Thank you to everyone who attended one of the two Budget/Audit Forums we held for the campus community at the Dayton’s Bluff and Midway locations on Nov. 29. WebEX was also available and several people participated electronically.
We know that many people were not able to attend or participate electronically, so we are sending the attached PowerPoint slides to provide everyone with an overview of our financial picture.
While many of the slides are self-explanatory, we’d like to emphasize the following points:
- The audit of our FY 16 financial statements was successful and resulted in an unqualified opinion. There were very minor issues brought to our attention for action.
- Our reserve funds were rapidly depleted over three fiscal years (FY 14-16). Draw-downs totaled $11.4 million, nearly half of our peak reserve balance in FY 13.
- While $6.8 million of these reserve draws were used to cover unanticipated construction costs, primarily for the Student Center and parking ramp, nearly $4.6 million was used to cover operating deficits in those years, a fact that was not well understood until our recent analysis of the draw-down.
- Of the $11.8 million still held in reserve funds, approximately $8 million either must be used to meet our minimum reserve requirements of $3.6 million, or they represent other restricted reserves, such as IFO and MSUAASF professional development fund carryovers, CE/CT, and Advance IT appropriation carryovers.
- The rapid drawdown of reserve funds triggered financial oversight by the Minnesota State Board of Trustees and a financial management plan that requires us to add at least $750,000 to reserves each year for five years. We have four years to go (FY 17-20) and we cannot draw against reserves to fund operating expenses.
- For FY17 we are on target to meet our financial goals but the pain of target-based budgeting and across-the-board reductions have illustrated a need for a more nuanced and strategic budgeting approach.
- The preparation of the FY 18 budget is underway.
a. The president and CFO have convened a Budget SWAT Team to understand the intricacies of the current budgeting process and to determine sound and clear budgeting principles. We thank Dina Inderlee and Mike Hagerty for their work in support of this effort.
b. The Strategic Enrollment Management Council is providing enrollment estimates to help us model tuition revenue for next year.
c. We will begin a phased implementation of “requirements based” budgeting that will work to match budget to strategic priorities and actions.
d. There are many unknowns affecting the preparation of the FY 18 budget, including the determination of the state appropriation from a new legislature, the actual enrollment, and the potential for tuition increases. As a result, we will budget conservatively and plan for incremental funding if and when we receive additional revenue.
The revised allocation formula adopted by the Board of Trustees in November 2016 will benefit Metropolitan State through the extra weighting (1.1x) of students who are Pell-eligible and/or first-generation students, and the use of headcount rather than FYE for the calculation of the student services appropriation. These benefits will be phased in over the next two years.
We appreciate your interest and participation and welcome your continued feedback or suggestions. We will continue to hold forums and communicate with you in a variety of ways as the budget process unfolds.