions may be unnecessary
• Loss of capacity, expertise, revenue
• Increased safety and compliance risks

39 FY12 FY13 FY14 FY15 FY18 $3.6 million $5.6 million $5.7 million $6.5 million $8.2 million

Establishing FY19-20 Tuition & Budget Parameters

Delaying Large Expenditure Reductions: Considerations

• Ability to establish necessity first
• Align assumptions on salary and wage increases to match

budget reality

• Allows for the time needed to create a strategic reduction

plan

• Would need to use one time funds/reserves for a 6-12

month implementation plan for expenditure reductions

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Establishing FY19-20 Tuition & Budget Parameters

PSU Board of Trustees Reserves Policy

• Board Authority and responsibility:

○ Reviewing annual reports on the University’s Primary Reserve Ratio and component reserves. ○ Approval of the set-aside and restriction of cash to achieve the goals and requirements of this Policy, generally as part of the annual budget process.

• Delegated to the President, who may further delegate to other

University officials, authority and responsibility for: ○ Recommending appropriate action and use of reserve balances if unforeseen events and economic factors require short-term deficit spending and a reduction to the Primary Reserve Ratio.

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Establishing FY19-20 Tuition & Budget Parameters

Tuition and State Support: Current Budget Reduction Matrix

Establishing FY19-20 Tuition & Budget Parameters

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Approximate Resident Undergraduate Tuition Increase** Biennial Increase to PUSF* 0% 3% 5% 9% 14% 18% $0 $25 to $27M $18 to $20M $17 to $19M $14 to $16M $10 to $12M $7 to $9M $40 million $21 to $23M $14 to $16M $13 to $15M $9 to $11M $5 to $7M $2 to 4M $80 million $15 to $17M $9 to $11M $4 to $6M $0 $120 million $10 to $12M $3 to $5M $2 to $4M $0 $186 million $1 to $3M $0

* Assumes restoration of Engineering Technology Sustaining Funds (ETSF) and Sports Lottery **Assumes 5% increase for Non-Residents and Graduate tuition rates with the exception of the 0% scenario which assumes no increase to any rates

Estimated Remissions Budget $23.3M $24.1M $24.5M $25.6M $26.9M $27.8M Innovation & Student Success Investments $1.5M $1.5M $1.5M $1.5M $1.5M $1.5M

Tuition and State Support: Current Budget Reduction Matrix

Establishing FY19-20 Tuition & Budget Parameters

43 Approximate Resident Undergraduate Tuition Increase Biennial Increase to PUSF 0% 3% 5% 9% 14% 18% $0 $25 to $27M $18 to $20M $17 to $19M $14 to $16M $10 to $12M $7 to $9M $40 million $21 to $23M $14 to $16M $13 to $15M $9 to $11M $5 to $7M $2 to 4M $80 million $15 to $17M $9 to $11M $4 to $6M $0 $120 million $10 to $12M $3 to $5M $2 to $4M $0 $186 million $1 to $3M $0 * Assumes restoration of Engineering Technology Sustaining Funds (ETSF) and Sports Lottery **Assumes 5% increase for Non-Residents and Graduate tuition rates with the exception of the 0% scenario which assumes no increase to any rates

Tuition and State Support: Current Budget Reduction Matrix

Establishing FY19-20 Tuition & Budget Parameters

44 Approximate Resident Undergraduate Tuition Increase Biennial Increase to PUSF 0% 3% 5% 9% 14% 18% $0 $25 to $27M $18 to $20M $17 to $19M $14 to $16M $10 to $12M $7 to $9M $40 million $21 to $23M $14 to $16M $13 to $15M $9 to $11M $5 to $7M $2 to 4M $80 million $15 to $17M $9 to $11M $4 to $6M $0 $120 million $10 to $12M $3 to $5M $2 to $4M $0 $186 million $1 to $3M $0 * Assumes restoration of Engineering Technology Sustaining Funds (ETSF) and Sports Lottery **Assumes 5% increase for Non-Residents and Graduate tuition rates with the exception of the 0% scenario which assumes no increase to any rates

Tuition and State Support: Current Budget Reduction Matrix

Establishing FY19-20 Tuition & Budget Parameters

45 Approximate Resident Undergraduate Tuition Increase Biennial Increase to PUSF 0% 3% 5% 9% 14% 18% $0 $25 to $27M $18 to $20M $17 to $19M $14 to $16M $10 to $12M $7 to $9M $40 million $21 to $23M $14 to $16M $13 to $15M $9 to $11M $5 to $7M $2 to 4M $80 million $15 to $17M $9 to $11M $4 to $6M $0 $120 million $10 to $12M $3 to $5M $2 to $4M $0 $186 million $1 to $3M $0 * Assumes restoration of Engineering Technology Sustaining Funds (ETSF) and Sports Lottery **Assumes 5% increase for Non-Residents and Graduate tuition rates with the exception of the 0% scenario which assumes no increase to any rates

Tuition and State Support: Current Budget Reduction Matrix

Establishing FY19-20 Tuition & Budget Parameters

46 Approximate Resident Undergraduate Tuition Increase Biennial Increase to PUSF 0% 3% 5% 9% 14% 18% $0 $25 to $27M $18 to $20M $17 to $19M $14 to $16M $10 to $12M $7 to $9M $40 million $21 to $23M $14 to $16M $13 to $15M $9 to $11M $5 to $7M $2 to 4M $80 million $15 to $17M $9 to $11M $4 to $6M $0 $120 million $10 to $12M $3 to $5M $2 to $4M $0 $186 million $1 to $3M $0 * Assumes restoration of Engineering Technology Sustaining Funds (ETSF) and Sports Lottery **Assumes 5% increase for Non-Residents and Graduate tuition rates with the exception of the 0% scenario which assumes no increase to any rates

Tools to cover $18.6 M in expenditure increases

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Establishing FY19-20 Tuition & Budget Parameters $6 - 9 million Combination of increased state funds + net tuition growth $3 - 4.5 million 1-1.5% reduction from CSL $2- 4 million Reduction in risk abatement $2 - 3 million Refinement of salary and wage assumptions $5 million Deficit spending $18 - $25.5 million

Historical Annual General Fund Revenue Growth

Resident undergraduate tuition increase -1.14% 3.08% 3.77% 5.34% 3.7% 48

Establishing FY19-20 Tuition & Budget Parameters

Where - % and $ Reduction Parameters

• What is the upper limit for tuition increases?
• What is the $ range that is acceptable for ongoing

reductions to be identified now?

• What amount of the $4 million in risk abatement should be

used to offset reductions in units?

• What level of deficit spending in year 1 is tolerable?

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Establishing FY19-20 Tuition & Budget Parameters

When - Timing Parameters

• Approval of a tuition increase above 5% will necessitate

approval by the HECC ○ How early do we want to signal tuition increases that may trigger the HECC process? ○ April 3rd F&A or delay? ○ Other universities may opt to wait until later when they have more information on the PUSF increase

• A Parallel Process?

○ Approve two rates based on PUSF assumptions ○ Approve one rate with a trigger to reconvene and set a higher or lower rate

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Establishing FY19-20 Tuition & Budget Parameters

Next Steps

• Tuition Review Advisory Committee continues to meet

through March

• Continued advocacy with the State Legislature
• Strategies for increased enrollment and net tuition growth
• Divisional and Executive Council planning on options to

close the current service level gap

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Establishing FY19-20 Tuition & Budget Parameters

Questions and Comments

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