P E N N S Y L V A N I A S T A T E S Y S T E M O F H I G H E R E D U C A T I O N

P E N N S Y L V A N I A S T A T E S Y S T E M O F H I G H E R E D U C A T I O N

Spring 2014 Adjustments

Board of Governors’ MeetingApril 9, 2014

PASSHE Budget Update

Total Budget$2,183.7

Educational and General$1,562.4

Auxiliary$327.9

Restricted$293.4

2013/14 Total Budget$ in Millions

As of October 2013

Capital/Transfers$1067%

Salaries & Wages$79652%

Benefits$35323%

All Other Operating

$30720%

2013/14 E&G Expenditures and Uses$ in Millions

E&G Expenditures: $1,562

As of October 2013

2013/14 and 2014/15 E&G BudgetAs Presented October 2013 ($ in Millions)

Revenue/Sources FY 2013/14 % Change FY 2014/15 $ Change % Change

Tuition $839.1 0.6% $835.2 ($3.9) -0.5%Fees 180.7 0.6% 180.1 (0.6) -0.3%State Appropriation 412.8 0.0% 412.8 0.0 0.0%All Other Revenue 70.8 -4.2% 69.7 (1.1) -1.6%Use of Carryforward 59.1 557.7% 47.5 (11.6) -19.7%Total Revenue/Sources $1,562.4 3.5% $1,545.2 ($17.2) -1.1%

Expenditures and TransfersCompensation Summary:

Salaries & Wages $795.6 2.3% $822.7 $27.1 3.4%Benefits 353.2 11.6% 384.4 31.2 8.8%

Subtotal, Compensation $1,148.8 5.0% $1,207.1 $58.3 5.1%Noncompensation Summary:Utilities 34.1 3.5% 34.5 0.4 1.3%Services & Supplies 273.2 4.7% 278.4 5.2 1.9%Capital Expenditures & Transfers 106.4 -14.3% 93.8 (12.6) -11.8%

Subtotal, Noncompensation $413.6 -1.0% $406.7 ($6.9) -1.7%Total Expenditures and Transfers $1,562.4 3.3% $1,613.9 $51.5 3.3%

Revenue/Sources less Expenditures/Transfers $0.0 ($68.7)

Tuition, Fees$1,015.2

Funding Requirement

*Requires $7 million in university cost reductions.Note: Other includes miscellaneous revenue and use of carryforward.

Numbers may not add due to rounding.

$ in Millions

Appropriation$412.8

2014/15 E&G Budget Request $ in Millions

E&G Budget: $1,606.9*

Other$117.2

Request$0

$10

$20

$30

$40

$50

$60

$70

4% E&G Appropriation

$16.5

Assume Tuition Increase

Similar to CPI$27.3

Priority ProgramsLine Item

$18.0

$61.7

As of October 2013

05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15*

$200

$250

$300

$350

$400

$450

$500

$550

State E&G Line Items Federal Federal for 08/09 Mid-Year Cut

$ in

Mill

ions

18% Reduction

PASSHE Appropriations

*Based upon Governor’s recommended Commonwealth budget.

State AppropriationsRecent Funding History

AgendaEnrollment ProjectionsAnnualized Full-Time Equivalent

5,801 or

5.2% less than

10/11

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/1580,000

85,000

90,000

95,000

100,000

105,000

110,000

115,000

120,000

103,359105,566

109,637112,030

109,741106,977

104,589 103,815

7.3%lessthan10/11

As of October 2013

Revised Enrollment ProjectionsAnnualized FTE Students

2013/14%

Change 2014/15FTE

Change%

ChangeOriginal 104,589 103,815 (774) (0.7%)Revised 104,682 103,428 (1,254) (1.2%)Difference 93 0.1% (387) (0.4%)

Current enrollment projections reveal: Improvement for FY 2013/14 Greater reduction in 2014/15 enrollment

Revised 2013/14 E&G Budget$ in Millions

Revenue/Sources Oct. 2013 Apr. 2014 $ Change % Change

Tuition $839.1 $843.2 $4.2 0.5%Fees 180.7 181.7 1.0 0.5%State Appropriation 412.8 412.8 - 0.0%All Other Revenue 70.8 70.2 (0.6) -0.9%Use of Carryforward 59.1 83.6 24.5 41.4%Total Revenue/Sources $1,562.4 $1,591.4 $29.0 1.9%

Expenditures and TransfersCompensation Summary:

Salaries & Wages $795.6 $792.4 ($3.2) -0.4%Benefits 353.2 348.5 (4.7) -1.3%

Subtotal, Compensation $1,148.8 $1,140.9 ($7.9) -0.7%Services & Supplies 307.2 309.7 2.4 0.8%Capital Expenditures & Transfers 106.4 140.8 34.4 32.4%Total Expenditures and Transfers $1,562.4 $1,591.4 $29.0 1.9%

2014/15 Cost Drivers

CategoriesPercent Increase $ in Millions

Salary Adjustments* 3.1% $23.9Health Care 7.0%** $12.6

Revised Health Care $9.5Retirement*** 21.4% $18.2Consumer Price Index 3.0%

*Estimated cost of required adjustments based on a static complement. **Varies by health care program. ***Includes estimated PSERS/SERS rate change of 29%.

Projected Retirement Costs20

02/0

320

03/0

420

04/0

520

05/0

620

06/0

720

07/0

820

08/0

920

09/1

020

10/1

120

11/1

220

12/1

320

13/1

420

14/1

520

15/1

620

16/1

720

17/1

820

18/1

920

19/2

020

20/2

120

21/2

2

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

ARP SERS PSERS

32%

27% SERS Rates as % of Salary

2013/14 15.1%2014/15 20.0%2017/18 31.6%

2014/15 E&G cost increasefor SERS and PSERS:

$13 million

Tuition, Fees$1,015.2

Funding Requirement$58.6

*Requires $7 million in university cost reductions.Note: Other includes miscellaneous revenue and use of carryforward.

Numbers may not add due to rounding.

$ in Millions

Appropriation$412.8

Revised 2014/15 E&G Requirement$ in Millions

E&G Budget: $1,603.8*

Other$117.2