Welcome!!
June 11, 2014 – Campus Forum
President Susan Martin & CFO John Lumm
◦ EMU operates in two difficult markets
◦ Both core region (greater Detroit) and broader
region (Michigan-Ohio-Indiana) are:
 Marked by slow employment growth
 Historical population decline
 Dampens growth of traditional freshman
◦ Several large competitors, with high and established
market share
◦ Near market saturation for many degree programs
◦ Core region:
 8.6% of Bachelor’s degrees
 7.5% of Master’s degrees
◦ Broad region:
 4.4% of Bachelor’s degrees
 4.7% of Master’s degrees
◦ In the period 2002 to 2011 EMU had:
 A slight decline in bachelor’s degree market share
 A slight increase in master’s degree market share
◦ EMU offerings are well aligned towards high-growth
& high-wage occupations
EMU Mission, Vision, Values

MISSION: (APPROVED/ISPC 10-26-2012)
EMU enriches lives in a supportive, intellectually dynamic and diverse community. Our
dedicated faculty balance teaching and research to prepare students with relevant skills
and real world awareness. We are an institution of opportunity where students learn in
and beyond the classroom to benefit the local and global communities.

VISION: (APPROVED/ISPC 10-26-2012)
Eastern Michigan University will be a premier public university recognized for studentcentered learning, high quality academic programs and community impact.

CORE VALUES: (APPROVED/ISPC 11-13-2012)
Excellence – We provide an exceptional environment to our faculty, staff, and students.
We improve our performance continuously and strive to be the best in everything we do.
Respect – We care for our people, communities and the environment and show respect
for the dignity of the individual.
Inclusiveness – We create an environment that supports, represents, embraces and
engages members of diverse groups and identities.
Responsibility – We are accountable – individually and in teams – for our behaviors,
actions and results. We keep commitments.
Integrity – Integrity and transparency are critical to our institutional effectiveness. We
pursue the highest level of personal, intellectual, academic, financial and operational
integrity within the University community.
Strategic Themes
Student Engagement and Success
Descriptor: Foster an environment where students have the greatest opportunity
to engage in purposeful learning and involvement so that they can successfully
meet and maximize their education goals.
High Performing Academic Programs and Quality Research
Descriptor: Support and foster high quality academic and research programs that
serve a demonstrated need in the community/region.
Institutional Effectiveness
Descriptor: Ensure EMU has the systems and processes in place that support the
mission of the institution as efficiently as possible, while fostering innovation,
diversity and ethical conduct in the workplace.
Service and Engagement
Descriptor: Support community engagement and collaborations that create a
mutually beneficial exchange of knowledge and experiences.
600,000
550,000
58,310
59,225
500,000
60,688
65,193
62,143
66,197
63,806
61,219
471,339
473,562
62,002
62,644
450,000
509,713
491,598
485,600
473,649
461,559
470,327
479,990
450,557
400,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Undergraduate
Graduate
100%
90%
10.3%
10.8%
11.1%
11.6%
89.7%
89.2%
88.9%
88.4%
11.8%
12.2%
12.3%
12.0%
87.8%
87.7%
88.0%
11.9%
11.4%
80%
70%
88.2%
88.1%
88.6%
60%
50%
40%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Undergraduate
Graduate
SCH by College in 2006
34,294
SCH by College in 2013
33,883
CAS
51,748
68,798
COB
72,833
COE
327,435
59,278
CHHS
COT
48,341
322,269
59,313
30,000
25,000
20,000
15,000
EMU
CMU
GVSU
Fall 08 Total
Fall 09 Total
Fall 10 Total
OU
Fall 11 Total
Toledo
Fall 12 Total
WMU
Fall 13 Total
25,000
20,000
15,000
10,000
EMU
Fall 08 UG
Fall 09 UG
CMU
GVSU
Fall 10 UG
OU
Fall 11 UG
Toledo
Fall 12 UG
WMU
Fall 13 UG
8,000
6,000
4,000
2,000
EMU
Fall 08 GR
CMU
Fall 09 GR
GVSU
Fall 10 GR
OU
Fall 11 GR
Toledo
Fall 12 GR
WMU
Fall 13 GR
7,000
6,000
5,000
4,000
3,000
EMU
CMU
GVSU
2011
2012
OU
2013
WMU
EMU Budget Update – June 2014
• Twelfth in a series of budget forums and discussions with President
Martin that began in the Summer of 2009
• Focus of budget forums is on Eastern’s budget, financial position
