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Greetings Colleagues,
Before we head into the holiday break, I want to provide you with an update on our FY2024 budget and our outlook and strategy as we head into FY2025, as shared with Leadership Council yesterday.
Going into this fiscal year, FY2024, we faced a $15.7M deficit in our central university funds, a continuation of multiple years of deficit due to enrollment declines, extraordinary inflation, and flagging state investment. Due to the collective efforts of our campus community, we have reduced the deficit to $7.9M for the year, and hope to make even more progress during spring term.
Highlights
- We are seeing significant increases in tuition and fee revenues due to enrollment increases, health programs expansion, and revised revenue splits through the budget optimization initiative.
- The majority of our revenue gains are being offset by increases in irregular labor expenses and continued inflation in services and supplies.
- Our hiring pause and centralized salary savings efforts make up the majority of our gains this year.
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We continue to work on our budget optimization projects and have posted a progress report on the budget website.
FY2025 Outlook
Our budget going into FY2025 is based on a modest increase in undergraduate enrollment, current tuition and fee rates, health insurance premium increases, a fully-funded position list, and mandatory increases in operating expenses. When we put all these factors together, our structural deficit is sitting right at the $15.5M mark, before factoring in any CEC or tuition rate increases.
Our Path Forward
We’ve reduced the drawdown of central reserves in FY2024 and stopped the downward trajectory of our structural deficit as we look ahead to FY2025. We now need to focus on ongoing balancing actions to balance revenues to expenditures by FY2027.
Our Budget Advisory Group will be working in earnest over the next several weeks to develop options and recommendations for achieving approximately 3% ($6.5M) in deficit reduction in FY2025 and an additional $6.5M in FY2026. This, combined with modest tuition rate increases, will set us on a solid course for realizing a balanced budget by FY2027.
In addition to continuing to support our budget optimization projects, we will be exploring revenue growth, different approaches to salary savings, reviewing our administrative recovery rates, and working with new benchmarking data to inform budget allocations and reallocations.
This is the hard work we’ve been discussing during our recent budget town halls, and will require extensive discussion, dialogue, and analysis. I am confident that we can and will figure out a path forward that gets us to a balanced budget while continuing to support our progress and momentum in fulfilling our mission.
In addition to meeting with our key stakeholder groups, we will be meeting individually with each unit in the coming weeks to discuss emerging options and ideas, understand unit-specific needs and impacts, and garner the collective best thinking of our campus community.
We will be providing updates in ISU Today and on the budget website as we move forward in this work, and will host a Budget Town Hall in January.
Please also feel free to reach out to me directly with any questions or ideas.
I wish you safe and happy holidays.
Jen
Jennifer Steele, Vice President for Finance and University Planning
(208) 373-1991 | jennifersteele@isu.edu
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