Budget forum sees money directed at programs, aid

President Susan Martin and Chief Financial Officer John Lumm held a second open forum meeting to discuss Eastern Michigan University’s budget for fiscal year 2010-11 last Thursday. Lumm said administration at EMU believes in “transparency and open communication” with the campus community and saw a need to hold forums to discuss key issues. Martin and Lumm explained the budget in detail and addressed issues raised by faculty members and students.

Martin discussed the matter of whether the University Budget Council was included on decision-making in regards to the budget and the zero initiative in a short interview with the Echo.

The budget council is a group of faculty, staff, administrators and student representatives from key areas that gives recommendations and guidance to the Strategic Operations Council on the process, procedures and development of the university budget.

In an e-mail obtained by the Echo, a member of the budget council said the approved 2010-11 budget and zero tuition increase were not discussed with the council. The member also said the council’s input wasn’t received.

Martin said the statements were “not true” and the council was included in figuring out the budget.

“On March 30, we called a special meeting with the budget council and we gave them a spreadsheet on it,” Martin said. “We asked them for their input on how to prepare the budget, including tuition and fees. We asked them for input.”

Martin also addressed questions about the possibility of trailers being used for classrooms during the construction of Pray-Harrold as discussed at the Board of Regents meeting last Thursday by John Donegan, chief of operations for EMU’s Physical Plant. Martin said the usage of trailers for displaced classrooms is highly unlikely.

“The Board of Regents doesn’t want to see trailers,” she said. “Only if any other solution is not possible. We think it’s going to work. We think we’re in good shape. I don’t think we’ll use trailers.”

Lumm said EMU’s overall financial outlook for the current fiscal year 2009-10 is positive and the balance sheet is stable, but financial leverage is high.Student credit hours for 2009-10 increased 4.3 percent from last year, and revenue was up 5.9 percent.

He also said EMU has an operating surplus amounting to between $5-$6 million. Forty percent of the surplus was reinvested into high-priority, one-time initiatives. Academic affairs received $1 million; the Invest,Inspire campaign received $700,000 and student affairs and enrollment management, IT, athletics and communications received a portion of $600,000. The one-time initiatives totaled $2.3 million. An additional $1.6 million will be allocated to these initiatives contingent upon EMU achieving revenue budgets. Lumm pointed out four key factors used by rating agencies to assess EMU’s financial health. Positive points include EMU’s surplus and enrollment growth, which reversed a five-year trend of declines.

“[The surplus] shows folks aren’t spending more than they have,” Lumm said. EMU’s relatively low reserves and high debt in comparison with benchmarks, the state’s economic climate and higher education funding were all noted as potentially negative items.According to Martin, the appropriations will be affected by a number of factors including who becomes the next governor.

“We simply do not know what to expect,” she said.

Although there is a great deal of uncertainty in the capital appropriations budget, Martin said she is optimistic EMU will be OK in light of potential cuts.For the 2010-11 budget, tuition and fees will account for $198.6 million or 71 percent of the general fund revenues and state appropriations will account for $75.8 million or 27 percent of the revenue. The bulk of the general fund expenses will come from salaries and fringe benefits for a total of $187.7 million or 66 percent and financial aid accounts for $30.4 million or 11 percent. The 2010-11 budget’s general fund revenues and expenditures is balanced at $280.9 million.In addition to the operating budgets, EMU has capital expenditures for fiscal year 2009-10 through fiscal year 2012-2013 for a total of $195 million. Academic facility enhancements for large projects such as Mark Jefferson Science Complex, Pray-Harrold and smaller projects on Halle Library and Fletcher, total $137.9 million or 71 percent.

Housing facility enhancements such as replacing windows and Hoyt renovations will total $13.7 million, and athletic facility enhancements will account for $4.4 million. Infrastructure, asset preservation and energy savings projects will receive a total of $34.7 million or 18 percent of the capital expenditures. Another aspect of the 2010-11 budget is built upon maintaining the momentum of success EMU has seen thus far.

The university has implemented the Above Base Budget Proposal process to fund initiatives and programs critical to academic quality and growth and has also pledged to avoid across the board budget cuts and layoffs. EMU is also investing in $30.4 million in university-sponsored financial aid and this is an increase of 42 percent in three years Lumm said.

“In the spirit for planning for success, we knew we had to invest for our future,” he said. “We’re striving for a balance in this plan.”

Lumm called the initiative a “very bold move” but he believes “the message is resonating.”

He also said although the initiative seems to be paying off, there is always an element of risk involved.

“There is a risk enrollment will not be [increased] by 3.4 percent,” Lumm said. “We seem to be off to a good start, but the summer is small, and it’s way too early to declare anything. We’re only 60 percent through fall registration.”

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