Campus Budget Overview & Discussion

1. Campus Budget Overview & Discussion January 2009

2. Unbundling College Resources • Revenue Sources • Expenditure Distribution • Budget Balancing Options

3. KSC’s Revenue Pie - FY2008Total = $108 Million(not including capital additions/deductions)(shown here at gross amounts, not netted for student financial aid)

5. Record Enrollment in Fall 2008 • Total Fall Enrollment 5,538 • Total Undergraduate Enrollment 4,864 • Total NH Enrollment 3,054 • Total Undergraduate Applications 5,563 • Student retention rates are at their highest • Student satisfaction exceeds 90%

6. Sticker Price In-State Out of State • Tuition $ 6,600 $14,400 • Tuition & Fees $ 8,778 $16,628 • Incl. Rm & Bd $16,574 $24,424 Room and board rates include debt service USNH has borne to achieve housing 60 percent of u/g students on-campus

7. Funds per In-state & Out-of-state Student • St. Approp. per In-state FTE Student $ 5,002 • In-state Tuition - Full-time $ 6,600 • In-state Total Funds per FTE Student $11,602 • Out-state Tuition – Full-time $14,400 • In-state Total/Out-of-state Tuition .80 (Does not include state capital appropriations)

8. How Do KSC Students Pay for Education • 85% of all KSC U/G Students have Financial Aid; includes scholarships, loans, employment • Of those, 86% have a loan • This year, the avg. loan is nearly $11,000 • Federal Government’s raising the limits on guaranteed student loans helped students stay in school

9. A Major Component of Revenue Comes Financial Aid • Tuition/Fees in 5 yrs. grew from 73% to 77% of operating budget to compensate for declines in state appropriation • Financial Aid covers $50M of $80M billed to students • Loans will grow again… • Stimulus Bill (pending) – FA impacts • Pell increase - Veterans assistance • Stafford increase - Work Study

10. KSC is Not Immune to Market Devaluations • Institutional Financial Aid – $7M • From gifts and endowments – $1.3M, mostly directed to in-state students - 1/3 of total institutional aid to in-state undergrads • KSC and KEA Endowment payouts -contribute $500,000 to the above • Remainder comes from other endowments – Travelli-Ayling, Morris Foundation,

11. Endowment Changes – FY08 to FY09 • KSC invested by USNH FY08 - $10M • Keene Endowment Assoc. FY08 - $4.4M • As of December 2008, down 25% for FY09 • Down 30% since FY07 • Underwater endowments – market value drops below original gift value • Have not paid out from underwater endowments

12. Expenditures and Efficiencies Drivers Include: • Personnel compensation – wages & benefits • Facility operations – utilities, custodial, energy controls, repair and renovation • Equipment – technology, modernization • Library – materials, print and electronic • Debt service • Financial Aid

13. Compared to Peers KSC is Efficient • USNH Strategic Indicators Comparators 12 Campuses – MA,CT,RI,NY,NJ,NC,MO • FY2007 Avg. Cost per FTE Student $15,319 • KSC Cost per FTE Student $13,858 • Peer Group Avg./KSC Avg. .85

14. Other Financial Benchmarks • 55% = share of general operating budget going to instruction and academic support • Unrestricted Net Assets = 24.8% of operating budget • Debt on KSC buildings = $93M • USNH Bond Rating = A1

15. How Does KSC Hold Costs Down • Part-time Faculty exceeds the # of Full-time • Support staff per student is below our peers • Low tuition discount rate, minimal use of merit award • Plant operating costs per SF remain < $8 • Sustainable building practices, replacing lighting and heating systems

17. Across the Board Reductions Don’t Work Support and Equipment Includes Required Expenses Contracted Personnel Technology Fee Instructional Supplies Insurance and Legal Fees

18. Departments Absorb Inflationary Increases • Have not adjusted supply budgets in five years. • Departments have saved & realigned budgets • Postage costs decreased by 21% saving $40K in spite of postal rate increases • Long distance tolls decreased by 46% saving $36K • Central copying costs – past yr. decrease of 12% or $12K • Other Shifts to Create Savings • 3 day a week supply deliveries • Use other negotiated agreements – FedEx, travel

19. Buildings lacking energy efficient systems (lighting, mechanical, windows and insulation), sprinkler systems, and handicapped accessibility • Adams & Butterfield • Joslin Hall • Elliot Center • Whitcomb Garage • Grafton House • Hale Building • Morrison Hall • Redfern Arts Center • Safety, Architecture & Product Design & Innovation • Foods Lab for Nutrition • Student Services & Plant Ops • Ceramics Studio & Grounds • Parking and Campus Safety • President and Admin Offices • Humanities and Classrooms • Fine & Performing Arts

20. Investment in Strategic Priorities • Over the last 2 years, 150 initiatives have been proposed by KSC Departments • KSC President has approved 70 • $2.6 million have been directed to these initiatives from campus resources • State rescissions have eaten into reserves that have been a major source of initiative funding, both at USNH and KSC

21. Cost Drivers FY10 • Each 1% Salary Increase = $350,000* • Each 1% Fringe Benefits Inc. = $120,000* • Municipal Services (share w Auxiliaries) • Utilities – a 10% increase = $450,000 • Financial Aid – make up for tuition & fee increases & endowment payout decreases • Strategic Initiatives – requests total $4M (Only general operating budget)

22. If State Appropriations Decrease • Each 1% reduction in State Aid = $130K • Each 1% in-state tuition increase = $66 and yields $143K • If State Aid disappeared in-state tuition would need to increase $5,346 • State Appropriation of $13,300,000 is equivalent of an endowment of $332M

23. If Endowment Payout and Gift Income Drop by 1/3 • Financial aid drop is $433,000 • In and out of state tuition would have to increase 1%; in-state - $66, out-of-st. - $144

24. Budget Balancing Options • Undergraduate enrollment • Graduate enrollment • Continuing education • Summer Session • Fund Raising • Partnerships

25. Enrollment Option • 2 yrs. have enrolled 1300 1st time FR. • To hold enrollment & relieve pressure in classrooms and residence halls, enroll 1200 • State appropriation = $13.3M • 5% state reduction = $680,000 • Enrolling 1250 1st time FR. students generates $500,000 revenue • In 2nd year 90 students = $900,000

26. Bottom Line • We need to balance our budget for FY2010 and FY2011 • We need to end each fiscal year with a positive gross margin, revenue left after covering expenses. • We need to maintain our A1 bond rating • We need to support our mission, values and goals, which enhances the College’s quality, visibility and reputation.

27. Q & A