and external economic factors that are impacting us
Today’s Topics
• Current Financial Position
• Fiscal Year 2013-14 – Outlook
• Fiscal Year 2014-15 – Budgets – General, Auxiliary, Capital Funds
o Budget development context
o Adopted budget key assumptions and major actions
• Q & A / Open Discussion
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Current Financial Position
• Five years from FY2008-09 through FY2012-13 represented period of unprecedented
campus capital investment – over $220M invested
• Capital investment contributed to stabilizing/growing enrollment in challenging
competitive environment, but as expected, additional borrowing and use of reserves
adversely impacted Eastern’s financial position and Balance Sheet
FY2008-09
FY2012-13
Long Term Debt
$ 146M
$ 240M
Unrestricted Net Assets
$ 54M
$ 25M
• Moody’s (June 2013) – rating affirmed
• Standard & Poor’s (September 2013) – rating downgraded
• Higher Learning Commission (HLC) (August 2013) – Notification of potential
Financial Panel review
Financial Challenge
• Improve financial position and balance sheet while at the same time increase
ongoing funding for capital investments to at least $15M annually
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Financial Position – Rating Agencies
Views
• Similar comments cited in Moody’s and S&P’s 2013 reviews and
reports
Positive Factors
• Stabilized enrollment and large enrollment base
• Expense control and cost containment actions
• Manageable debt service burden at 5% of total operating expenses
and broad diversity of revenues available to cover debt service
• Net tuition revenue growth
Negative Factors
Full-accrual operating deficits although positive on cash basis
High financial leverage - reserves to debt
Slim financial resources - reserves to annual expenses
Declining demographics of graduating high school students in
Michigan combined with heavy reliance on in-state students
• Diminished, strained state funding environment
•
•
•
•
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Current Year Outlook
• FY2013-14 year ends June 30, 2014
• Operating deficits last two years FY2011-12 and FY2012-13 – following
three years of surpluses
General Fund ($296M budget)
• Projected Credit Hours – 533,500
o Small (0.8%) decline vs. FY13 but 1% increase budgeted
o Shortfall in Winter - higher Dec. graduates, lower new students – and
Spring
o Net revenue below budget for SCH and Financial Aid expense
• Expenditures in total at or below budget
• Deficit expected in General Fund
Auxiliary Funds and Capital
• Auxiliary Funds ($44M budget)
o Surplus expected – housing, dining revenue over budget
• Capital ($9M budget)
o On track to budget
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FY2014-15 Budget Development Context
Credit Ratings and HLC
• FY15 budget must take steps to improve financial performance and position
• Restoring operating surpluses demonstrates commitment to financial
improvement and is first step in long-term financial position improvement
GASB #68
• Accounting rule change requiring that the State’s net MPSERS pension liability
be reflected in participants financial statements
• Significant (non-cash) impact to Eastern’s financial statements beginning in
FY2014-15
Enrollment and Credit Hours
• In today’s highly-competitive Higher Ed environment in Michigan, not realistic
to assume continuing enrollment growth annually in budgets
• Realistic credit hour and revenue assumptions significantly improves
probability of year-end surpluses to build adequate reserves
Focused Priorities and Resource Re-Allocation
• Challenge to balance budget at lower credit hours while supporting priorities of
successful PA program launch, enrollment growth, safety/security, technology
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FY 2014-15 Budgets Approved by Board
of Regents
• Yesterday, FY15 budgets adopted by Board of Regents
o General Fund Operating
o Auxiliary Funds
o Capital Spending
General Fund
(millions)
Revenues
Tuition and Fees
State Appropriation
All other revenues
Total GF Revenue
Amount
Percent of Total
$ 219.8
72.4
10.4
$ 302.6
73%
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3
100%
Expenditures
Personnel – Salaries & Benefits
$ 194.3
Financial Aid
43.8
SS&M
36.3
Utilities, Debt Service, Asset Preserv.
