Planning and Resources Committee Final Report FY 2022


FY2022 Final Committee Report

University Senate Committee on Planning and Resources

 

Committee:

Chair

Nils Gore  (Architecture)

 

Faculty

Geraldo Sousa (English)

Jin Feng (Mathematics)

Suzanne Shontz  (Electrical Engineering and Computer Science)

 

Staff

Christy Imel  (Kansas Public Radio)

Whitney Juneau  (Architecture & Design)

Bradley Schroeder  (Aerospace Engineering)

 

Student

Jordan Smoot 

 

Ex-officio

Nick Stevens (Chief Data Officer, Analytics & Institutional Research)

Jason Hornberger (Senior Associate Vice Provost for Finance)

 

 

FY2022 Standing charges:
 

  1. Participate in the University’s planning processes by communicating with the Provost, CFO, and Provost’s senior staff on matters of capital strategic planning, infrastructure, IT resources, and sustainability, and examine how current financial circumstances (the health of the state economy, current university indebtedness, school-specific fees and charges, etc.) will influence such projects.  Report issues and any recommendations for action to Sen Ex.

 

The Committee met with:  

  1. Jason Hornberger (Vice Provost for Finance) and Nick Stevens (Chief Data Officer) regarding the budget timeline and process for finalizing university budgets;
  2. Jeff Dewitt (CFO) and Ashley Lonnberg (CFO Chief of Staff) regarding the University’s new 5-year strategic Plan; 
  3. Matt Melvin (Vice Provost—Enrollment Management) regarding issues surrounding future enrollment and admissions efforts. (Report at #3, below)

 

 

On 4 February 2022 Vice Provost Hornberger and Nick Stevens met with the committee to share more information regarding the budget timeline and process for finalizing budgets. Key points made in the meeting are as follows:

 

  1. Jason Hornberger began the meeting with a detailed graphic and description of the budget model timeline.

    1. Key Dates:

      1. Feb 14:  20th day census is official semester enrollment
      2. Feb 23:  Revenue estimate (reveals how much money has been spent so far)
      3. Mar 15:  Provost and CFO approval
      4. Apr 8:  Finalize and distribute allocations
      5. May 1:  Tuition and fee proposals to KBOR
      6. June 12:  Final FY23 budget
    2. Meetings held throughout the spring to determine hiring needs
  2. Question:  How’s the new budget model going? How is it being evaluated and tweaked?
    1. Jason:  We’ve transitioned from a “historical” model to a “productivity” model. We are making progress and it will continue to evolve. Developing a single model that takes into account idiosyncrasies of different units, and still works for everyone is a big challenge. Jason will be glad to go into greater detail for the committee if desired.
  3. Question:  Please clarify Operating vs. Capital budgeting.
    1. Jason:  separate budget categories. One upcoming challenge having to do with infrastructure:  KBOR is going to force universities to spend 2% on deferred maintenance. In practical terms this means that KU will need to find ± $35 million in additional revenue to support this requirement.
  4. Question:  What’s best way to understand long and short-term financial impacts of Covid?
    1. Nick:  enrollment declines (which have been significant) have a 4-year impact as that cohort moves through the system. 
    2. Jason: Housing, dining, union, bookstore, parking, athletics all took a big hit and lost money.
    3. Jason can give a more detailed view of that if the committee wishes him too.

 

 

On April, 1, 2022 CFO Dewitt and Ms. Lonnberg reported on updates to the university’s 5 year financial strategic plan that was first revealed in April 2021. (A follow-up video update was given to the university community in March 2022 and can be found here.) Key points made in the committee’s April 1 meeting are as follows:

 

