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Notes to Most Likely Budget Scenario

  1. The Central Fund Balance is the total of non-health-care resources held by the campus that are not allocated to operating managers (the provost and vice presidents). The total is a compilation of balances from fund sources including State, Income Fund Reimbursable, Research Indirect Cost Return, Royalties, Tuition Overflow, Utility Savings, and any other non-health-care funds under control of the president that are not owned by others. Although each fund type has specific policies and spending guidelines, these dollars are available for institutional purposes. Through various mechanisms, these funds can roll over from one fiscal year to the next. See additional comments under item No. 31.
  1. Revenue projections and long-term implications of prior year commitments will result in the Fund Balance variances shown for 2010-11 and 2011-12.
  1. Primarily two base cuts to State funds will be allocated to Stony Brook - approximately $6 million as part of a SUNY cut intended to reduce IFR cash balances and approximately $2.7 million to reduce Research IDC cash balances.
  1. Tuition rate increases in 2008-09 and 2009-10 require more funds to be set aside to pay graduate tuition scholarships.
  1. This negative item represents a reduction in Research Indirect Cost Return revenue. This resulted from losses in centrally managed investments of IDC (systemwide) and lower direct grant and contract expenditures (Stony Brook) that will provide an IDC return lower than previously budgeted.
  1. Tuition rate increases in 2008-09 required more funds to be used to pay graduate tuition scholarships. This negative item has been carried forward to 2009-10 and needs to be funded as a one-time cost.
  1. Stony Brook’s share of a $90 million cut to SUNY.  System Administration had one-time funds to help offset the cut in 2009-10, but the full cost will be assessed in 2010-11 and beyond.
  1. Through the generosity of donors, the Stony Brook Foundation made these funds available to reduce the 2009-10 impact of State budget reductions. 
  1. The Quality of Life Pool is used to refurbish faculty offices, student lounges, and similar spaces. Improvements for which these funds were earmarked will be halted indefinitely and resources reallocated to offset budget cuts.
  1. The Rehab and Repair Pool is used to refurbish classroom, laboratory, and other academic space. Improvements for which these funds were earmarked will be halted indefinitely and resources reallocated to offset budget cuts.
  1. This small reserve fund is being terminated.
  1. Net revenue at Stony Brook Manhattan will be enhanced by $1 million for 2011-12 through cost reduction (lower rent) and/or increased tuition revenue. Half of this improvement will occur in 2010-11.
  1. Operations of several non-academic units will be modified to generate one-time savings in 2009-10 and base budget reductions in 2010-11 and beyond.
  1. One-time savings have been identified in capital projects funded in prior years.  These resources are being returned to Central Funds and will provide short-term budget relief.
  1. One of the budget cuts described above was linked to cash balances in campus IDC funds. Although these funds are designated for other areas, we will borrow $2.7 million per year for three years to provide mid-term relief from this budget cut. In three years, a repayment plan will begin to restore the balance to its previous level and another source will be needed to replace this loan.
  1. We will benefit from approximately $25 million in direct research awards supported by federal stimulus money. The IDC resources accruing to Central Funds will be used to partially address the budget gap.
  1. We anticipate a 1 percent increase in the soon-to-be-renegotiated RF Indirect Cost Rate, which will generate an additional $500,000 per year. 2010-11 will see a phase-in benefit.
  1. Local IFR overhead rates will increase by 3 percent effective 7/1/10 and 2 percent more effective 7/1/11. Each percentage point increase generates $500,000 that can be used to offset base State budget cuts.
  1. A small portion (16 percent) of the new tuition revenue generated by the academic sector’s master’s degree enrollment growth initiative will be returned to Central Funds and will be used to address the budget shortfall.
  1. The SUNY Board of Trustees approved a 2 percent tuition rate increase for fall 2010 and, as part of SUNY Innovation, propose for an increase each year to be set by the Higher Education Price Index. If this proposal is approved by the State legislature, new revenue in the amounts shown will be generated. If the legislature does not act in our favor, this part of the action plan will not materialize.
  1. A major component of the SUNY Innovation initiative is a tuition rate that is higher at the research campuses than at the four-year comprehensive colleges.  This projection assumes that proposal is not approved by the State legislature.
  1. Improved retention from Spring ’09 to Fall ’09 resulted in enrollment in excess of target, generating these additional funds as base revenue. This resource is being applied to the budget gap.
  1. Provost Kaler and President Stanley are co-funding a $1 million increase in the annual library acquisitions budget.
  1. President Stanley has approved new faculty lines for this initiative, phasing in over three years.
  1. President Stanley has approved five new faculty lines in each of the next two years in areas to be determined.
  1. President Stanley has approved an allocation to include furniture, fixtures, and equipment costs in two major capital projects—the new Laufer Center for Computational Biology and Genome Sciences and refurbishment of the Old Chemistry building.
  1. No anticipated costs are included in this category because we have assumed the SUNY Innovation tuition increase will not be approved in 2010-11. When approved, funds generated by this source will support a ten-year plan to add 400 full-time faculty.
  1. SUNY System Administration has advised all campuses when planning for 2010-11 budgets to assume New York State will not fund the costs of the final year of negotiated union salary increases. This cost at Stony Brook approximates $12 million and will increase the campus budget gap by that amount.
  1. Our assumptions include an estimated State budget reduction of $10 million in 2011-12. Many long-term projections point to 2011-12 being the worst year in this down cycle due largely to the elimination of federal stimulus funds that year.
  1. If all the assumptions included in this model prove to be accurate, after all the Action Plan items shown above are implemented there will remain a $30 million budget gap in 2010-11 that will increase to $36 million in 2011-12 without further action.
  1. Common business practices and industry standards (informal) indicate that $15 million is at the low end of maintaining a prudent Fund Balance for an institution of our total All-Funds budget. An appropriate Fund Balance is needed to protect against unforeseen expenditures like rapidly increasing utility costs, unplanned enrollment variances, and/or mid-year budget cuts. Without reasonable reserves, such circumstances would require immediate cuts to operating budgets without regard to existing commitments or plans. It is also wise to hold reserves for key, unanticipated investment opportunities.

 

 



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