1

July 20, 2007

BBoard of Trustees Meetingoard of Trustees MeetingFocus DiscussionFocus Discussion

2

Fiscal Year 2007-2008

GGeneral Fund Budgeteneral Fund Budget

3

Budget and Appropriations History

◦ Fiscal Year 2006-07 Total Operating Budget

◦ Fiscal Year 2006-07 General Fund Budget

◦ Appropriation funding history

◦ Budget reduction history

Fiscal Year 2006-07 One-time funding needs

Fiscal Year 2007-08 Base Budget needs

Tuition summary

OOverviewverview

4

TTotal Resources Operating Budgetotal Resources Operating BudgetTotal - $178.3 millionTotal - $178.3 million

55

**This graph displays total resources net of Scholarships costs.

TTotal General Fund Resources Budgetotal General Fund Resources BudgetTotal - $96.0 millionTotal - $96.0 million

66

1981 1991

20012006

To maintain financial reporting consistency with fiscal years ’81, ’91, and ’01 data, financial aid was not deducted from ’06 tuition and fee revenue.

TTotal General Fund Resourcesotal General Fund Resources

7

$44.

2

$45.

9

$47.

2

$48.

8 $51.

3

$52.

0

$50.

2

$45.

2

$45.

0

$45.

1

$45.

2

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Appropriation History(shown in 000,000’s)

State Mandates *(shown in 000,000’s)

* FY2003 appropriation after both Executive Orders and the State Supplemental

$1.3

$1.1 $1

.4

$1.8

$2.1

$2.2 $2

.5

$2.6 $3

.0

$3.5

$4.1

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

* State mandates include Michigan Public School Employee Retirement System (MPSERS), Indian tuition waiver, minimum wage, and MI-OSHA requirements.

AAppropriationppropriation

7

88

* Appropriation per FYES if NMU receives $4.2 million delayed appropriation

** Appropriation per FYES if NMU does not receive $4.2 million delayed appropriation

AAppropriation per FYESppropriation per FYES

$6

,87

6

$6

,96

6

$6

,75

1

$6

,84

4

$6

,93

1

$6

,73

9

$6

,28

1

$5

,35

5

$5

,51

7

$5

,30

7

$5

,29

0

$4

,82

0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 * 2007**

9

BBudget Reduction Historyudget Reduction History General Fund budget cuts/reallocations of $13.8 million

since 2003◦ FY2003-04: $6.5 million◦ FY2004-05: $2.8 million◦ FY2005-06: $1.5 million◦ FY2006-07: $3.0 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)

10

FY2006-07 One-time funds

◦ Reduced payment of FY2006-07 appropriation ($807,000 or 1.7%)

◦ Delayed August 2007 payment of $4.2 million

FY2007-08 base budget

◦ Base appropriation reduction from FY2006-07 (1.7%)

◦ No further reduction in appropriation

◦ Return of $4.2 million delayed FY2006-07 appropriation payment in October 2007

GGeneral Fund Budget Assumptionseneral Fund Budget Assumptions

11

Fiscal Year 2006-2007

GGeneral Fund One-time eneral Fund One-time Funding NeedsFunding Needs

12

FY07 Reduction: -1.7%ONE-TIME BUDGET NEEDS - FY2007 Delayed Payment: $4.2M

FY07 CASH FLOW -- APPOPRIATION REDUCTION -$5,027,000

SOURCES: Revenues in excess of budget $506,000 Delayed academic equipment upgrades, replacement of obsolute equipment, staff hirings, and building maintenance and improvements $4,521,000

Total $5,027,000

FFY2006-07 General Fund One-time NeedsY2006-07 General Fund One-time Needs

13

Fiscal Year 2007-2008

GGeneral Fund Budgeteneral Fund Budget

14

BASE REVENUE ADJUSTMENTS FROM 2007:

Tuition and fees $217,000 Scholarships/financial aid -$95,000 Investment income $350,000 Rental income $34,000

