Board of trustees Meeting September 23, 2010

1. Budgeting at UNC Pembroke • Enrollment Growth funding • FY-2011 FACTS • FY-2012 Planning Board of trustees MeetingSeptember 23, 2010

2. Purpose of Today’s Presentation Develop a better understanding of State budgeting and the associated processes Discuss UNCP budgeting in detail UNC Pembroke

3. Why do we budget? • The North Carolina Legislature and the State Constitution • The “State Budget Act” as defined in General Statue 143C-1-1 establishes procedures for the following: • Enacting the State budget • Preparing the recommended State budget • Administering the State budget. UNC Pembroke

4. Preparing the Recommended State Budget North Carolina General Statute 143C-2-1 provides that the Governor is Director of the Budget. As such, the Director has responsibility to prepare and recommend the State budget, and the Director’s powers extend to all agencies, institutions, departments, bureaus, boards and commissions of the State of North Carolina. UNC Pembroke

5. Delegation of Powers The Governor may -- and does -- delegate certain powers and authorities of the Governor as Director of the Budget to the Office of State Budget and Management (OSBM) (G.S. 143C-2-1(a)). UNC Pembroke

6. Office of State Budget & Management • The Governor has delegated the authority to OSBM to: • Prepare the recommended budget • Certify the ratified budget • Distribute the budget to state agencies • Monitor, report, and control the State budget. UNC Pembroke

7. Office of State Budget & Management Issues Biennial Instructions for Budget Preparation Requests State Agencies Develop Budget Request Prepares Economic and Revenue Forecast Reviews Agency Budget Requests Governor Finalizes Biennial Budget and Six-Year Capital Improvement Plan UNC Pembroke

8. State Budget Development Time Line Governor Presents Budget Message to General Assembly Presents Governor's Budget to General Assembly Appropriation Subcommittees Review All Budget Requests General Assembly Finalizes Budget and OSBM Certifies UNC Pembroke

9. UNC Budget Process Legal Basis State Executive Budget Act Higher Education Reorganization Act of 1971 Board of Governors’ Role: Presents comprehensive financial plans to General Assembly Modifies plans based on resources made available by Legislature Establishes annual budgets which are administered by the constituent institutions UNC Pembroke

10. UNC Budget Process “A single, unified recommended budget for all public senior higher education.” Statute prescribes form of budget requests – three categories: • Continuing Operations (enrollment, utilities, vehicle replacement) – allocated to institutions • Academic Salary Increases – lump sum to Board of Governors and then allocated to campuses • Expansions/Reductions, when appropriate – by priority – lump sum to Board of Governors and then allocated to campuses • New and expanded programs • Capital improvements • Increases to remedy deficiencies UNC Pembroke

11. UNC Budget Process Key steps in process of budget preparation: • UNC President receives general instructions from Governor via State Budget Office. • Budget workshops are conducted separately with three groups: • UNC General Administration Council • Chancellors • Board of Governors UNC Pembroke

12. UNC Budget Process Key steps in process of budget preparation: (continued) • In conjunction with the decisions reached at the budget workshops, instructions are provided to the campuses for preparation of institutional budget requests. • Continuation budgets • Academic salary increases • Expansions and improvements • Chancellor is responsible for the preparation of budget requests for the institution and the assignment of any institutional priorities that may be applicable. The process of campus involvement is determined by the Chancellor, who appoints delegates to work with UNC General Administration. UNC Pembroke

13. UNC Budget Process Key steps in process of budget preparation: (continued) • Institutional budgets are reviewed: • Continuation Budget – reviewed by Vice President-Finance for general consistency and conformance. • Academic Salary Increases – campus data reviewed by Senior Vice President for Academic Affairs and the Vice President-Finance in a similar manner to continuation budgets. • Expansions and Improvements – reviewed by internal review committee, headed by Senior Vice President-Academic Affairs, composed of the General Administration Council. UNC Pembroke

14. UNC Budget Process Key steps in process of budget preparation: (continued) • President confers throughout the process with the Chancellors. • Afterward, Vice President-Finance prepares recommendations for Board and its Budget and Finance Committee. • After a final budget workshop for the full Board, the Budget and Finance Committee recommends the adoption to Board. • Board takes final action, then submits to Governor and Advisory Budget Commission UNC Pembroke

15. UNC Budget Process Key steps in process of budget preparation: (continued) President represents University in any hearings with Governor. Governor forwards recommendations to General Assembly. President, or his designees, represent University in Legislative hearings. UNC Pembroke

16. Enrollment Budgeting Overview The SCH enrollment change formula is driven by the projected change in student credit hour (SCH) production as classified in a 12-cell funding matrix comprised of 4 areas of instruction assigned a cost category and 3 levels of instruction. UNC Pembroke

17. Four Instructional/Cost Categories UNC Pembroke

18. Overview The three levels of instruction are undergraduate, masters, and doctoral. These three levels are based on differences in the cost of instruction associated with average class size. UNC Pembroke

