FY2005 Budget Development Update
For Board of Regents July 8, 2004
This document is a brief update on the University s process, challenges and outcomes for the development of its FY05 annual operating budget. A more detailed Executive Summary will be provided to the Board of Regents in September, when the FY05 budgets are formally submitted for approval.
As we began the development of our FY05 budget, the University was entering its fourth year of having the University Budget, Planning & Analysis Committee (UPBAC) assume responsibility for long term planning and the development of our annual operating budget. The Committee began its public meetings in December, 2003. The Committee s draft budget plan was reviewed and discussed during a public open forum on April 29, 2004. The Final FY05 General Operations Budget Plan was approved by President Gamble on May 6, 2004.
UPBAC has continued to fulfill the expectations President Gamble established when he appointed the original twenty-one members. All discussions and decisions of this Committee are conducted in public meetings and recorded on a dedicated web page. In past years, UPBAC developed several documents that serve as guides for our Committee s actions. These documents include the University Mission Statement, the General Principles for Resource Allocation Decisions, the Delaware Study of nationwide Instructional Cost/Productivity comparisons, established Key Performance Data, and the University s FY04-05 Strategic Priorities.
This year, UPBAC created the Montana State University-Bozeman Five Year Vision, a document which establishes a clear description of, and strategic plan for, what the University will be like in five years, assuming current successful trends continue. This description is divided into six different but often overlapping areas: 1) Student Body, 2) Faculty and Staff, 3) Curriculum, 4) Research and Creativity, 5) Partnerships and Outreach, and 6) Physical, Technological, and Financial Infrastructure. The detailed tactical plans for fulfilling the University s five year vision will be developed over the course of FY05. However, the most significant elements of that vision are reflected in the documents previously created by UPBAC.
Last year the following FY04-05 Strategic Priorities were established, with a focus on President Gamble s vision of student access and success. These have not changed for FY05.
- Quality Enhancements
- Other Student Access & Success Priorities
At the same time, we also identified the following set of challenges, opportunities and commitments that the University must confront in this biennium and beyond.
- A commitment to refine our strategic plan.
- Recognition that as State funding continues to stagnate or decline, tuition rates will increase.
- A significant decline in the number of in-state high school graduates in the near term future.
- The imperative to maintain our infrastructure of facilities, technologies and support services.
- The desire to fashion efficient and beneficial partnerships among all units of the University.
- A commitment to sustain Bozeman s FY04/05 strategic investments at other campuses.
- The emergence of price sensitivity and/or resistance to the price of tuition in our nonresident student market.
There are also some very specific FY05 challenges that UPBAC had to address during its development of the coming year s budget. These included the following:
- A significant decline in State funding, due to MSU s front-loading of general fund in the first year of the biennium.
- The initiation of new MUS fee waiver programs for Employee Dependents and for High School Honors Students.
- The implementation of a complex, performance-based tuition assistance program for both resident and non-resident freshmen students.
- Significant increases in employee benefits costs, as well as utilities.
For FY05, the University s general fund distribution will decline by about $4.8 million, and tuition collections are projected to increase by about $6.8 million, resulting in an overall increase in net revenues of about $2.0 million, to a total of approximately $96.27 million.
Nearly all of the University s Base Budget commitments for the beginning of FY05 are for the following fixed costs:
Salary increases $552,767
Insurance/benefits cost increases $973,833
Utilities cost increases $868,733
Library acquisitions cost increases $216,238
The University also reserved $1,447,065 for an Enrollment Contingency. If enrollment targets are not met, the funds in this reserve will not be available for distribution across campus. However, if enrollment targets are met, these funds will be invested in several program enhancements, including MSU s new Core 2.0 program, added faculty lines, additional library acquisitions, and enhanced information technology support.
FY05 is going to be a banner year for MSU-Bozeman. The University is making great progress on the tactical strategies for achieving the goals in its five-year vision, as well as continuing to refine its planning, budgeting and analysis process. We are committed to targeting funds for strategic priorities, growth programs, and essential infrastructure needs. But most of all, the University community is excited about the future, and our campus is embracing the concept that everyone plays a role in ensuring student success.
Our students have chosen MSU because of its reputation for excellence in the classroom, for offering undergraduate and graduate student opportunities in research and emerging technologies, and for preparing graduates to be extremely competitive and highly marketable in their chosen career field. In this year, and for the future, our focus will continue to be to fulfill our student s expectations for continued high quality academic programs.