General Budget Orientation and Discussion

1. General Budget Orientationand Discussion Mr. Gavin Leach, Vice President for Finance and Administration

2. Fund Types • Current funds (Operating) • General fund • Designated fund • Auxiliary fund • Expendable restricted fund • Non-current funds (Non-operating) • Student loan fund • Endowment fund • Plant fund • Insurance fund • Agency fund

3. Current Fund (Operating) Activities • General Fund • Academic and instructional programs and their administration – programs primarily supported by appropriation, tuition and fees, indirect cost recoveries, investment income, and incidental revenues of departments • Base budget • Recurring budget line items such as personnel, supplies, equipment, utilities, debt service, and other related expenditures • Designated and carryover budget • University funds remaining from the prior fiscal year. These funds include amounts contractually committed (i.e., purchase orders issued, unspent faculty contractual travel funds), general operating reserves, and departmental operating carry-over balances. • Designated Fund • Operations that generate revenues for specific purposes that are not restricted by donors, supporting agencies, or patrons – generate revenue to support their ongoing operations but may receive some general fund support and also include departmental equipment reserves • Major operations include: intercollegiate athletics, Superior Dome operations, Berry Events Center, recreational services, telephone systems, NMU Foundation support, printing services, etc.

4. Current Fund (Operating) Activities (continued) • Auxiliary Activities Fund • Activities of revenue-producing, self-supporting activities that perform a service for, but are not themselves educational and general activities, and do not receive state support • Major operations include: Residence Life, Dining Services, Bookstore, University Center operations, and the Health Center • Recurring budget line items such as personnel, supplies, equipment, utilities, debt service, and other related expenditures • Expendable Restricted Fund • Funds that are restricted for specific purposes stated by the supporting agencies or donors • Primary funding sources include federal financial aid, private scholarships, and federal, state, and local grants

5. Non-current Fund Activities • Student Loan Fund • Maintained to account for loans to students of the institution • Endowment Fund • Maintained to account for money or investments received for endowments where donor has specified that the principal may not be expended, term endowments (donor specified period to hold principal), and funds functioning as endowment (donor did not require funds be held in perpetuity, but governing board has decided to treat as endowment) • Plant Fund • Funds held to account for: the acquisition of physical properties to be used for institutional purposes, renewal and replacement of institutional properties, retirement of indebtedness of institutional properties, and funds expended and invested in institutional plant properties • Insurance Fund • Funds held to account for institution’s employee insurance and institutional physical plant and liability insurance programs • Agency Fund • Funds received by the institution to be held or disbursed only on the instruction or behalf of the person or organization from whom they are received – custodial funds (i.e., amounts withheld for taxes, social security, insurance, etc.)

6. NMU Total Resources Operating Budget Total = $165.9 million Note: This graph displays total resources net of scholarships costs. If scholarship costs were not deducted from Tuition and Fees, Dining Revenues, and Residence Life Revenues the Total Resources Operating Budget would be $192.3 million.

7. General Fund Budget

8. General Fund Budget Process Timeline Fiscal Year 2009-10 • February: Governor State of the State • February: Governor Executive Budget to the legislature • March/April: House Budget Subcommittee Hearing • April 30/May 1: Board of Trustees Meeting • May/June: Senate Budget Subcommittee • May/June??: House and Senate floor votes • June ??: House/Senate Conference Committee • July 16/17: Board of Trustees Meeting (may need special board meeting to set tuition and fees)

9. General Fund Resources

10. NMU Total Resources General Fund Budget Total = $102.4 million Note: This graph displays total resources net of scholarships costs. If scholarship costs were not deducted from Tuition and Fees the Total Resources General Fund Budget would be $112.9 million.

11. Total General Fund Resources History (Source: Actual General Fund Revenues State of Michigan HEIDI Database) 1981 1991 2008 2001 To maintain financial reporting consistency with fiscal years ’81, ’91, and ’01 data, financial aid was not deducted from ’08 tuition and fee revenue.

