December 8, 2022 Minutes

PRESIDENT'S BUDGET ADVISORY COMMITTEE

December 8^th, 2022

MEMBERS PRESENT:

STAFF PRESENT:

GUESTS PRESENT:

MEMBERS ABSENT:

AGENDA

1. Call to Order and Welcome

2. Approval of the Minutes: October 20^th, 2022

3. BOT Request

4. 23-24 Budget Planning

5. Working Group Update

6. Budget Forum Debrief

7. Announcements for the Good of the Order

1. Call to Order and Welcome
   Provost and Vice President of Academic Affairs, Karen Moranski, welcomed the committee and began the meeting at 8:30 am.
    
2. Approval of the Minutes: October 20^th, 2022
   Moranski introduced the agenda and asked if there were any additions. Hearing none, Moranski requested a motion to approve the minutes of the October 20^th meeting. The minutes were approved unanimously.
    
3. BOT Request
   Laura Lupei presented the 2023-2024 Board of Trustees (BOT) budget request. The BOT requested a total of $529.8M of increased based revenue for the CSU system for the 2023-2024 year. The request can be split into two categories, within the compact and above the compact. The compact was a promise from the Governor to increase the CSU operating fund budget by 5% each year through 2026-2027. The BOT structured their request incorporating, first the 5% base increase from the compact, totaling $243.4M. The request includes an additional $286.4M above the compact amount. The total $529.8M increase would support the following initiatives: Graduation Initiative 2025 & Basic Needs ($75M); Faculty and Staff Compensation Pool ($261M); Health Premium Increase ($50.5M); Academic Facilities and Infrastructure ($50M); Strategic Resident Enrollment Growth ($50.6M); Maintenance of New Facilities ($6M); Liability & Property Insurance Premium Increases ($13.7M); Inflation on Non-personnel Costs ($23M).
   
   The committee discussed the BOT request and the different scenarios that could come from funding within the compact and funding above the compact. The committee was concerned about the systemwide enrollment decline and if that would have effects on the Governor's 5% increase compact. Lupei mentioned the Department of Finance understands the tuition decline is not something that will be fixed quickly so would expect the compact to hold for at least 2023/2024.  Lupei did note that the 5% increase is an increase in the state general funding, which does not include tuition, so the compact is closer to a 2.5-3% increase on the entire CSU budget.
   
   The January Governor's budget would be the next step in the budget planning timeline, which the committee will review in the Spring semester.
    
4. 23-24 Budget Planning
   Lupei presented an update on the 2023-2024 budget planning. Lupei began by outlining the projected base deficit which, as of now, is $14.8M. Lupei noted this is a preliminary figure and there are still a couple of factors to be determined before finalizing the 2023-2024 budget. Lupei then reviewed the multi-year budget plan that was submitted to the CO in November which plans to eliminate the budget deficit by 2024-2025. The last time the committee saw the multi-year budget plan it hadn’t had numbers attached to the preliminary strategies. The updated plan that was reviewed with the committee included estimated figures for each revenue enhancement and reduction strategy. Lupei noted that the numbers on this plan are projections and subject to change as planning for 2023-2024 and future years continue.
   
   The multi-year budget plan outlined the estimated deficit figure, the estimated figures from the revenue enhancement strategies, and the estimated figures for the expense reduction strategies for 2023-2024 and 2024-2025. The estimated deficit for 2023-2024 is $14.8M, mainly due to the PY base deficit ($-13.9M), an estimated decrease in tuition revenue ($-2.2M), adjustments to the cost allocation revenue ($1.7M), and some increases in mandatory costs ($-312K). The estimated figure for revenue enhancement strategies for 2023-2024 is $1.4M. The $1.4M comes from strategic enrollment growth which coincides with the multi-enrollment plan projection for 2023-2024. The expense reduction strategies for 2023-2024 include: VSIP position Savings ($6.1M); 2022-2023 attrition position savings ($1.4M); savings in maintenance and repair costs ($14k); and a reduction in other miscellaneous operating costs ($208K). With the projected revenue enhancement strategies, and the projected expense reduction strategies, the remaining deficit in 2023-2024 is projected to be $3.7M which will roll to 2024-2025.
   
   For 2024-2025, the projected deficit is $2.1M. The projected deficit consists of the remaining PY base deficit ($-3.7M), estimated increase in tuition revenue ($2.1M), adjustments to the cost allocation revenue ($-150K), and increases in mandatory costs ($-350K). The estimated figure for revenue enhancement strategies for 2024-2025 is $1.8M, which includes strategic enrollment growth, predominantly resulting from moving Summer Session to stateside. There is also a small amount of revenue projected to come from campus partners who move back to campus from offsite leased spaces and pay rent to the University. The expense reduction strategies for 2024-2025 include, 2023-2024 attrition position savings ($1.5M), and savings from energy efficiency initiatives ($50K). With the projected revenue enhancements strategies, and the projected expense reduction strategies the deficit would be resolved by 2024-2025.
   
   The committee wanted to know the motive behind the decision to move Summer Session to stateside instruction. Lupei responded that it would result in some additional revenue, but the main reason for the decision is that it would allow the University to count the Full Time Equivalent Students (FTES) toward the University’s target goal. This is particularly important as the University’s enrollment is declining, and has not met the University’s FTES goal for a couple of years. Moving Summer Session to stateside would also bring down the cost of Summer Session to students and would allow them to use their financial aid packages to pay for summer courses.
    
5. Working Group Update
   Mike Ogg provided an update to the committee on the working group's progress. The working group was established to provide a written summary of the committee's feedback on the multi-year budget and multi-enrollment plans that were submitted to the CO. The working group has met and collaborated on a report which will be ready for the committee to review at the first Spring meeting.
    
6. Budget Forum Debrief
   The committee discussed the Fall 2022 Budget and Planning Forum, which took place on November 3^rd. The forum was a different format than previous forums. It began with presentations from President Lee, Laura Lupei, Karen Moranski, and Monir Ahmed and ended with an extensive live question and answer hosted by President Lee. The forum was held in person and was also live-streamed. The committee was very pleased with the new format and thought it was well received by the campus as well. The main piece of feedback was the appreciation for the live question and answer and being able to have open and transparent conversations with the President about the challenges facing the University.
    
7. Announcements for the Good of the Order
   The committee had a couple of announcements. Monir Ahmed announced that the Voluntary Separation Incentive Program (VSIP) was in progress, and the results would be shared with the committee in the Spring. There was a question about the progress of the President's job search and the status of it. Jerlena Griffin-Desta gave an update that the President’s search will begin in late Spring 2023 and would be wrapped up by Fall 2023.
    

Moranski adjourned the meeting at 10:00 am.  

Minutes prepared by Hayley Avery.