Florida State UniversityFinancial Planning and Outlook

Chairs and Deans MeetingMarch 15, 2010

As Florida’s Economy Has SlowedFlorida Total Personal Income: 1990 through 2010 (forecasted)

$0

$100,000,000,000

$200,000,000,000

$300,000,000,000

$400,000,000,000

$500,000,000,000

$600,000,000,000

$700,000,000,000

$800,000,000,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Calendar Year

The State’s Unemployment Has RisenFlorida Unemployment Rate: 2004 to 2009

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

Octob

erNo

vemb

erDe

cemb

erJan

uary

Febr

uary

March

April May

June

July

Augu

stSe

ptemb

erOc

tober

Nove

mber

Dece

mber

Janua

ryFe

brua

ryMa

rchAp

ril May

June

July

Augu

stSe

ptemb

erOc

tober

Nove

mber

Dece

mber

Janua

ryFe

brua

ryMa

rchAp

ril May

June

July

Augu

stSe

ptemb

erOc

tober

Nove

mber

Dece

mber

Janua

ryFe

brua

ryMa

rchAp

ril May

June

July

Augu

stSe

ptemb

erOc

tober

Nove

mber

Dece

mber

Janua

ryFe

brua

ryMa

rchAp

ril May

June

July

Augu

stSe

ptemb

erOc

tober

Nove

mber

Dece

mber

Janua

ryFe

brua

ryMa

rchAp

ril May

June

July

Augu

stSe

ptemb

erOc

tober

Nove

mber

2003 2004 2005 2006 2007 2008 2009

Perc

enta

ge

State Revenues Have DeclinedLegislative Appropriations: 1980-81 to 2009-10

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Fiscal Year

$ Milli

ons

Total Appropriations General Revenue

The Drop Has Come in General Revenue

Financial Planning Periods2007-08 to 2011-12

(5-Year period, since spring 2007)

2009-10 to 2011-12 (3-Year current plan)

Budget Crisis Committee

• Lawrence G. Abele Provost and Executive Vice President for Academic Affairs• Rafael Alvarez Associate Vice President for Budget/Planning & Financial Services• Robert Bradley Vice President for Planning and Programs• John Carnaghi Senior Vice President for Finance and Administration• Mary Coburn Vice President for Student Affairs• Kirby Kemper Vice President for Research• Reggie Cuyler Student Government Association Senate President Pro Tempore• Lee Hinkle Vice President for University Relations• Elizabeth Maryanski Associate Vice President for Student Affairs• Thomas McCaleb Professor, Economics• Eric Walker Professor and President, Faculty Senate• Jayne Standley Professor and Vice-chair, Faculty Senate Steering Committee

Base budget of General Revenue and Lottery 2007 = ~$336M

Budget Reduction Challenges• A great deal of money really can’t be reduced

– Health Insurance Benefits ~ $26.2 M– Utilities ~ $25.1 M (E&G only)– Retirement Benefits ~ $22.2 M– Social Security Match ~ $12.1 M– Medicare Match ~ $3 M

• “Fixed Costs” ~ $97.6 M/ $336 M base

Budget Reduction Challenges• 1,018 Employees Earn < $30,000• 50% of all Employees Earn < $50,000• Furlough for the lowest 50% yields• ~ $200,000/day• Furloughing everyone on campus yields• ~ $1.1M/day• Budget reduction by furloughs would reduce everyone’s

salary by about 33%

Actions to Cut ~$56 million• Released all vacant positions back to the state• Released all positions vacated by retirements back to the state• Reduced the budgets of all units on campus• Engaged in the painful process of layoffs• Sought federal stimulus funding for two years of salary plus

benefits to those affected by layoffs

The Funding Reductions Have Dramatically Affected FSU Faculty and Staff

Data represent 07/01/2007 to 02/28/2010

Terminations A&P USPS Executives Faculty 7 Total

Voluntary Separation1 358 486 3 236 1083

Involuntary Separation2 2 114 116

Contract Cancellation /Non-Renewal 3

49 68 117

RIF/Layoff 4 19 15 34

Retirement 58 135 1 74 268

Sub - Total 486 750 4 378 1618

Notified but not Terminated 5 12 21 19 52

Total Number Notified for RIF/Layoff 6

59 77 52 188

FSU All Employee Terminations Summary: August 2007 - February 2010

Footnotes provide definitions

Program Eliminations Were Included For Several Reasons

• Based in part of a need for SACS “teach out” of 2 years with guaranteed funding