12. Appropriation Appropriation History (shown in 000,000s)

13. Fiscal Year Equated Student (FYES) • Calculation: • Total undergraduate credit hours divided by 30 equals 1 FYES • Total graduate credit hours divided by 24 equals 1 FYES • NMU Total FYES for FY2008 = 8,428 • Fall 2007 Headcount (FY2008) = 9,358 • Fall 2008 Headcount (FY2009) = 9,347

14. NMU Appropriation per FYES

15. Appropriations per FYES Fiscal Year 2008-2009 FY 2009 Appropriation divided by FY2008 FYES Source: Presidents Council, State Universities of Michigan

16. Tuition and Fee Rates Fiscal Year 2008-2009 Annual resident undergraduate tuition and fee rates Source: Presidents Council, State Universities of Michigan

17. Non-resident Tuition and Fee Rate Comparison FY2008-2009 Annual nonresident undergraduate tuition and fee rates Source: Michigan President’s Council Report on Tuition and Fees for FY2008-09

18. General Fund Expenditures

19. Total Costs per FYES: NMU vs. Michigan 12 Fiscal Year 2007-2008 Michigan 12 (M12): excludes Michigan State University, University of Michigan Ann Arbor, and Wayne State University)

20. State Comparison of NMU vs. M11 Universities Revenues and Expenditures per FYES Fiscal Year 2007-2008

21. NMU Total Cost per FYES History • FY 1998: $ 9,643 (10 years) • FY 2002*: $10,343 (5 years) • FY 2008*: $11,969 • Total costs per student (FYES) increased a total 24.1% over the past 10 years (approximate average increase of 2.4% per year since 1998) * Includes costs for implementation of TLC (NMU’s notebook computer program – providing all full-time students with notebook computer on two-year replacement cycle)

22. History – Total Revenues per FYES Source: State of Michigan HEIDI Database

23. History – Appropriations per FYES Source: State of Michigan HEIDI Database

24. History – Tuition Revenue per FYES Source: State of Michigan HEIDI Database

25. History – Financial Aid per FYES Source: State of Michigan HEIDI Database

26. History – Investment Income per FYES Source: State of Michigan HEIDI Database

27. History – Total Expenditures per FYES Source: State of Michigan HEIDI Database Note: NMU’s costs include implementation of the TLC (notebook computer program) during this time period.

28. History – Instruction per FYES Source: State of Michigan HEIDI Database

29. History – Research per FYES Source: State of Michigan HEIDI Database

30. History – Academic Support per FYES Source: State of Michigan HEIDI Database Note: NMU’s costs include implementation of the TLC (notebook computer program) during this time period.

31. History – Total Academic Programs per FYES (Instruction, Research, and Academic Support) Source: State of Michigan HEIDI Database Note: NMU’s costs include implementation of the TLC (notebook computer program) during this time period.

32. History – Public Services per FYES Source: State of Michigan HEIDI Database

33. History – Student Services per FYES Source: State of Michigan HEIDI Database

34. History – Institutional Support per FYES Source: State of Michigan HEIDI Database

35. History – Plant Operations per FYES Source: State of Michigan HEIDI DatabaseNote: Includes heating plant / utilities

36. History – Plant Operations (excluding utilities)per FYES Source: State of Michigan HEIDI DatabaseNote: Includes heating plant / utilities

37. History – Utilities per FYES Source: State of Michigan HEIDI DatabaseNote: Note LSSU went from reporting $268 per FYES in 1998 to $0 for 2003 and 2008.

38. History – Plant Operations (excluding utilities) per Square Foot Source: State of Michigan HEIDI Database

39. History – Auxiliary Activities per FYES (Primarily Intercollegiate Athletics) Source: State of Michigan HEIDI DatabaseNote: Note LSSU went from reporting $268 per FYES in 1998 to $0 for 2003 and 2008.

40. Auxiliary Activities Total Expenditures (Intercollegiate Athletics) Source: State of Michigan HEIDI DatabaseNote: Note LSSU went from reporting $268 per FYES in 1998 to $0 for 2003 and 2008.

41. History – Transfers per FYES Source: State of Michigan HEIDI Database

42. Budget Reduction History • General Fund budget cuts/operational savings/ reallocations • FY2003-04: $6.5 million • FY2004-05: $2.8 million • FY2005-06: $1.5 million • FY2006-07: $3.0 million • FY2007-08: $1.3 million • FY2008-09: $1.8 million • Organizational efficiency – consolidation of organization structure and increased productivity = lower cost • 5 vice presidents to 2 • 5 academic colleges to 3 • NMU faculty and staff are the most productive among the 15 public universities (student-to-staff ratio)

43. Productivity: Student-to-Staff Ratios • NMU has the best overall staffing efficiency ratios of the Michigan public universities • Productivity (student-to-staff ratio) 27.9% greater than state average (M11 universities) • Productivity increase of 6.2% over past 5 years (approximate average increase of 1.2%per year) Productivity* Staffing TypeRank Administrative #1 Faculty #1 Service #5 Total #1 * Based on number of students divided by the number of staff.