Editors note: This story was updated at 11:30 a.m. June 25.
Central Michigan University’s Board of Trustees approved a $462 million budget for the 2014-15 fiscal year that will go into effect starting July 1. The new budget is an increase of $21.2 million from last year’s budget.
The largest expenditure in the budget is for faculty and staff salaries and benefits, making up 57.55 percent of the budget.
Barrie Wilkes, vice president of Finance and Administrative Services, said compensation takes up a majority of the budget because it’s an investment in the students.
“When we talk about making an investment in our own employees and an investment in our students in financial aid, you can see how important that is to the budget,” Wilkes said. “What we look at historically are what have been the main cost drivers. Not surprisingly topping that list is salary and benefit increases.”
Compensation has increased four percent annually since the 2001-02 fiscal year. Wilkes said this is in part because of more employees members are needed.
“We have more employees than we started with,” he said. “The total amount of compensation has increased by $79 million, a sizable amount of money over that time.”
Wilkes told trustees that a possible one percent increase in salaries would cost about $1.75 million. However, that salary increase is still up in the air as contract negotiations continue with the Faculty Association, Police Officers Association of Michigan (POAM) for CMUPD and the American Federation of State, County and Municipal Employees (AFSCME) for service maintenance employees.
Other expenditures include scholarships and financial aid – which increased to $39.9 million – research compliance, and service center budget reallocations.
The state’s mandatory minimum wage increase has also been factored into the 2014-15 budget.
University President George Ross was proud of the 20 percent increase in scholarships and financial aid. He said the $6.9 million increase in that part of the budget was important for helping students succeed.
Ross said it would have been increased any way with or without the boost in state appropriations.
“This was before we knew what the state appropriations were,” he said.
Breaking down the revenue drivers and enrollment
According to the budget, tuition accounts for 56.04 percent of the university’s total revenue stream. That total was determined after a trustees voted in May to increase tuition by 2.94 percent, or $11 per credit hour.
The increase bring the total undergraduate tuition rate to $385 per credit hour.
Steven Johnson, vice president of Enrollment and Student Services, estimated the 2014-15 freshmen class will be around 3,500 students.
Wilkes said with the added freshmen, they budgeted for around 495,300 total on-campus credit hours. This does not include Global Campus credit hours.
State appropriations are another source of revenue for the university. This year, lawmakers gave CMU $79 million in state aid, an increase of 7.6 percent.
Wilkes said with the rate of inflation since 2001, the university is down $56.2 million from the projected increases in appropriations. Students would have saved $99 per credit hour had lawmakers in Lansing not made such drastic in the early 2000s, he added.
Aside from assistance by way of state aid, CMU’s medical school will receive additional funding from the reserve general fund to cover shortfalls in their budget. They will be receiving around $8.3 million.
Provost Michael Gealt said it is not unusual for some colleges to need a bit of help when they have shortfalls. The College of Humanities and Social and Behavioral Sciences also had a shortfall of $900,000.
“If you look at the shortfall last year for CHSBS, it was approximately $2 million,” Gealt said. “Despite that, we’ve been able to reduce the deficit, and I think with the increased number of students in the fall, a lot of which will be taking general education courses, I think we’re looking at a smaller shortfall next year even.”
Ross added that the shortfalls were decreasing.
“We went from $11 million (in shortfalls) down to $9 million,” Ross said.
Visit cm-life.com for more stories from Tuesday’s Board of Trustees meeting.