Florida State University Financial Planning and Outlook Chairs and Deans Meeting March 15, 2010

1. Florida State UniversityFinancial Planning and Outlook Chairs and Deans MeetingMarch 15, 2010

2. As Florida’s Economy Has Slowed

3. The State’s Unemployment Has Risen

4. State Revenues Have Declined

5. The Drop Has Come in General Revenue

6. Financial Planning Periods 2007-08 to 2011-12 (5-Year period, since spring 2007) 2009-10 to 2011-12 (3-Year current plan)

7. Budget Crisis Committee • Lawrence G. Abele Provost and Executive Vice President for Academic Affairs • Rafael Alvarez Associate Vice President for Budget/Planning & Financial Services • Robert Bradley Vice President for Planning and Programs • John Carnaghi Senior Vice President for Finance and Administration • Mary Coburn Vice President for Student Affairs • Kirby Kemper Vice President for Research • Reggie Cuyler Student Government Association Senate President Pro Tempore • Lee Hinkle Vice President for University Relations • Elizabeth Maryanski Associate Vice President for Student Affairs • Thomas McCaleb Professor, Economics • Eric Walker Professor and President, Faculty Senate • Jayne Standley Professor and Vice-chair, Faculty Senate Steering Committee

8. Base budget of General Revenue and Lottery 2007 = ~$336M

9. Budget Reduction Challenges • A great deal of money really can’t be reduced • Health Insurance Benefits ~ $26.2 M • Utilities ~ $25.1 M (E&G only) • Retirement Benefits ~ $22.2 M • Social Security Match ~ $12.1 M • Medicare Match ~ $3 M • “Fixed Costs” ~ $97.6 M/ $336 M base

10. Budget Reduction Challenges • 1,018 Employees Earn < $30,000 • 50% of all Employees Earn < $50,000 • Furlough for the lowest 50% yields • ~ $200,000/day • Furloughing everyone on campus yields • ~ $1.1M/day • Budget reduction by furloughs would reduce everyone’s salary by about 33%

12. Actions to Cut ~$56 million • Released all vacant positions back to the state • Released all positions vacated by retirements back to the state • Reduced the budgets of all units on campus • Engaged in the painful process of layoffs • Sought federal stimulus funding for two years of salary plus benefits to those affected by layoffs

13. The Funding Reductions Have Dramatically Affected FSU Faculty and Staff Footnotes provide definitions

14. Program Eliminations Were Included For Several Reasons • Based in part of a need for SACS “teach out” of 2 years with guaranteed funding • Based use of Stimulus funds for “teach out” • Based on problems with further Across-the-Board cuts and low on-going funding had already resulted in campus-wide program thinning • Further Across-the-Board reductions would exacerbate program thinning, diminish quality and result in SCH reductions within current workload efforts • Lack of Enough Non-recurring to Bridge an Uncertain Funding Gap and Cope with Questions about the Status of Non-recurring Resources

15. The Next Couple of Years Will Be Challenging • Further State Reductions are in the Offing • Federal Stimulus Funds will Disappear • Restrictions will Continue to Limit the Use of Increased Tuition Funds

16. Federal Stimulus Funding In addition to filling the $30 million gap with central fund balances, we are also using temporary ARRA appropriations * Funds are expected for only one more year

17. Federal Stimulus Funding Use Note: Primary use is to allow certain students to complete their degree programs

18. Other Resources Will Come Into Play • Increasing revenues from tuition • Increased revenues from the technology Fee • Increased revenues from an aggressive fund raising effort • Redeploying existing assets will continue

19. Bridging A Part of the Gap With Various Non-recurring Resources May Be Possible

20. Balancing State Recurring Reductions > Internal Recurring Reductions FSU’s 3-Year Plan to 2011-12 (strategy summary) • Earmarking future recurring revenues to close interim annual budget gaps and achieve normal budget balancing whereby: Recurring revenues ≥ Recurring internal allocations • Use of central non-recurring fund balances and Federal ARRA funds until there is a return to normal annual budget balancing

21. Where are We Now • Recurring deficit remaining from 2009-10 ~$30 M • Plans to reduce this without further unit cuts or layoffs • 2008-09 • Recurring deficit ~ ($11 M) Reduced from $30M with “new” funds • Non-recurring reserve ~ $40.5 M • Tuition collections 2008-09 through 2011-12 • Legislative increases estimated 8% • Differential increases estimated 7%

22. Where are We Now(cont.) • Legislative tuition increase is discretionary and all funds are committed to reducing the deficit. • Differential Tuition increase is restricted to: • 30% to undergraduate need-based aid • 70% to ‘enhance the undergraduate educational experience’ and may not be used for graduate students

23. 2010-11 • State total revenues are projected to increase by $1.4 billion, but the legislative debate is about a $1.0 billion to $3.0 billion shortfall • Large dollar items in the shortfall debate: availability of Federal funds, transfers from Trust Funds, Medicaid, Casino Monies, the Budget Stabilization Fund, Class size, etc.

24. $29,215.0 in 2007

25. Senate Higher Education • 6% GR cut to the base budget totaling $111 M • $50.3 M GR added back for ‘Reprogram for State Priority Areas’ • 8% across the board tuition increase • $10.9 M in Recurring GR to replace non-recurring GR (BOG requested $11.3 M) • $18.8 M in Recurring GR to replace some federal stimulus funds

26. House Higher Education • 4.6% GR cut to the base budget totaling $92.3 M • $65 M cut to ‘employee compensation & benefits’ (it is unclear exactly what this is at the moment) • 8% across the board tuition increase

27. Recovery May Be Delayed Until 2015

28. What can we say at this point about potential additional reductions and FSU’s potential course of action? • Although things may change we believe that with current non-recurring funds and the expectation of tuition increases we can continue our current strategy and avoid any cuts to campus for 2010-2011.

29. Questions?