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May 18, 2007

President Jischke's comments on fees, conceptual budget

This morning I will give an overview of the proposed fee increase and the conceptual budget for Fiscal 2008. I presented a more detailed report on this Thursday at the board's Finance Committee meeting, which also served as a public hearing on the fee increase.

Next year, for the first time in my seven years at Purdue, our campuses are receiving increases.

Since 2000, our state appropriations have remained flat or were actually decreased. Meanwhile, inflation measured by the Consumer Price Index and the Higher Education Price Index has continued to rise.

Since 2000, the Consumer Price Index has gone up 17.6 percent. The Higher Education Price Index, which is a more accurate measure of our costs, has gone up 27.9 percent.

The conceptual budget I will present today will show we are investing in ourselves by reallocating resources for highest-priority initiatives. We are holding the line on expenses and cutting costs while moving forward with initiatives that will improve the quality of education at Purdue.

In West Lafayette we are proposing a 5.2 percent increase in total general fund budgeted student aid, and 4.5 percent on our regional campuses.

Among our peer institutions, Purdue West Lafayette undergraduate resident fees this year rank seventh and are 19 percent below the mean. Our undergraduate nonresident tuition and fees rank seventh among our peers and are 7 percent below the mean.

Our undergraduate resident in-state fees rank eighth among Big Ten public institutions and are 20 percent below the mean. In the Big Ten, our undergraduate nonresident fees rank fifth among public institutions and are 4 percent below the mean.

Purdue is an incredible value for Indiana residents and people from outside our state.

To maintain the quality of a Purdue education, to continue offering top educational opportunities for our students while at the same time holding the line on costs, we are proposing a 4.5 percent increase for resident and nonresident students next fall at Purdue West Lafayette.

This proposal impacts our students in different ways.

The difference is the repair and rehabilitation fee that started last year. Students who were enrolled before the summer of 2006 do not pay this repair and rehabilitation fee. It only applies to those who enrolled after it was approved by the board.

Under this proposal, students enrolled before the summer of 2006 are the left side of the screen. Following the numbers in the top gold bar, resident fees for this group would rise from $6,846 this academic year to $7,154 next fall. In the fall of 2008, fees would increase to $7,476.

On the right side of the screen for students who enrolled in the summer of 2006 and thereafter, the repair and rehabilitation fee is added. Nonresident tuition and fees under this proposal are listed in the bottom gold bar numbers. For those enrolled before the summer of 2006, tuition and fees would rise to $21,962 next fall and $22,950 in the fall of 2008. For nonresident students first enrolled in the summer of 2006 and thereafter you can see the addition of the repair and rehabilitation fee on the right side of the screen.

For our Calumet campus, we are proposing a 4.5 percent increase for resident and nonresident students in each of the next two years. The impact is shown in the gold numbers.

These numbers, and all the numbers I will give for our regional campuses, assume a 30 credit hour load per year.

For IPFW, we are proposing a 4.5 percent increase in each of the next two years for our resident students. We are proposing a 6 percent increase in each of the next two years for our nonresident students. The impact is shown in the numbers in gold.

At North Central for the next two years, the proposed increase is 4.5 percent for residents and nonresidents.

Next I will present Purdue’s conceptual budget plan for 2007-08 as it describes the application of the fee proposal just presented.

In West Lafayette, our Fiscal 2008 conceptual general fund budget includes $11.7 million in additional state appropriations. This includes $8.7 million in operating appropriations and $3 million in debt.

Student fees would provide an additional $25 million for our budget. "Other income" includes the increase in F&A recovery from sponsored programs.

In West Lafayette, we are proposing internal reallocations of $14.9 million, or 3.3 percent.

Total additional revenue and reallocations are $59.8 million.

How will we spend this money?

Mandatory cost increases are $6.3 million. Increases in compensation and benefits are $22.5 million.

This is based on a 3 percent pool as merit salary policy with flexibility for colleges, schools and divisions to additionally fund special needs of extraordinary merit, market or equity up to 0.5 percent for faculty and staff.

We have Strategic Plan initiatives totaling $50.5 million.

Allocations from the new $1,000 student fee increase that started in 2002-03 go directly into increasing faculty numbers. This is the last year for additional revenue from this increase.

Our allocations by strategic plan initiatives show the highest percentage going to compensation and benefits -- 45 percent. Overarching initiatives would receive 23 percent, followed by discovery at 17 percent, learning at 12.5 percent and engagement at 2.8 percent.

In your packets, board members have even more information about this that we reviewed in the Finance Committee.

For our Calumet campus, state appropriations will increase $149,000. Student fees would result in increased revenue of nearly $2.7 million. Internal reallocations at Calumet are 2.4 percent, which total $1.1 million. Total revenue changes and reallocations are nearly $4 million.

Mandatory cost increases at Calumet total nearly $250,000. Strategic plan initiatives, including compensation and benefits, total $4.1 million. This is based on a 2.5 percent pool as merit salary policy with flexibility for colleges, schools and divisions to meet special needs of extraordinary merit, market or equity up to 1 percent for faculty and staff.

When debt service is included, total allocations are just under $4 million.

On our Calumet Campus, the new student fee increase would go toward faculty positions. Compensation, benefits and goal two would receive the largest share of $4.1 million in strategic plan initiatives.

IPFW is receiving a $2.1 million increase in state appropriations for Fiscal 2008. Student fees would produce an additional $3.1 million in revenue. The internal reallocation at IPFW is 2 percent, totaling $1 million. Total new revenue and reallocations is $6.3 million.

With this plan, compensation and benefits will increase $2.7 million. This is based on the salary policy at Calumet. All strategic plan goals total $5.1 million.

When mandatory costs and debt service are factored in, total allocations are $6.3 million.

At Indiana Purdue Fort Wayne in fiscal 2008, about $631,000 from the new student fee increase will be allocated for a number of areas. These include added faculty positions and campus improvements. Compensation increases and benefits will receive 52.6 percent of IPFW strategic plan funds.

At North Central, state appropriations will increase about $555,000. Student fees will produce $927,000 in new revenue. Internal reallocations at North Central are 2.5 percent, totaling $383,000. Total revenue changes and reallocations are $1.9 million.

Mandatory cost increases are $300,000 to continue existing operations. Compensation and benefits would increase $840,000. This is based on the same salary policy as West Lafayette. Total Strategic Plan initiatives would be $1.6 million. Total allocations would be $1.9 million.

At North Central, our allocations of Fiscal 2008 revenues from the new student fee increase would go mostly toward academic salary support. Compensation and benefits would receive the largest allocation among strategic plan initiatives -- 52 percent.

I believe that systemwide we have held the line on spending. We addressed unavoidable cost increases. We addressed compensation.

This budget stays the course on our initiatives to improve the quality of a Purdue education; and it includes internal reallocations at each of our campuses of at least 2 percent toward strategic goals.

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