Total Base Revenue Adjustments from 2007 $506,000 % change in budget 0.5%

BBase Revenue Adjustments for FY2006-07ase Revenue Adjustments for FY2006-07(adjusted for FY2007-08)(adjusted for FY2007-08)

15

Inflationary cost increases: Compensation $2,750,000 USOEC (additional net tuition revenues) $96,000 Software maintenance/license fees (i.e., Oracle, SCT) $77,000 Athletic transportation/team travel costs $75,000 Credit/Debit card fees $68,000 Printing/postage $33,000 Faculty and staff recognition awards $25,000 Hazardous waste disposal $10,000

Total Inflationary $3,134,000 % change in total university budget 3.3%

PProjected Cost Adjustments rojected Cost Adjustments (Fiscal Year 2007-08)(Fiscal Year 2007-08)

16

Budget reduction/reallocations: Departmental personnel and support costs -$870,000 Operation and maintenance (heating plant) -$300,000 Debt service/loan retirement -$122,000

Subtotal-Budget Reductions/Reallocations -$1,292,000 % change in total university budget -1.3%

BBudget Reductions/Reallocationsudget Reductions/Reallocations(Fiscal Year 2007-08)(Fiscal Year 2007-08)

17

State mandates: Michigan Public School Employee Retirement System - (MPSERS) (FY07: $3,334,000) $250,000 Minimum wage (FY07: $464,000) $75,000 Indian tuition waiver (FY07: $338,000) $55,000 MIOSHA compliance (eye wash annual testing) $16,000

Total Mandates $396,000 % change in total university budget 0.4%

SState Mandate Increases tate Mandate Increases (Fiscal Year 2007-08)(Fiscal Year 2007-08)

18

Initiatives:

Instructional staffing and support: $940,000

Faculty staffing (enrollment) adjust - FY08 ($840,000)

Graduate stipends ($100,000)

Facility maintenance and equipment (Deferred maintenance $87.3M) $657,000

Long-term building maintenance ($507,000)

Capital equipment replacement ($150,000)

Administrative staffing and support: $206,000

Grant development ($160,000)

Internationalization ($40,000)

Extended library hours for students ($6,000)

Total Initiatives $1,803,000

% change in budget 1.9%

IInitiatives nitiatives (Fiscal Year 2007-08)(Fiscal Year 2007-08)

19

Fiscal Year 2007-2008

TTuition and Feesuition and Fees

2020Source: State of Michigan HEIDI Database

$10,341

$9,660

$8,936

$7,516

$7,398

$7,350

$7,265

$7,200

$6,956

$6,956

$6,948

$6,752

$6,733

$6,638

$6,184

$5,543

UM-AA

MTU MSU UM-D AVG WSU WMU FSU EMU OU UM-F GVSU LSSU CMU**

NMU* SVSU

Annual resident undergraduate tuition and fee rates

* NMU includes portion of Freshmen Student Athletic Fee ** CMU Freshmen rate is $7,530

TTuition and Fee Ratesuition and Fee RatesFiscal Year 2006-2007Fiscal Year 2006-2007

2121Source: Presidents Council Tuition and Fees Report

9.1%

8.7%

8.5%

7.9%

6.8%

6.5%

6.4%

6.0%

6.0%

5.9%

5.9%

5.8%

5.5%

5.1%

4.9%

4.8%

OU MTU UM-D UM-F FSU AVG LSSU EMU WMU GVSU MSU WSU UM-AA

CMU SVSU NMU

Annual resident undergraduate tuition and fee rates

TTuition and Fee Percentage Increasesuition and Fee Percentage IncreasesFiscal Year 2006-2007Fiscal Year 2006-2007

2222

Annual resident undergraduate tuition and fee increases per semester(based on media reports)

TTuition and Fee Semester Increasesuition and Fee Semester IncreasesFiscal Year 2007-2008Fiscal Year 2007-2008

*For new students Fall 2007**Fall 2006 to Fall 2007 Comparison (6.7% summer to fall)