21.8
All other expenses and transfers
5.7
Total GF Expense
$ 301.9
64%
14
12
8
2
100%
Budgeted Surplus
$
0.7
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FY 2014-15 General Fund Highlights and Key
Assumptions
•
Student Credit Hour assumption – 524,880 hours
o 8,620 hours below FY2013-14 projection; 19,146 below FY2013-14 budget
o New students in Fall – 2,600 FTIACs, 1,850 Transfers, 1,200 Grad
•
Tuition & Fee rate increase of 3.2% (State cap to receive performance funding)
o Program fee increases higher for some 300 level courses and above
•
State funding increased by $4.8M
•
Total GF revenue up $6.2M (2.1%) compared with FY13-14
•
Total GF expenditures up $5.5M (1.9%) - $700K surplus budgeted
•
Expenditure Increases:
• Financial Aid - $4.6M (11.7%) increase
• Public Safety - $820K for additional officers and associated expenditures
• Athletics – higher Game Guarantee revenues fund $550K operating expenditure
increase and $500K capital for Rynearson turf replacement
•
Significant cost savings – over $5M in General Fund, $800K Auxiliaries
•
Increased operational - generated funding for capital, but still not adequate
•
FY15 operating budgets more robust
o Realistic credit hours
o Alignment of credit hours and associated financial aid
o Full-accrual breakeven with 1% contingency
o Consistent with University Budget Council Recommendations
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FY 2014-15 Auxiliary and Capital Budget
Highlights
Auxiliary Activity Funds
• Room & Board rate increases of 4.0% approved by Board of Regents in
March; Apartments re-structured to contract-based similar to
residence halls
• Auxiliary fund revenues of $49.2M include Dining $17.7M, Residence
Halls $16.2M, Apartments $3.8M, Parking $3.7M, and all other $7.8M
Capital Budget and Three Year Projection
• Approved FY15 capital budget of $12.6M. Priority placed on supporting
CHHS growth, campus technology, and safety and security. Over 70% of
total capital spending being invested in these priority areas, including:
o Rackham Renovations
$ 4.8M
o Campus technology
$ 2.7M
o Safety and Security
$ 920K
o PA Program
$ 750K
• Three year capital spending projection of $36.9M with academic facility
enhancements and technology investment accounting for about half
($18.8M). Next major residence hall renovation planned is Wise Hall in
Summer of 2015.
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Employee Total Compensation Changes
The budget includes the following total compensation changes during the
next fiscal year for non-bargained-for employees (AP, AC, CA, AH
classifications):
Retirement Plan
• Effective November 1, 2014, the EMU contribution for employees hired
prior to January 1, 2013 will be 9%; for employees hired on or after
January 1, 2013, the EMU contribution will be 5% and if the employee
contributes 4%, EMU will match that 4% (maximum EMU contribution of
9%)
Health Care Cost Sharing
• Effective January 1, 2015, employee cost sharing of health care costs
will be increased from approximately 9% to 12%
Merit Increase
• The budget includes a 2% merit pool effective November 1, 2014
Human Resources will be scheduling information sessions in the month of
July including group and individual sessions
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Summary and Look Ahead
• Improving Eastern’s financial position is a high priority that will take
time to fully achieve. We are in a highly competitive Higher
Education market in Michigan and the pace of improvement in our
financial position must be balanced with the University’s other
program and capital needs.
• The FY15 budget takes an important step in that direction. With
more conservative revenue assumptions and budgeted surpluses,
the probability is significantly higher of realizing surpluses and
adding incrementally to our reserves.
• Future University budgets will need to build on the progress made
with the FY15 budget. Identifying and implementing both cost
savings and revenue enhancements will be required – in either case,
innovation will be essential.
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Comments……Questions?
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