University System of NH Presents Budget Proposal to the Senate Finance Committee

April 27, 2007 - Concord – University System of New Hampshire (USNH) representatives met with the Senate Finance Committee today to present their budget proposal for the FY08-09 biennium and highlight some specific efforts USNH is focusing on in terms of its role in supporting economic and workforce development. The budget, if adopted, would hold tuition increases over the biennium to 4.5 percent each year and expand need-based financial aid substantially above that rate.

The proposed budget was approved by the USNH Board of Trustees in the fall after detailed review and analysis, and was presented to the Governor during his budget hearings last November. It is based on a request for a 7.6 percent increase in general funds for each year of the biennium that would hold tuition increases at the 4.5 percent level. The NH House of Representatives passed a budget earlier this month that included a 5.1 percent increase for FY08 and a 5.2 percent increase for FY09. In dollar terms, this would leave a gap of $7.1 million from the USNH request over the biennium.

The University System serves nearly 30,000 students annually, awards more than half of the bachelors degrees conferred each year in the state, and has a nearly $1 billion-dollar impact on the NH economy.

Andy Lietz, chair of the USNH Board of Trustees testified before the committee with Ed MacKay, vice chancellor at USNH. During his testimony Chairman Lietz cited four key initiatives supported by the USNH Board of Trustees:

Continuation and expansion of the "Affordable College Effort" (ACE), which helps low-income New Hampshire residents to enroll at a USNH institution without having to take out a loan to cover the direct costs of their attendance.
Expansion of access through collaboration with the NH Community/Technical College System through 2+2 arrangements between USNH and selected CCSNH campuses and through on-line delivery, as well as improving access to high-demand programs such as nursing, education, and business across the state.
Increased outreach to K-12 through the continued expansion of Project Mentor, which has raised the aspirations of hundreds of young people by pairing college students with middle school students who are at risk of dropping out.
Maintaining programs of quality which prepare graduates for good employment, meaningful lives, and effective citizenship.

"The importance of an affordable college education cannot be overstated, especially in today’s rapidly changing global economy. The international marketplace is one characterized by instantaneous communication, virtual workplaces, intense competition, and a highly skilled workforce that is being educated in what used to be called the developing countries," Chairman Lietz said. "If our own citizens are to succeed in such a world, they will need, now more than ever, the right set of specialized skills, general knowledge, and an entrepreneurial spirit."

The Appropriation for the current biennium is 13.4% of current total USNH operating revenues, and the USNH budget request asks the Stateto fund 13.9% of total revenue during the FY08-09 biennium. The House recommendation would provide 13.4%, or a gap of $7.1 million. In dollar terms, the increases for the two years of the biennium in the USNH budget request would be $7 million in FY08 and $7.5 million in FY09.

The significant drivers of the appropriation request are the need to:

maintain affordability of tuition,
provide adequate financial aid for all New Hampshire residents and target more aid to the most needy students,
invest in proper operation and maintenance of USNH facilities,
address substantial increases in the costs of medical benefits, and
provide fair compensation to employees.

"This proposal comes as a result of a rigorous process that does not simply as the state to fund all of our needs. With a proven track record of being extremely cost conscious, USNH institutions spend significantly less than our peers," said Vice Chancellor MacKay. "USNH faces many of the same factors challenging higher education institutions across the country, and is actively and successfully engaged in numerous mitigating strategies. Thus, any gap presents a serious obstacle to achieving the goals cited by Chairman Lietz," he added.

To help illuminate the challenges USNH faces in terms of its budgeting process, MacKay cited the fact that despite plan design changes and aggressive pursuit of cost savings, the USNH employer medical plan costs have more than doubled in this decade, and projected to increase by more than $5 million per year in the coming biennium. USNH employee contribution to a typical HMO family medical plan increased from roughly $200 to more than $2,500 annually over last five years.

The University System is a partner with the State, and seeks other revenue sources to support programs and services that make significant contributions to the New Hampshire economy. In addition to the approximately $410 million in Education & General revenue and expenses derived primarily from tuition and the State Appropriation, the USNH annually generates more than $160 million from auxiliary (self-supporting) operations such as residence halls, dining facilities, student activity and recreation centers and nearly $120 million more from sponsored programs (primarily grants from the federal government) and private gifts. In the aggregate, these activities of USNH provide a direct infusion of $445 million in the state’s economy, and nearly $900 million when the indirect impact is conservatively estimated.

Top officials from all four USNH institutions participated in the hearings. Testimony from Chairman Lietz and Vice Chancellor MacKay are available.

-30-

UNH | Plymouth State | Keene State | Granite State