June 12, 2009

1. Report on May 2009 Revenue Forecast, Governor’s Recommended 2009-11 Higher Education Budget and Special Legislative Session June 12, 2009

2. Budget Process and Estimated Timeline • March 2008 - Budget instructions issued to institutions • August 2008 – Institutions submit budget requests and begin budget presentations • November/December 2008 – CHE budget recommendations • January 2009 – Governor’s/State Budget Committee recommended budget • February 2009 - House passes budget • March 2009 – Senate passes budget X April 2009 – General Assembly enacts a budget • June 2009 – Governor proposes new budget • ?? 2009 – General Assembly enacts a budget • Days after state budget enacted – CHE recommends non-binding tuition targets • June/July 2009 – Institutions set tuition rates for 2009-10 and 2010-11

3. Governor’s Proposal to Move Forward with Special Session • New revenue forecast presented to State Budget Committee May 26 • Special Joint Budget Committee appointed: co-chaired by Chairman of House Ways & Means Committee and Senate Appropriations Committee • Governor presents new proposed budget on June 2 • Special Session begins June 11

4. Dec. 2008 Revenue Forecast

5. April 2009 Revenue Forecast

6. May 2009 Revenue Forecast

7. Governor’s Recommended Higher Education Budget, June 2, 2009 • Very similar to Governor’s proposed budget in January for state general fund appropriations • Includes ARRA funds, some explicitly, some implicitly

8. Governor’s Recommended Higher Education Budget, June 2 • Campus Operating Appropriations • 1% proportional cut to general fund appropriation in FY 09 • 4% cut to system-wide general fund appropriations in FY 10 • FY 10 operating appropriations calculated using 25% of CHE recommended formulae • Flat general fund appropriations in FY 11 • FY 11 operating appropriations calculated using 50% of CHE recommended formulae

9. Governor’s Recommended Higher Education Budget, June 2 • Use of ARRA Funds • ARRA Part A funds (may be used only to restore appropriation reductions) • Restores all general fund appropriation reductions to FY 09 appropriation level in FY 09, FY 10 and FY 11 • Limits use of ARRA Part A funds to R&R

10. Use of ARRA Part A funds to Restore General Fund Operating Appropriations System-wide May be spent only on R&R

11. Proposed FY 09 State GF & ARRA Part A Funding: Campus Operating Appropriation as % of FY 09 Appropriation

12. Proposed FY 10 State GF & ARRA Part A Funding: Campus Operating Appropriation as % of FY 09 Appropriation

13. Proposed FY 11 State GF & ARRA Part A Funding: Campus Operating Appropriation as % of FY 09 Appropriation

14. Line Items • Most line items (except leases) reduced 1% in FY 09 • cuts to line items to institutions restored with ARRA Part A funds (must be spent on R&R) • Most line items (except leases) reduced 4% in FY 10 • cuts to line items to institutions restore to FY 09 appropriation base with ARRA Part A funds (must be spent on R&R) • Most line items (except leases) held flat in FY 11 • cuts to line items to institutions restore to FY 09 appropriation base with ARRA Part A funds (must be spent on R&R)

15. Line Items Notable Line Items Exceptions: • IHETS $4.974M appropriation reduced to • $600,000 to IHETS • $2,000,000 to IU • $3,000,000 in FY 10 and FY 11 to IU for “Medical Education Center Expansion” • ITCCI Portage Lease not funded • PUWL BSL-3 Lease not funded • Cuts to line items to other than institutions not restored with ARRA Part A or B funds

16. Use of ARRA Part B funds for New Capital Projects Notes: (1) recommended by CHE (2) restatement of 2007 authorization

17. Debt Service (fee replacement) • Debt service is appropriated only for capital projects authorized by the 2007 General Assembly that have been through the review process • Of the $417M state funded capital projects authorized by the 2007 General Assembly: • $234.3M have been through state review • $183.4M have not been through state review • BSU Central Campus Renovation and ISU Lab Renovations & Chiller funded through ARRA Part B cash

18. ARRA Part B Funds for R&R Note: funds 50% of the 07-09 R&R formula. SBA reverted $31,035,048 of general fund appropriations for R&R in FY 09

19. State Student Assistance Commission of Indiana (SSACI) • 3% appropriation increases to HEA, FOC and 21st Century Scholars funds • Expects $1.66M in federal funds to supplement HEA awards in FY 10 and FY 11 • All other SSACI appropriations either flat or slightly reduced

20. State Student Assistance Commission of Indiana (SSACI) • SSACI Award demands have surpassed resources for several years, including in 2009-11 • SSACI has capped maximum awards at public and private institutions since 2003 • Current maximum award caps (2008-09): • Public $6,095 • Private $10,996 • Changes in enrollments, award utilization, tuition rates, students’ choice of institution, state appropriations and federal aid methodology will impact the award caps in FY 2010 and FY 2011

21. Miscellaneous Language Issues in Gov’s Proposed Budget Bill • CHE and SSACI to undertake a “study of the funding of college scholarship programs provided by [SSACI] and the state’s public universities.” • Grants IU and PU $100M each in “general revenue” bonding authority • intended specifically to expand research capabilities • bonds are not state funded • expires July 1, 2011 • Requires recipients of 21st Century Scholars awards to be means tested “using a methodology consistent with” HEA/FOC every year they apply for an award • Woodrow Wilson Teaching Fellowship Program funded $10M in FY 10

22. Special legislative Session • Governor presented new proposed budget on June 2 • Special Joint Budget Committee has been derailed • House will present its own budget bill • Senate will present its own budget bill • Budget Bill hearings will take place over the next several days • Other complicating factors in the session ?? • Goal is to enact a budget by June 30 • Executive Committee meeting of CHE to be called within a few days of budget enactment to announce recommended tuition targets • Stay tuned …