Appendix B

3/13/18

SENATE COMMITTEE ON UNIVERSITY PLANNING

2017-2018 Operating Budget

(Informational)

Provost Jones will present information on the 2017-2018 Operating Budget and the 2018-2019 State Appropriation Request.

SENATE COMMITTEE ON UNIVERSITY PLANNING 2017-2018

  • Richard Bundy III
  • Kevin Cockroft
  • Ann Douds
  • David Gray
  • Lisa Grigley
  • Nicholas Jones
  • David Lieb
  • Hector Lopez
  • Sinfree Makoni
  • Frantisek Marko
  • Mary Lou Ortiz
  • Padma Patil
  • Laura Pauley, Chair
  • Nicholas Pearson
  • Thomas Sarabok
  • Steinn Sigurdsson, Vice-Chair
  • William Sitzabee
  • Charles Specht
  • Mary Vollero
  • Ming Wang
  • Robert Zambanini

Slide 1: University Budget Report (All Text Slide)

An Overview of the 2017-18 Operating Budget and a Look Ahead
to Penn State’s 2018-2019 State Appropriation Request

Dr. Nicholas P. Jones, Executive Vice President and Provost

Meeting of the University Faculty Senate – Tuesday, March 13, 2018


Slide 2: 2017-18 Total Institutional Operating Budget ($000s)

2017-18 Total Budget$5,424,272
2017-18 Total$5,675,676
Budget Changes94,659
Penn State Health Changes156,745

March 13, 2018 Senate Agenda, Appendix B, Slide 2


Slide 3: 2017-18 Total Institutional Budget: Income

Total Operating Budget for 2017-18:  $5.676 billion
Hospital/Clinic 39.0%
Tuition and Fees 31.0%
Restricted Funds 12.2%
Aux. Enter. 8.0%
State Appropriations 5.3%
Other 4.5%

As described below: March 13, 2018 Senate Agenda, Appendix B, Slide 3


Slide 4: General Funds Budget Components

  • Educational and General (E&G)
  • Agricultural Research and Cooperative Extension
  • College of Medicine
  • Pennsylvania College of Technology (Penn College)

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 4


Slide 5: General Funds Budget: Income* ($000s)

_Total General
Funds
General Funds
less Medicine
E&G
Total100%100%100%
Tuition & Fees1,667,3291630,0761630,076
Appropriation282,353271,298216,404
Other255,258156,574155,876
Total2,204,9402,057,9482,002,356
Tuition & Fees75.6%79.2%81.4%
Appropriation12.8%13.2%10.8%
Other11.6%7.6%7.8%

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 5


Slide 6: 2017-18 State Appropriation ($000s)

_2016-17
Appropriation
Changes2017-18
Appropriation
Total$315,723$2,500$318,223
Direct State Appropriation: General Support$230,4360$230,436
Pennsylvania College of Technology20,0742,00022,074
Sub-Total250,5103,000252,510
Agricultural College Land Scrip Fund: Agricultural Research and Cooperative Extension51,81350052,313
PA Department of Public Welfare: Milton S. Hershey Medical Center: Medical Assistance Funding (estimate)13,400013,400

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 6


Slide 7: Summary of State Appropriations

This chart shows Penn State’s annual state appropriations since 2001-2002, including this year’s total of $318.2 million.

The totals have increased slightly since 2012-2013, but this year’s total is still $40 million less than the appropriation received 10 years ago.

The next few slides focus on the 2017-2018 Educational and General budget, which is supported by the General Support appropriation of $230.4 million.

