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View Budget FY2016 and 2017 AMERICAN UNIVERSITY FISCAL YEARS 2016 AND 2017 MAY 1, 2015–APRIL 30, 2017 Adopted by the Board of Trustees March 6, 2015 FISCAL YEARS 2016 AND 2017 CONTENTS Report from President Kerwin 2 Fiscal Years 2016 and 2017 Budget Highlights 4 Fiscal Year 2016 Revenue and Expenditure Budget 6 Fiscal Year 2017 Revenue and Expenditure Budget 7 Fiscal Year 2016 Revenue and Expenditure Budget (Graphs) 8 Fiscal Year 2017 Revenue and Expenditure Budget (Graphs) 9 Fiscal Year 2016 Divisional Expenditure Budget 10 Fiscal Year 2017 Divisional Expenditure Budget 12 Fiscal Years 2016–2017 Highlights of Funding for Strategic Plan Goals 14 Fiscal Years 2010–2017 Summary of Funding for Strategic Plan Goals 16 Faculty and Staff Merit Increase and Market Adjustments 17 Fall Full-Time Equivalent Enrollment 18 Tuition, Housing, and Meal Plan Rates 19 Market Comparison: Average Undergraduate Tuition and Mandatory Fee Increases 20 Market Comparison: Full-Time Undergraduate Tuition and Mandatory Fees 21 Tuition Discount Rate (Financial Aid as a Percent of Tuition Revenue) 22 Percentage of Financial Aid Expenditures on Need vs. Merit 23 Average Student Debt for Graduates 23 Operating Budget History 24 Endowment Funds 25 REPORT FROM PRESIDENT KERWIN The AU Board of The AU Board of Trustees approved an operating budget totaling $1.25 billion for fiscal years Trustees approved 2016 and 2017. The budget reflects equilibrium among a number of critical factors, including our strategic priorities, affordability efforts, Middle States reaccreditation recommendations, an operating budget and external factors such as regulatory changes. In the next two years, we will also be making totaling $1.25 billion adjustments in response to challenges in our budgetary environment that will ensure the for fiscal years 2016 university is poised for continued achievement and progress in the future. and 2017. The budget Fiscal years 2016 and 2017 mark the seventh and eighth years of implementing the university’s reflects equilibrium strategic plan, American University and the Next Decade: Leadership for a Changing World. among a number The strategic plan objectives for the next two years were developed through an open and consultative process to ensure we are getting all we can from the large investments we have of critical factors, made. The additional investment of $55 million in the next two years will fund strategic including our objectives and action steps considered to be an utmost priority to the institution or related strategic priorities, to compliance with new regulatory requirements. AU 2030 themes will remain a priority for affordability efforts, targeted investments in academic programs and research. Further, existing face-to-face master’s programs will be enhanced with advanced technology to be delivered online and at a distance as Middle States a strategic area for enrollment and revenue growth over the next two years and beyond. reaccreditation Affordability was at the forefront of deliberations on pricing for the next two years. Tuition recommendations, rate increases are 3.0 percent in FY16 and 3.5 percent in FY17 across all enrollment categories. and external factors Lower increases for room and board will keep increases in total cost of attendance at 2.5 percent such as regulatory in FY16 and 3.0 percent in FY17. Financial aid will continue to be a critical priority in FY16 changes. and FY17, with an emphasis on enhancing need-based aid. Including special allocations, undergraduate and graduate financial aid funding levels will rise to 31.7 percent of tuition revenue. This budget continues our strategic investments in human resources to recruit and retain the best faculty and staff and to provide on-campus employment opportunities for students. Funding pools are budgeted in each year to provide 1.5 percent performance-based one-time payments in FY16 and 1.5 percent salary increases in FY17 for faculty and staff. We will enhance instructional resources and increase compensation rates for term faculty and adjuncts. Funding is also provided for increased costs related to faculty and staff benefits, including compliance with new health care regulations and DC minimum wage increases. Due to a budgetary environment with a greater degree of complexity than those of recent two-year budget formulation processes, budget reductions and cash funding supplements are necessary to achieve equilibrium and ensure a strong foundation for the FY18–FY19 budget process. One percent base budget reductions in each year identified by the cabinet will maximize efficiency and partially fund required new expenditures. In addition, we will leverage 2 AMERICAN UNIVERSITY BUDGET REPORT: FISCAL YEARS 2016 AND 2017 cash supplements in each year to fund strategic