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University Budget Advisory Committee
November 5, 2015
Summary

In attendance: Dr. Jeanne Colleran; Lisa Cornelius (for Mark McCarthy); Dr. Roy Day; Jennifer Dillon; Dr. Dwight Hahn; Dr. Dan Kilbride; Rich Mausser; Dr. Jerry Weinstein; Brian Williams; David Wong (Staff Council representative).

• Rich Mausser opened the meeting by welcoming everyone to the first University Budget Advisory Committee (UBAC) meeting of 2015-16. He explained that the charge of the UBAC was evolving with input from the Strategic Budgeting Task Force (SBTF). The focus of the SBTF is examining the University budgeting process and making recommendations for change. The first recommendation has been for the acceleration of the budgeting cycle. The University will seek Board of Director approval of the 2016-17 Operating Budget in March, 2016 which is seven months earlier than the current year 2015-16 budget which was approved at the October 2015 Board meeting.
• Rich Mausser reviewed the information that was shared with the Finance Committee on October 6, 2015. The University ended the 2014-15 fiscal year with a $1.1 million operating deficit. The preliminary deficit budget presented to the Board in May 2015 was rejected. Work was done by the Senior Leadership Team throughout the summer to reallocate funds and arrive at an operating budget with a $315,000 surplus which was approved by the Board in October. The first operating forecast for the year presented to the Finance Committee shows the surplus deteriorating somewhat to break-even due to an enrollment decline in both fifth-year undergraduates and in most graduate programs offset by increased fundraising revenue and savings from payroll float.
• The Board has asked for a preview of the 2016-17 budget at the December, 2015 meeting as well as assumptions for the following couple of years. Rich Mausser presented a framework of key budget assumptions that drive the University budget including freshman enrollment, retention rates, tuition and fees, room and board rate changes, impact of endowment spending policy changes and increases in various expense categories including salaries and benefits. After much discussion, the UBAC was in reasonable agreement that the assumptions were acceptable.
• Group discussion continued about how the operating surplus could be increased to allow for funding of strategic initiatives. Potential improvement in retention, an increase in the number of transfer students and in non-traditional revenue were discussed. The on-going work of the SBTF on the process for academic and non-academic program prioritization was mentioned as critical to the University to free up funds for new initiatives.

University Budget Advisory Committee
December 4, 2015
Summary

In attendance: Dr. Roy Day; Jennifer Dillon; Dr. Dwight Hahn; Dr. Dan Kilbride; Rich Mausser; Mark McCarthy; Dr. Elizabeth Swenson; Brian Williams; David Wong (Staff Council representative).

• Rich Mausser opened the meeting with discussion of the information that will be shared with the Finance Committee on December 8, 2015. The budgetary framework assumptions and resulting four year operating budget projections to be presented to the Finance Committee are the same as discussed at the prior UBAC meeting November 5, 2015. He stated that the primary issues to be discussed were the assumptions about faculty and staff raise pools and the level of funding for strategic initiatives. Specific strategic initiatives have not yet been identified by the USPG. Initiatives will either be funded through reallocation of existing budget dollars or through new funds to the extent they are available. If new funds are requested, the initiative will need to be reviewed by the UBAC. A question was raised about the source of funding for the new minority faculty post-doc program. Rich Mausser indicated that it was likely that funds would need to be reallocated within the academic budget to fund this new program.
• Capital spending and budgeting is another area reviewed and approved by the Board Finance Committee. Rich Mausser distributed a package to the group including a five-year high level capital spending overview, 2015-16 capital project budgets for both Facilities and Information Systems and lists of potential 2016-17 capital projects for both areas. Facilities uses a five-year replacement plan for projecting work and spending across the campus. Each year the needs are prioritized and considerations such as the schedule of summer events on campus, contractor availability, the potential for savings from combining similar projects, and the amount of time available for managing multiple projects are weighed to determine the final list of projects. IT projects, many of which support the currency of technology on campus, are prioritized as well. The potential project list is reviewed by the IT Steering Committee before it is finalized. Capital budgets have not been discussed with the University Budget Committee in the past and it was suggested that perhaps the UBAC should play a role in the review process. The 2016-17 capital budgets will be presented to the Finance Committee at the March 8, 2016 meeting.