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 7


Slide 8: 2017-18 E&G Budget Planning: State Appropriation

  • September 2016 Appropriation Request: $25.3 million increase
  • February 2017 Governor’s Executive Budget: level funding
  • 2017-18 Final Appropriation:
    • General Support level funded
    • $500K increase for Ag R&E
    • $2M increase for Penn College

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 8


Slide 9: 2017-18 E&G Budget: Parameters and Priorities (All Text Slide)

  • Lowest possible tuition increases and increased student aid
  • Identify expense reductions and budget reallocations
  • Invest in innovation and Strategic Plan priorities
  • Fund mandated increases for health care and retirement
  • Advance the Capital Plan and address facility maintenance
  • Satisfy contractual obligations and provide salary increases
    to address inflation and to maintain competitive position
    to attract/retain the best talent

Slide 10: 2017-18 E&G Budget ($000s)

2017-18 Budget$1,941,957
2017-18 Total$2,002,356
Budget Increases81,443
Budget Reductions(21,044)
Net increase 60,399

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 10


Slide 11: Summary of E&G Expense Changes (All Text Slide)

  • Budget reductions
  • Benefits – employer share of health care and retirement
  • Contractual and inflationary (merit-based) salary costs
  • Student aid and grants-in-aid
  • Innovation and Strategic Plan initiatives
  • Facilities, utilities, property and liability insurances, and the Capital Plan

Slide 12: E&G Expense Changes: Reductions (All Text Slide)

Budget reductions: $21.0M

  • New healthcare plan administrator and prescription drug savings
  • Capping and reducing the subsidy to World Campus
  • Increasing the overhead tax on Auxiliary Enterprises
  • Capturing savings from a review of central budgets that can be closed without having a negative effect on operations

Slide 13: E&G Expense Changes: Benefits

Employee Benefits: $27.4M

  • Health care: $12.5M
  • Mandatory contributions to retirement plans: $14.8M

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 13


Slide 14: E&G Expense Changes: Salaries (All Text Slide)

Salary Costs: $24.8M

  • Contractual and 2.0 percent pool: $19.8M
  • Summer Session and faculty promotions: $1.6M
  • Salary-related benefits costs: $3.4M

Slide 15: E&G Expense Changes: Other Key Areas (All Text Slide)

  • Innovation and support for thematic priorities outlined in the
    2016-2020 University-wide Strategic Plan: $9.0M
  • Student aid and grants-in-aid: $5.7M
  • Programs supported by student fees: $3.7M

Slide 16: E&G Expense Changes: Facilities (All Text Slide)

  • Maintenance and operation of new and recently renovated facilities: $3.2M
  • Utility costs of new and newly renovated facilities and loan amortizations for the West Campus steam plant and energy savings projects: $4.2M
  • Capital Improvement Program: $3.4M

Slide 17: E&G Income Changes ($ in millions)

Tuition-$50.4
TOTAL-$60.4
Tuition - Rate Increases44.4-
Tuition - Conversion from temporary pool5.0-
Tuition - Summer Session1.0-
State Appropriation-0.0
Student Fees-3.7
Indirect Cost Recovery and Other-6.3

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 17


Slide 18: No. 1 Priority: Keep Tuition Increases Low or at Zero

  • Aggregate base increase
    for Pennsylvania resident undergraduates: 2.45%
  • No tuition increases for Pennsylvania resident undergraduates at eight Commonwealth Campuses

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 18


Slide 19: 2017-18 Tuition and Fee Increases

Tuition Increases per Semester

Lower DivisionPA Residents %PA Residents $Non-PA Residents %Non-PA Residents $      
University Park2.74%$2323.85%$605
Altoona, Berks, Erie, Harrisburg 2.49%$1733.85%$421
Abington2.49%$1643.85%$400
Brandywine, Hazleton, Lehigh Valley, Schuylkill, W. Scranton, York, World Campus2.35%$1553.85%$397
Beaver, DuBois, Fayette, Greater Allegheny, Mont Alto, New Kensington, Wilkes-Barre0.00%$03.85%$377
Shenango0.00%$03.85%$370

Upper Division — dollar amounts are higher – same %
Student Fees – increases: Student Initiated Fee — $8 at campuses, $36 at UP (combination of former Activities and Facilities Fee) Information Technology Fee – no increase

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 19


Slide 20: Information Technology Fee

  • First assessed in 1990-91
  • Technology infrastructure supported with IT fee revenue is essential
  • Students want to allocate fee revenue annually