initiatives. Our ongoing contribution to fund I am grateful to all financial safeguards in the FY16–FY17 budget underscores our commitment to maintaining who participated these holdings. in this year’s While our complex budgetary environment requires that we realign our budget level in fiscal budget process, years 2016 and 2017, the university’s positive financial standing will effectively accommodate including the the necessary period of adjustment over the next two years. Our emphasis on financial safeguard policies has positioned us well to respond as needed without forgoing continued investment in University Budget strategic priorities and minimizing any adverse effect on our core academic and administrative Committee, Finance functions. I am confident that our response to these challenges will result in our ultimately being and Investment better positioned for progress and growth in coming years. Committee of This report provides an overview of the major elements of the budget for fiscal years 2016 and the AU Board of 2017 and includes the following: Trustees, and • fiscal years 2016 and 2017 budget highlights the university • revenue and expense budget schedules with supporting graphical presentations community. • tuition, residence hall, and meal plan rates for FY16 and FY17 • highlights of funding for strategic plan goals • historical data on AU’s enrollment, faculty and staff salary increases, operating budget, and endowment funds • market comparison data on AU’s tuition rates and fees • financial aid and affordability summary I am grateful to all who participated in this year’s budget process, including the University Budget Committee, Finance and Investment Committee of the AU Board of Trustees, and the university community. Cornelius M. Kerwin AMERICAN UNIVERSITY BUDGET REPORT: FISCAL YEARS 2016 AND 2017 3 FISCAL YEARS 2016 AND 2017 BUDGET HIGHLIGHTS TUITION FOR ALL ENROLLMENT 3.0% increase for FY16 and 3.5% increase for FY17 CATEGORIES RESIDENCE HALLS Increases of 1.0% for traditional-style housing, 2.5% for Centennial suites, and 3.0% for apartment and suite housing each year MEAL PLAN 2.0% increase each year TOTAL TUITION, MANDATORY 2.5% increase for FY16 and 3.0% increase for FY17 FEES, RESIDENCE HALL, AND MEAL PLAN RATES PARKING No increase for FY16 and FY17 INVESTMENT INCOME Increased $500,000 to total $6.25 million in FY16 and another $250,000 to total $6.50 million in FY17 INDIRECT COST RECOVERY Increased $600,000 to $2.0 million in FY16 FACULTY AND STAFF SALARIES $2.5 million for a 1.5% funding pool to provide performance-based, one-time payments for faculty and staff in September 2015 An additional $2.7 million for a 1.5% performance-based salary increase to take effect September 2016 FULL-TIME FACULTY $576,000 to provide base funding for tenure-track faculty in FY16 TERM FACULTY $1.35 million over two years to support continuing and additional term faculty to enhance instructional resources $400,000 in FY16 and an additional $400,000 in FY17 to increase term faculty salaries to meet market demands ADJUNCT FACULTY Funds set aside each year to address market adjustments and to hire additional adjuncts DC MINIMUM WAGE INCREASES $500,000 in FY16 and another $400,000 in FY17 to fund compensation adjustments in accordance with DC minimum wage increases STAFF $1.6 million over two years for salaries and benefits for new full-time staff positions, including those for East Campus that will become operational in FY17 Funding allocations to increase compensation for student residence hall staff effective FY16 and residential education staff for East Campus residence halls FACULTY AND STAFF BENEFITS $1.8 million over two years to provide competitive benefit offerings to attract and retain high-quality faculty and staff $293,000 over two years to fund the university’s compliance with new health care regulations Funding set aside to cover estimated costs to comply with the DC Earned Sick and Safe Leave Amendment Act of 2013 4 AMERICAN UNIVERSITY BUDGET REPORT: FISCAL YEARS 2016 AND 2017 FINANCIAL AID $8.3 million over two years to match enrollment changes and index to the tuition increase An increase of $688,000 in FY16 to provide permanent funding for AU enrichment grants that provide financial support for study abroad and internships based on need An increase of $100,000 to provide additional summer financial aid for students enrolled in three-year BA programs The tuition discount formula was recalibrated effective FY16 to reflect special allocations that had previously not been factored into the calculation, including AU enrichment grants, Frederick Douglass Distinguished Scholarships, grants- in-aid, and some graduate financial aid awards. Under the revised formula, undergraduate and graduate financial aid funding
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