• Based use of Stimulus funds for “teach out”• Based on problems with further Across-the-Board cuts

and low on-going funding had already resulted in campus-wide program thinning

• Further Across-the-Board reductions would exacerbate program thinning, diminish quality and result in SCH reductions within current workload efforts

• Lack of Enough Non-recurring to Bridge an Uncertain Funding Gap and Cope with Questions about the Status of Non-recurring Resources

The Next Couple of Years Will Be Challenging

• Further State Reductions are in the Offing• Federal Stimulus Funds will Disappear• Restrictions will Continue to Limit the Use

of Increased Tuition Funds

Federal Stimulus Funding

In addition to filling the $30 million gap with central fund balances, we are also using temporary ARRA appropriations

Status 2009-10* 2010-11

Appropriated $21,182,461

Requested/Expected

$21,182,461 * Funds are expected for only

one more year

Federal Stimulus Funding UseStatus 2009-10 2010-11

Faculty/Staff Headcount 200 200

Other Headcount (graduate students, adjuncts, etc.)

400-500 400-500

Note: Primary use is to allow certain students to complete their degree programs

Other Resources Will Come Into Play

• Increasing revenues from tuition • Increased revenues from the technology Fee• Increased revenues from an aggressive fund

raising effort• Redeploying existing assets will continue

Bridging A Part of the Gap With Various Non-recurring Resources May Be Possible

Balancing State Recurring Reductions > Internal Recurring Reductions

FSU’s 3-Year Plan to 2011-12 (strategy summary)

1. Earmarking future recurring revenues to close interim annual budget gaps and achieve normal budget balancing whereby:Recurring revenues ≥ Recurring internal allocations

2. Use of central non-recurring fund balances and Federal ARRA funds until there is a return to normal annual budget balancing

Where are We Now• Recurring deficit remaining from 2009-10 ~$30 M• Plans to reduce this without further unit cuts or layoffs

– 2008-09– Recurring deficit ~ ($11 M) Reduced from $30M with “new” funds– Non-recurring reserve ~ $40.5 M

• Tuition collections 2008-09 through 2011-12– Legislative increases estimated 8%– Differential increases estimated 7%

Where are We Now (cont.)• Legislative tuition increase is discretionary and

all funds are committed to reducing the deficit.• Differential Tuition increase is restricted to:

– 30% to undergraduate need-based aid– 70% to ‘enhance the undergraduate educational

experience’ and may not be used for graduate students

2010-11• State total revenues are projected to increase

by $1.4 billion, but the legislative debate is about a $1.0 billion to $3.0 billion shortfall

• Large dollar items in the shortfall debate: availability of Federal funds, transfers from Trust Funds, Medicaid, Casino Monies, the Budget Stabilization Fund, Class size, etc.

2009-10 2010-11 $20,000.0 $21,000.0 $22,000.0 $23,000.0 $24,000.0 $25,000.0 $26,000.0 $27,000.0 $28,000.0 $29,000.0 $30,000.0

$21,247.6 $22,441.0

General Revenue Fund Financial Outlook StatementFY 2009 - 10 and FY 2010 - 11

Recurring Funds Available (in millions)

Source: March 9, 2010 General Revenue Estimating Conference, EDR

+5.6%

$29,215.0 in 2007

Senate Higher Education• 6% GR cut to the base budget totaling $111 M• $50.3 M GR added back for ‘Reprogram for State Priority

Areas’• 8% across the board tuition increase• $10.9 M in Recurring GR to replace non-recurring GR

(BOG requested $11.3 M)• $18.8 M in Recurring GR to replace some federal stimulus

funds

House Higher Education• 4.6% GR cut to the base budget totaling $92.3 M• $65 M cut to ‘employee compensation & benefits’

(it is unclear exactly what this is at the moment)• 8% across the board tuition increase

Recovery May Be Delayed Until 2015Non-Medical FSU Operating E&G Scenario:

2000 - 2015

$0

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Fiscal Year

General Revenues Student & Other Fees Lottery Stimulus Total

Scenario Estimates

What can we say at this point about potential additional

reductions and FSU’s potential course of action?

• Although things may change we believe that with current non-recurring funds and the expectation of tuition increases we can continue our current strategy and avoid any cuts to campus for 2010-2011.

Questions?