University Budget Advisory Committee
February 26, 2016
Summary

In attendance: Dr. Jeanne Colleran; Dr. Barbara D’Ambrosia; Dr. Roy Day; Jennifer Dillon; Dr. Dan Kilbride; Rich Mausser; Mark McCarthy; Dr. Elizabeth Swenson; Dr. Jerry Weinstein; Brian Williams; David Wong (Staff Council representative).

• Rich Mausser opened the meeting with an update on the current year forecast. Spring retention was lower than anticipated, specifically in the freshman and sophomore cohorts, resulting in a loss of net tuition revenue and room and board revenue. Fortunately, savings in several areas were identified that offset the revenue declines. The favorable medical expense trend has continued producing additional savings and the relatively mild winter temperatures and low natural gas and electricity rates are providing savings on utility expense. Additionally there is some interest savings due to the recent 2006 bond refinancing. The net impact of the revenue and expense changes is a forecast that remains at breakeven for the 2015-16 year
• Rich Mausser moved on to discuss the proposed 2016-17 budget which will be reviewed by the Finance Committee on March 8, 2016 and presented to the full Board the following day for approval. The University has accelerated the budget process this year resulting from a recommendation from the Task Force on Strategic Budgeting. The proposed budget is based on the budgetary framework assumptions reviewed at the last two UBAC meetings with a couple of changes. The budget starting point has decreased due to the continuing impact of the spring retention decline. Volatility in financial markets has reduced the value of the endowment so a reduced amount of endowment earnings is included in the proposed budget. Additional funding for the new post-doctoral teaching fellowship program and for increased Title IX staffing along with some projected restructuring savings are included in the proposed budget. The result of these changes is to reduce the previously projected budget surplus over roughly $383,000 to zero or breakeven. It is hoped that the BOD will approve this balanced budget. Another Finance Committee agenda item is the 2016-17 capital budget. Project lists for Facilities, Information Technology and for the JCU Fleet were shared with the UBAC.
• The last topic of discussion was improving the linkage between planning and budgeting. Rich Mausser provided a draft handout created by the University Strategic Planning Group on the efforts underway to improve in this area. Due to time limitations, the draft was only briefly discussed, but will be included again as a future meeting topic.

University Budget Advisory Committee
May 13, 2016
Summary

In attendance: Dr. Roy Day; Jennifer Dillon; Rich Mausser; Mark McCarthy; Dr. Elizabeth Swenson; Dr. Jerry Weinstein; Brian Williams; David Wong (Staff Council representative).

• Rich Mausser opened the meeting with an update on the current year forecast which was little changed from the previous forecast projecting a breakeven result after allowing for $2,000,000 in funding for the reserve for capital expenditures. Discussion quickly moved to enrollment expectations for the fall 2016 semester. The number of deposited freshmen has not yet reached the budget target of 765, but there is hope the goal will be reached by the end of the summer. One noted trend is growth in the number of freshman commuters to roughly 100 compared with 60 in the prior fall. This could have a negative impact on room & board revenue if the trend is not reversed.
• Rich Mausser moved on to discuss the 2016-17 budget approved by the Board at the March meeting. He provided four years of budget projections based on various assumptions discussed at earlier UBAC meetings. The 2016-17 budget shows revenue equal to expenditures producing a breakeven result. Risks to the budget include potential decline in net tuition revenue if the freshmen class does not reach its 765 target, deterioration in room & board revenue due to the growth in the number of incoming freshman commuters and the expected pressure on salary expense resulting from the impending release of new Federal Labor Standards Act requirements. It is expected that the minimum pay level for an employee to be considered exempt from the requirement to be paid overtime will increase to around $50,000 from its current level of $23,660 and could be effective as early as September 1, 2016. At this point it appears that as many as 110 University employees could be affected. A recent survey was conducted to assess the level of overtime that potentially affected employees typically work to project the financial risk to JCU. Currently $200,000 to $300,000 in annual additional salary expense is being projected. [Note: the final ruling was made May 18, 2016 by the Department of Labor that set the salary threshold at $47,476 and is effective December 1, 2016].
• The last topic of discussion was improving the linkage between planning and budgeting. There was conversation about the work of the Strategic Budgeting Task Force (SBTF). One task force recommendation was that the annual budget process be accelerated. The recommendation was approved and implemented with the 2016-17 budget presented to and approved by the Board in March as opposed to October which was the case in the past several years. The SBTF has made progress in defining and developing some academic analytics and in recommending a template for non-academic program reviews.