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 20


Slide 21: 2017-18 Tuition Increase Percentages for Select Public Universities (resident)

Connecticut (a)6.90%
Ohio State (a) 5.50%
Nebraska5.40%
West Virginia (b) 5.00%
Colorado (a) (b) 4.90%
Kentucky4.00%
Cornell – Contract Colleges3.75%
PASSHE3.50%
South Carolina3.46%
Iowa3.00%
Utah3.00%
Texas3.00%
Michigan2.90%
Virginia Tech (b) 2.90%
Michigan State2.8%
Pittsburgh2.50%
Temple2.50%
Penn State – Undergraduate Aggregate2.45%
Virginia2.20%
Missouri2.10%
Minnesota2.00%
North Carolina (a) (b) 1.90%
Indiana1.40%
Arizona1.00%
Purdue0.00%
Illinois0.00%
Wisconsin0.00%

(a)  Incoming freshmen only
(b)  Tuition and Fees; Note:  Gathered from legislative, university, and news web sources.   As of July 17, 2017

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 21


Slide 22: 2017-18 Agricultural Research and Cooperative Extension ($000s)

Agricultural College Land Scrip Fund-$51,813
2017-18 Total Budget-$52,313
2016-17 Appropriation Increase--
Inflationary Costs:$1,837-
Program Needs:($1,337) 500

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 22


Slide 23: 2017-18 College of Medicine and Hershey Medical Center ($000s)

College of Medicine-
2017-18 Total Budget$2,463,394
General Funds$146,992
Restricted/Auxiliary Funds101,761
Total College 248,753
Hershey Medical Center2,214,641

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 23


Slide 24: 2017-18 Pennsylvania College of Technology ($000s)

2017-18 Adjusted Budget$151,804
2017-18 Total Budget$152,849
Total Changes 1,045

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 24


Slide 25: Allocation of Temporary Funds ($000s)

This chart shows how temporary funds have been allocated from 2012-2013 through 2016-2017.

Shown in purple, Academic Program Funds are allocations in support of educational priorities, teaching workload, matching grant funding, and other program needs.

Shown in gray, Capital Funds are monies available for new facilities, fuel and utilities, and major maintenance endeavors.

Shown in green, Central Contingency refers to funds available for unexpected costs that arise during the fiscal year to support the University’s operational needs.

Shown in orange, Central Encumbrances are funds set aside for specific purposes, such as investments in and implementation of university-wide enterprise systems.

Shown in yellow, President/Provost’s Strategic & Reserves refers to funding available for various initiatives to support the University’s strategic plan including transforming education, digital innovation, and enhancing health. Other one-time funding is available for discretionary spending in support of priorities such as Start-Up Week, Invent Penn State, and the DreamIt EdTech accelerator.

Shown in blue, Unit Encumbrances are funds for unit-specific purposes, such as start-up, research support, unit capital expenses, and other short-term uses.

Shown in red, Unit Contingency refers to funds available for unexpected costs that arise during the fiscal year at the unit level across the University.

The funding amounts in each category vary from year to year, but since 2012-2013, we’ve seen declines in Capital Funds allocations.

In 2015-2016 and 2016-2017, we saw increases in Central Encumbrances as we worked to implement enterprise systems, such as our new WorkLion human resources portal.

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 25


Slide 26: 2018-19 State Appropriation Request ($000s)

Direct State Appropriation:2017-18 Anticipated AppropriationRequested Increases2018-19 Requested Appropriation
TOTAL APPROPRIATION$318,223$19,769$337,992
General Support$230,43613,826$244,262
Pennsylvania College of Technology22,0742,00024,074
Total Direct State Appropriation252,51015,826268,336
Agricultural College Land Scrip Funds:52,3133,13955,452
Subtotal304,82318,965323,788
Department of Human Services:
M.S. Hershey Medical Center
Medical Assistance Funding (estimate)
13,40080414,204

As described above: March 13, 2018 Senate Agenda, Appendix B, Slide 26


Slide 27: Thank You. Questions or Comments? (All Text Slide)