Fiscal Year 2018 Budget Development Update
To the Metropolitan State community:
As previously promised, I am writing to bring you up to date on the university’s financial status and annual process of preparing and implementing our operating budget. The budgeting approach we are taking for fiscal year 2019—whether we call it “outcome-focused,” “requirements-based,” or “performance-based”—links our available funds to the activities that lead to achieving the highest-priority outcomes in light of our mission, vision, values, and strategic goals.
This work is the pathway for turning our mission and objectives into financial resource plans that allow us to serve our 11,300-plus students.
In the context of our ultimate goal of student success, our strategic priorities of growth and operational sustainability provide structure and guidance for prioritizing our finite resources to fulfill our academic and administrative requirements. The process of refining these plans is supported by the year-round work of gathering information on program goals, activities, performance measures (including recruitment, retention, and graduation), dependencies, and resources.
Our planning builds on the immediate past. We finished FY2017 with a positive balance of $950,000, after making a $750,000 annual contribution toward restoring our fund balance, as required by the Board of Trustees. This small surplus was generated because enrollment was slightly higher for the year, salary savings were slightly higher than anticipated and everyone was a good steward of our budgeted funds. Of this $950,000, approximately $230,000 was used to construct the Testing Center, which had been in the planning stages for about a year, and $285,000 was used to improve our university’s information security posture. The remainder is being held in reserve in the event of an adverse decision in the legal appeal of the “393 Bates” property purchase price.
We are awaiting the results of this year’s system financial audits. We expect to receive a “clean” report in the weeks ahead, and will make any process adjustments that are indicated by the consultants.
For the current fiscal year, FY2018, we projected total revenues of $77.1 million, based on an estimated enrollment decline of 1.5 percent, a tuition increase of 4 percent, and a $3.1 million increase in our state appropriation resulting from changes to the allocation formula. These revenues have been deployed as follows:
- $60.5 million distributed to the divisions’ operating budgets
- $14.2 million to a centralized fringe benefit cost center, so that departments don’t have to absorb those expenses, which often fall unevenly on individual cost centers
- $1.75 million toward debt service
- $750,000 for the Board-required contribution to our fund balance
- $600,000 shifted to FY19, because the legislature funded FY19 at a lower level than FY18. Without the prudent movement of these funds to FY19 we would need to cut at least $1.2 million from FY19, in order to fully meet that year’s commitments.
I am pleased to report that we continue to improve our budgeting process and that preparation of the FY19 budget has already begun. We are again planning and budgeting conservatively, in light of regional enrollment trends that affect us, and in light of uncertainty about the impact of collective bargaining agreements that have yet to be settled. We are confident that we will be ready to engage our campus community in discussion of our challenges and choices by February.
In the spirit of the continuous improvement model that strengthens our university and undergirds our regional accreditation, I am pleased that our budget processes, from data analysis to modeling to planning and implementation, are becoming more detailed, more accurate, and more expressive of our institutional objectives and values. It’s a work in progress, but moving steadily towards greater transparency and clarity.
While this work continues, I want to wish each of you a restful and renewing holiday and a successful last few weeks of the semester.
President Virginia "Ginny" Arthur, JD
Metropolitan State University