19. SCH Change Funding Model UNC Pembroke

20. Fundable or Not Fundable…That is the Question In general, SCHs are fundable if they are derived from degree creditable instruction in the regular term (fall or spring semester) via on-campus or distance learning efforts. SCHs are deemed non-fundable if covered by other state appropriations, or if tuition is set to cover the full cost of instruction. UNC Pembroke

21. Fundable Regular term degree credit instruction delivered on campus or at off-campus resident credit centers Distance education degree credit instruction delivered to NC resident students, regardless of location, summer and regular academic year Distance education degree credit instruction delivered to non-resident students within NC Repeated courses Degree credit instruction offered via electronic delivery UNC Pembroke

22. Non-Fundable Non-degree-credit instruction Certain instruction offered below the baccalaureate level Instruction to students auditing courses Instruction generating continuing education units (CEU’s) On-campus instruction delivered during the summer term Distance education delivered outside NC to non-resident students Instruction to university employees where employee tuition waiver is claimed UNC Pembroke

23. UNCP Revenue Sources UNC Pembroke

24. FY 2009 Revenues UNC Pembroke

25. Adjusted Division Budgets per BANNER UNC Pembroke

26. UNCP Budgeting Process Operational Funding • Over-arching parameters provided by VC for Business Affairs as set by General Administration. • Continuation Budget Request – developed and entered into GA budget system by Director of Budget and Financial Planning. Various divisional employees provide input especially facilities staff. UNC Pembroke

27. UNCP Budgeting Process • Expansion and Reduction Requests • Divisional input solicited from appropriate departments, prioritized, and submitted to Budget Director. • Budget Director summarizes input to be shared with the executive staff (ES) and Chancellor. • ES sets University priorities. • Chancellor approves priorities or modifies. • Approved data entered into GA budget system. UNC Pembroke

28. UNCP Budgeting Process • Capital Budgeting (new projects, appropriated and non-appropriated as well as repair and renovation requests) • Asst. VC for Facilities directs the process with direction given by General Administration. • Six year plans for new projects and for the repair and renovations. • Divisions- Request for projects or needs is made to departments and prioritized and shared with Asst. VC for Facilities. • Asst VC- Summarizes all requests by category. Shares with ES and Chancellor. • Chancellor- Approves or modifies the recommendations. UNC Pembroke

29. FY 2011 Unallocated Resources UNC Pembroke

30. FY 2011 Budget Reduction UNC Pembroke

31. FY 2011 Unfunded Budget Requirements UNC Pembroke

32. FY 2011 Unfunded Budget Requirements continued UNC Pembroke

33. FY 2011 Unfunded Budget Requirements continued UNC Pembroke

34. UNCP Budget Planning FY 2012 Budget Memo # 1 • Expansion/Reductions • Submit top 3 expansion requests • Plan for 5% and 10% reduction of base budget • GA will request funds for enrollment growth • GA will consider requests for • Salary increases • Campus safety UNC Pembroke

35. UNCP Budget Planning FY 2012 General Planning Information • Tuition Increase Approved – 218/yr • 6,676 FTE @ $218 = $1,455,368 • 9% Tuition increase • Additional Tuition Increase - $500/yr • 6,676 FTE @ $500 = $3,338,000 • 20.6% tuition increase • Reductions • 5% = $3,000,000 • 10% = $6,000,000 • Prior Year Unallocated Enrollment Growth ??? UNC Pembroke

36. UNCP Budget Planning FY 2012 Budget Memo # 2 • Capital • Appropriated six year plan • Non-appropriated six year plan • Repair and renovations six year plan UNC Pembroke

37. Links for Information Instructions for Preparation of the 2011-13 State Budget http://www.osbm.state.nc.us/files/pdf_files/BudgetInstructions1_2011-13.pdf The UNC Budget Development Process http://www.northcarolina.edu/finance/budget/Budget_Process.pdf NC General Assembly Senate Bill 897 http://www.ncga.state.nc.us/Sessions/2009/Bills/Senate/PDF/S897v8.pdf Enrollment Change Funding Model http://qed.ncat.edu/ir&p/funding-manual.pdf UNC Pembroke

38. FY 2011 Budget Requests UNC Pembroke

39. Budget Decisions/Facts FY 2011 How/what to fund from unallocated resources. How current year decisions impact next year’s budget challenges. Concern that many administrative departments are under funded and under staffed. How to maintain current student/faculty ratios during this period of enrollment growth with budget reductions and reversions. UNC Pembroke

40. Budget Facts/Options for FY 2012 • Anticipated 10% budget reduction ($6.0M) • Approved tuition increase $218 (9% increase, $1.5M additional revenue) • Possible reversions (1%-3%) • Possible programmatic reductions (administrative and academic) • Consider possible additional tuition increases (per General Administration, up to $500/year 20% increase ,$3.4M) • Prior year unallocated budgets UNC Pembroke

41. Summary of Student charges UNC Pembroke

42. FY 2012 Budget Scenario UNC Pembroke

43. Enrollment Growth Effect on Appropriations Fiscal Years 2008-2011 UNC Pembroke