UniversityPer Semester

IncreasePer Semester

% Increase

CMU* $795 21.1%FSU** $750 20.8%OU $486 13.9%MTU $460 9.5%MSU $427 9.6%GVSU $326 9.9%LSSU $309 9.3%EMU $279 8.0%UM-AAUM-DUM-FNMUWSUSVSUWMU

To be announced - July 25

To be announced

To be announced - July 19To be announced - July 19To be announced - July 19To be announced - July 20

To be announced - July 27

23

Recover appropriation reduction 1.7% (1.7% tuition = 1.7% appropriation)Recover expected appropriation increase 4.2% (3.2%CPI + 1% growth/initatives)Tuition and fee inflation 4.2% (3.2% CPI + 1% growth/initiatives)

Tuition Percentage Increase 10.1%

TTuition Guideline uition Guideline (Fiscal Year 2007-08)(Fiscal Year 2007-08)

*The 10.% assumes NMU receives the $4.2 million delayed appropriation.

24

* Scenario 3: nonresident increase same dollar amount as resident

BASE BUDGET -- FY2008 Scenario 1 Scenario 2 Scenario 3*

BASE REVENUE ADJUSTMENTS From FY2007 (0.5%) $506,000 $506,000 $506,000

PROJECTED COSTS --INFLATIONARY (3.3%) -$3,134,000 -$3,134,000 -$3,134,000

BUDGET REDUCTIONS/REALLOCATIONS (1.3%) $1,292,000 $1,292,000 $1,292,000

STATE MANDATES (0.4%) -$396,000 -$396,000 -$396,000

INITIATIVES (1.9%):

Instructional staffing and support -$940,000 -$811,000 -$750,000

Facility maintenance and equipment -$657,000 -$557,000 -$465,000

Administrative staffing and support -$206,000 -$206,000 -$206,000

Total Initiatives -$1,803,000 -$1,574,000 -$1,421,000

APPROPRIATION % change -1.7% -1.7% -1.7%

Appropriation adjustment -$807,000 -$807,000 -$807,000

ENROLLMENT % change 0.00% 0.00% 0.00%

Enrollment revenue adjustment $0 $0 $0

TUITION AND FEES % rate change 9.50% 9.00% 9.25%

Tuition and fees adjustment $4,342,000 $4,113,000 $3,960,000

BUDGET BALANCE $0 $0 $0

GGeneral Fund Budget Model Summaryeneral Fund Budget Model Summary(Fiscal Year 2007-08)(Fiscal Year 2007-08)

25

9.5% NR%=R % 9.0% NR%=R % 9.25% NR$=R $Scenario 1 Scenario 2 Scenario 3

FY07 -- Resident undergraduate (30 credits) $6,141.00 $6,141.00 $6,141.00FY08 -- Resident undergraduate (30 credits) $6,724.00 $6,694.00 $6,709.00 FY08 -- Annual increase $583.00 $553.00 $568.00 FY08 -- Per semester increase $292.00 $277.00 $284.00

FY07 -- Nonresident undergraduate (30 credits) $10,077.00 $10,077.00 $10,077.00FY08 -- Nonresident undergraduate (30 credits) $11,034.00 $10,984.00 $10,645.00 FY08 -- Annual increase $957.00 $907.00 $568.00 FY08 -- Per semester increase $479.00 $454.00 $284.00

AAnnual Tuition and Fee Ratesnnual Tuition and Fee Rates(Fiscal Year 2007-08)(Fiscal Year 2007-08)

26

Eliminate initiatives ($1.3 million)

$2.9 million balance – staffing and programming reductions and delayed university improvements and/or mid-year tuition and fee increase

◦ $2.9 million is the equivalent of eliminating 50 positions or an additional 6.3% in tuition and fees

GGeneral Fund Budget eneral Fund Budget (if $4.2M is not received)(if $4.2M is not received)

27

Competitive with our peers

Maintain quality, access, and affordability

Move forward with strategic initiatives

TTuition and Fees uition and Fees