  1. The University’s consolidated (KU Lawrence, KU Edwards, KU Med) FY2021 revenues = $1.4 billion.
  2. Since 2008, the General Fund support has failed to keep up with inflation, resulting in a $52.53  million “loss.” In that same time, enrollment has remained relatively flat, and tuition has, as well.
  3.  In the last 15 years (since 2008), KU has been subject to budget cuts in 12 of those years. About $74 million of those cuts have been permanent base budget cuts.
  4. This year, the governor has proposed additional revenue to the universities, with an understanding that tuition would not rise. (On 4.20.22 the Lawrence Journal World reported that there will be an additional $108 million for higher education.)
  5. In future years, KU will be required to spend an additional minimum amount of funds on deferred building maintenance.
  6. If we don’t change the way we’ve traditionally done business, KU will continue to slide into a deeper structural deficit every year with projections of a $62.5 million deficit in 2026.
  7. To avoid this, the university is embarking on a set of strategic initiatives that will increase revenue and decrease expenditures:
    1. Strategic Enrollment Management (new programs responding to the market)

      1. Projected additional revenues by 2026: $12.5 million
    2. Continuous Improvement (optimized business processes)
      1. Projected revenue by 2026:  $7.5 million
    3. Conventions and Events (new revenue through space use and marketing)
      1. Done in conjunction with City of Lawrence
      2. Projected additional revenues by 2026:  $5 million
    4. All Funds Budgeting (course fees, endowment, KUCR)
      1. Projected additional revenues by 2026:  $10 million (starts immediately)
  8. If these initiatives are successful, the result should be positive budgets rather than deficits. Projected revenue surplus by 2026: $27.8 million.
  9. Other initiatives:
    1. Competitive pay study for all university employees and an implementation plan
    2. System to reward high-performing employees
    3. Long range-plan for infrastructure, facilities and technology
    4. Reaccreditation and obligations to Higher Learning Commission
    5. Development of KUMC strategic and financial plan
  10. CFO Dewitt’s March 2022 presentation can be found here.

 

 

 

 

  1. Host meeting with Provost, CFO, and the Provost’s senior staff to review planning reports and budgetary submissions made by the various units.  Report issues and any recommendations to SenEx for consideration.

 

The Committee did not review planning reports and budgetary submissions for specific units.

 

  1. Monitor enrollment trends and changes in tuition plans and their potential effects on enrollment and revenue generation.

 

On 25 March 2002  Vice Provost Matt Melvin reported the following: 

  1. There are significant challenges in the future of enrollment and admissions, including:

    1. Demographic changes with a decline in KS high school graduates
    2. Ethnic/racial shifts to a more diverse set of future potential enrollees
    3. A declining percentage of KS students who choose to attend college
    4. Declining “college readiness” benchmarks (as defined by ACT score)
    5. Declining enrollments in community college headcounts
    6. Declining international student enrollments
  2. Though some of these may be temporarily affected by the covid pandemic, others are trends that are independent and long-term (i.e., based on demographics).
  3. A primary goal of the university is to attract/enroll students who have the 1) desire, 2) qualifications, and 3) financial ability to attend college.
  4. Efforts of the enrollment management team to attract these students center on:  enhanced lead generation and inquiry cultivation, website optimization and customer relationship management  (CRM) maximization, academic program diversification and new program development, pricing and aid optimization, enrollment and revenue modeling and forecasting, retention and completion, and performance management.
  5. Understanding the market:  What potential students are seeking:  job/career prep and experiential learning opportunities.
  6. Optimizing aid packages to attract promising students who need financial aid.
  7. Given the above it will be important, in the future, for KU to:
    1. Not count on increased market penetration for future enrollees;
    2. Develop a more market-centric academic program offerings (online, adult-centric, career-centric, transfer-friendly, etc);
    3. Use new budget model, start-up funding and leadership to provide incentive for academic units to engage;
    4. Employ a more disciplined and rigorous approach to identifying, developing and approving new programs  that are attractive to future students
  8. Current efforts this year appear to be promising with some indication that negative covid impacts may be retracting.

 

 

FY2022 Specific charges:

1. Follow up on the implementation and analysis of the Budget model and make recommendations.

See discussion above, regarding meeting with Vice Provost Jason Hornberger and Nick Stevens. The committee received only general information, but no specific analysis, because it’s still a “work-in-progress,” and due to covid disruptions.  

 

2. Meet with the CFO in Fall 2021 and spring 2022, to obtain update on the universities strategic financial planning, and projected growth.

See above.

 

Recommendations for next year:

Include the same specific charges, with emphasis on how the budget model is working.

 

Respectfully submitted by Nils Gore.