Minutes of the University Budget Committee

Meeting Date: February 18, 2010

Regular Members Present: Tim Gavin, Susan DelVecchio, Scott MacGilvray, Don Palumbo, John Given

Ex-officio Members Present: Gary Vanderpool, Wanda Sandeford, Louis Warren, Joe Gaddis, Travis Poole, Nancy Phelps

Meeting was called to order by Chairman Tim Gavin.

Announcement made by Chairman that he has been serving on a committee looking into issues related to faculty compensation and salary inversion.

Agenda Items:

1. Presentation on budget related issues and their impact on the Health Sciences Division by Vice Chancellor Phyllis Horns:

The Division of Health Sciences is funded from both of the Universities State Budget codes. As a result of this, only the College of Nursing, the PhD programs within the Division, and the masters of Public Health program participate in enrolment growth funding. Virtually all of the programs within the Health Sciences division are expensive to run, in large part because of the very high faculty to student ratios required to deliver the curriculum. The addition of the Dental school is no exception to this, as it is a new program that is also very expensive to run.

In some aspects the Health Care industry has been less severely impacted by the economic issues and recession. There have been cut backs and belt tightening, but not nearly to the extent seen in other industries. In addition to being an industry that will always have jobs, these disciplines are very highly regulated by usually more than one external regulatory body. These regulatory bodies have an impact on how we structure our operations and teaching curriculum, as we need to answer to them in order to remain in business. The Nursing programs are an example of this, where the outside regulatory agencies dictate a very high faculty to student ratio in the clinical programs. On the Medical School side, many of the programs require at least a 1:1 faculty to student ratio. Nursing is the only undergraduate major at the university that represents a liability for the patients and therefore a liability risk to the University as well. In addition to the regulatory requirements, the need to mitigate this liability is another part of why you need the high faculty ratios in the clinical programs. The formula used for enrollment growth funding in the College of Nursing does take the need for this high faculty to student ratio into account. At present nursing generates all of their funding formulas.

The vast majority of the funding for the Medical School budget comes from areas outside of the State Budget codes. The breakdown by funding source is ECU physicians (practice plan) 68%, State Budget 21%, Grants 9%, other 2%(includes income from the vivarium and the MRI scanner that the hospital pays ECU for the use of). This currently translates into $157 million from the practice plan, and $49 million from the state budget. The payroll in the Medical School is intimately intertwined with, and dependant on the practice of medicine. One of the long term goals for the Medical School is to increase the level of grant funding so that it will reach a level of 20% of the funding for the Medical school as a whole, from its current level of 9%. In order to do this, there will need to be investments made in additional facilities and infrastructure to support the expanded research goal.

Hospital relationships are key to the success of the Medical School. However, the success of the hospital is also dependant on the success of the Medical School. There is definitely a very close partnership with the Hospital, and this includes the payment by the hospital of ~$30 million each year to compensate the Medical School for services provided by faculty for medical direction of hospital programs. This must be reimbursed at a fair market value, so there is a limit to what the hospital can provide in support for these services.

A question was asked what the impact of the current parental leave and serious illness policy (and the proposed revision) would have on the Division of Health Sciences. Vice Chancellor Horns did not have the data in front of her to provide a complete answer. Instead, she will present that information at the February Faculty Senate meeting next week.

2. Presentation by Vice Chancellor for University Advancement, Michael Dowdy.

The Division of University Advancement is the smallest division in the University. It consists of; alumni relations, University fundraising, and University publications. The Division also has strong relationships with the independent and related entities that support various aspects of the Universities fundraising efforts. These entities are; the alumni association and the three foundations (Pirate club, ECU foundation, Medical and Health science). Each of these three foundations serves to raise funds to support aspects of the University. The ECU foundation has an endowment of $65 million, the medical foundation endowment is $23 million, and the pirate club has little endowment, as its fundraising efforts are used to provide scholarship support for athletics.

The Division as a whole has approximately $5.5 million in state support to provide for its operations. The total division consists of 80 employees, and is part of the non-academic core that last year was asked to take a higher budget cut at 9%. This resulted in the loss of two positions. For each of the foundations, their operating funds are derived from a percentage of the net revenue from the investments and assets. In the last academic year there was a 32% decrease in income for the foundations from the down economy. Through the end of 2009 the endowments were up 26% but have not yet recovered to baseline. To compensate for the decreased revenue and budget, the Division has tried to be very prudent by limiting travel and entertainment as much as possible. Many items were put on hold due to the budget considerations.

Even in the face of the recession, for the second year in a row, FY 2009 was a record year for fundraising. Most of the reason for the increased donations is that the University is in the middle of a capital campaign. Current projections are for this year’s fundraising total to still be in the range of $30 million.

Currently, the net result of all of the fundraising efforts is that they provide University budget support from private funds of approximately $19 million last year, which represents about 2% of the budget. The goal is to increase the endowment to the point that it will provide support for around 5% of the budget each year. Other goals are to alter the distribution of funds raised so that a slightly higher percentage is brought in to support the academic side of the University rather than Athletics. Currently the distribution of funds raised is about 70%:30% academic to athletic mix and the goal is to get to a 75%:25% mix. Most of the gifts to the University are smaller, in part this is because the oldest alumni are teachers and there is generally not much money there. Currently almost 90% of the funds raised are provided by 10% of the donors. The observation was also made that success in sports has little impact on the large donations, but the number of small donations tend to improve. Currently the ECU fundraising system is third within the UNC system, but has grown considerably compared to our pears, and is narrowing the gap steadily.

Major fundraising priorities for the future are to endow professorships as well as generating increased support to expand both the ECU and Honors scholarship programs. It is anticipated that as the economy improves that there will be a need to expand the number of staff within the Division. Currently the Division is very understaffed in the medical foundation, and overall only slightly understaffed. The additional staff will allow for an increase in the number and size of the donations and as a result the endowment.

Next Meeting: March 18, 2010 at 4:00pm in Rawl Annex 142