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Discussion Points Higher Educational Services FY 2016-2017 Discussion Points Rutgers University, the State University of New Jersey 10. In recent years, there has been growing concern among legislators and the public regarding the steady rise in tuition and fees that leads to higher student loan debt and a decrease in the accessibility of higher education. A 2015 report from The Chronicle of Higher Education analyzed the extent to which student fees and other institutional resources subsidized the athletic departments of Division I colleges from 2010 through 2014. The report found that Rutgers University spent over $170 million in the five-year period to underwrite intercollegiate sports, more than any other college in the country. • Questions: Please explain the reasons for the over $170 million subsidy to the athletic department over the five-year period from 2010 through 2014. Please provide the size of the annual subsidy, and the percentage the subsidy represented of the athletic department’s operating budget, starting with the 2005-2006 academic year. What strategy is the university deploying to reduce, if not eliminate, the subsidization of annual athletic department costs by general student fees and institutional resources? Rutgers Response: Driving down the structural subsidy is a focus of the university administration and our Boards. The increased ongoing revenue resulting from one-time investments will provide the financial support necessary for the athletic department to move towards financial stability and position the program to be self-sufficient when the university receives its full payments from the Big Ten following the six-year transition into the conference. The direct institutional support for our programs is continuing to decline as we approach self-sustainability and full member status in the Big Ten. The annual support for operations provided to the athletic department by the university over the five year period in question averaged just under $19M per year or just under $95M and has averaged 31% between FY2006 and FY2014. Not included in the five year calculation of institutional support, above, are one-time costs and investments totaling $24 million made in fiscal years 2013 and 2014. Notably, those additional investments are related to our transition to the Big Ten Conference and to the replacement of a previous marketing contract with a new one that will more than double marketing and sponsorship revenue to the athletic program. 1 Higher Educational Services FY 2016-2017 Discussion Points (Cont’d) For example, although exiting the American Athletic Conference cost Rutgers $11.5 million, the University has projected that over the next 12 years the minimum increase in revenue from moving to the Big Ten will approach $200 million. The enviable return on investment (ROI) for the $11.5 million settlement to exit the American Athletic Conference is 95 percent. Similarly, the $7 million cost of cancelling a 13-year marketing relationship that generated, in total, approximately $30 million for the university will be more than offset by a new 11-year/$65 million agreement. The agreement includes an option to extend the partnership for an additional 3 years and generate an additional $22 million, or a projected total of $87 million. This new agreement will more than double the revenues to the university and will capitalize on enhanced opportunities for national corporate support. The 11-year ROI is 84 percent, annually. These are essential business investments that are a part of our program to enable Rutgers athletics to operate from a position of financial stability. 2 Higher Educational Services FY 2016-2017 Discussion Points (Cont’d) Senior Public Institutions of Higher Education 12. Section 43 of P.L.2009, c.90 (C.18A:64-85) allows a State college, county college, and Rowan University to enter into a public-private partnership agreement, which allows the private entity to assume full financial and administrative responsibility for a project as long as the State or institution of higher education retains full ownership of the land upon which the project was completed. The law also allows a college to lease to a private entity the operation of a dormitory or other revenue-producing facility to which the college holds the title, in exchange for up-front or structured financing by the private entity for the construction of classrooms, laboratories, or other academic buildings. The private entity is then responsible for the management, operation, and maintenance of the facility, while the college continues to hold title to the facility. The private entity can receive some or all of the revenue generated by the facility. • Questions: Please provide a list of public-private partnership agreements that the institutions have entered into pursuant to this law, including the name of the project, the cost of the project, and the amount of revenue to be generated for the institution and the private entity annually and throughout the length of the agreement. Has any agreement been terminated before it reached its term? Have any agreements for payments-in-lieu-of-taxes with respect to a project been concluded with any municipality in which the projects are located? If so, please summarize the terms of the agreement. Rutgers Response: This law does not apply to Rutgers. 13a. The public research universities, State colleges and universities, independent institutions, and county colleges were invited in 2013 to apply for approximately $1.3 billion in bond funds under the “Building Our Future Bond Act,” the “Higher Education Equipment Leasing Fund Act,” the “Higher Education Facilities Trust Fund Act,” the “Higher Education Technology Infrastructure Fund Act,” and the “Higher Education Capital Improvement Fund Act.” The Higher Education Capital Facilities Programs Solicitation for Grant Applications set forth a number of criteria for the review and selection of capital projects. On April 29, 2013, the Secretary of Higher Education transmitted a list of projects to the Legislature as required under the law. The list of projects to be funded under the “Higher Education Equipment Leasing Fund Act” and the “Higher Education Technology Infrastructure Fund Act” was submitted to the Joint Budget Oversight Committee in July 2013 for approval or disapproval, as provided under P.L.2012, c.42. Since the Legislature and Joint Budget Oversight Committee took no action to disapprove the projects, the projects were deemed approved by July 2013. 3 Higher Educational Services FY 2016-2017 Discussion Points (Cont’d) • Questions: For each of the bond funds listed above, please provide an updated table listing the approved projects, total cost, grants from the State, original start and completion dates, and revised start and completion dates, if applicable. Please discuss if there were any unexpected difficulties or problems in complying with reporting requirements or accessing grant funds through the Office of the Secretary of Higher Education. Were there any project timetable delays as a result of process or cash flow issues? Rutgers response: The requested table is attached. To date there have not been any problems complying with the reporting requirements or accessing grant funds and no project delays have occurred as a result of funding or cash flow. • Question: What is the institution’s understanding of the process to follow if it perceives that a project’s cost has changed to the extent that it may no longer be feasible to continue without additional State funds? Rutgers response: The institution has not had difficulty in this area as a result of project cost. 13b. Section 25 of P.L.2012, c.41, the “Building Our Future Bond Act,” requires the Secretary of Higher Education to submit to the State Treasurer and the New Jersey Commission on Capital Budget and Planning with the secretary’s annual budget request a plan for the expenditure of funds from the “Building Our Future Bond Fund” for the upcoming fiscal year. The act requires the plan to include the following information: “a performance evaluation of the expenditures made from the fund to date; a description of programs planned during the upcoming fiscal year; a copy of the regulations in force governing the operation of programs that are financed, in part or in whole, by funds from the “Building Our Future Fund”; and an estimate of expenditures for the upcoming fiscal year.” • Questions: Was each institution required to submit a project expenditure plan for FY 2017, along with project progress/expenditure reports, to the Secretary of Higher Education or any other department? If so, when was the information requested and submitted? If any report was prepared by the institution, either for internal use or submission to the secretary, please provide a copy. Rutgers response: Yes, the requested report is attached. 13c. On November 16, 2015, the Secretary of Higher Education announced a second round of funding totaling $180 million from the 2012 “Building Our Future Bond Act” ($34.3 4 Higher Educational Services FY 2016-2017 Discussion Points (Cont’d) million) and the “Higher Education Capital Improvement Fund Act,” ($146.0 million). Applications for this second round of funding were due by January 15, 2016. • Questions: How many grant applications has each institution submitted to the Secretary of Higher Education for the second funding round? What is the dollar amount of each application submitted and the total dollar amount of all the applications submitted by each institution? What criteria has
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