CHAPTER 4: Organization and Resources

Financial Resources

In the past decade, CU-Boulder has experienced significant growth in its financial resource base at the same time that the campus has made major strides in teaching, research, and service. Operating expenses and revenues have more than doubled in size from $324 million in FY 1989 to more than $668 million in FY 1999. State appropriated funding has grown about 72 percent, while restricted fund resources have grown almost 200 percent (including direct lending). Auxiliary/self-funded activities have grown at the same pace as the state appropriated funding.

As part of the university system, CU-Boulder participates in a systemwide budget and planning process. A systemwide vice president has responsibility for oversight and coordination of the university’s annual operating budget and other fiscal matters of the four-campus system. However, each campus is responsible and accountable for its own resources. CU-Boulder is audited annually by the state auditor’s office, in addition to regular visits from the Board of Regents’ internal auditing staff and federal auditors.

State Appropriated Funding

State appropriated funding is comprised of tax revenues, tuition and fees, indirect cost recoveries, and other miscellaneous revenues. In FY 1999, tuition and fees comprise the largest component of the state appropriated funding at 60 percent, and tax revenue (or state general fund) comprises the next largest portion at 27 percent. The percentage of state funding from tax revenues has declined over time, while dependence on tuition and fees as a revenue source has increased.

TABOR

As discussed in Chapter VI, the passage of the TABOR (Taxpayers Bill of Rights) Amendment in 1992 was perhaps the most pivotal event impacting state appropriated funding in the past decade. Restrictions caused by TABOR may have long-range, serious consequences for the campus’s resource base. In the absence of specific authorization from voters, TABOR limits growth of tax and other revenues in the state (outside of revenues from state "enterprise" operations) to the sum of population growth and inflation.

As a result, TABOR restricts the entire university in two ways. First, state expenditures are restricted by limits on revenue growth; consequently, state support for the university can only be expected to grow modestly. More importantly, tuition is considered to be within the state’s revenue base, which implies that the university’s tuition revenue stream is constrained by TABOR. To date, the TABOR amendment has not resulted in significant damage, but its effects could be more severe in the future.

Tuition and Fees

In the past decade, growth of tuition and fees was rapid in the early part of the period, but slowed in the latter half—due in part to the TABOR restrictions. Overall, undergraduate and graduate nonresident tuition and mandatory fees have doubled since 1989, while resident rates have increased less than 70 percent.

From 1989 to 1994, there was a more rapid percent increase in tuition rates than from 1994 to 1999. Tuition rates for undergraduate and graduate resident students grew 34 percent and 42 percent, respectively, from 1989 to 1994, while increasing at a more moderate rate of 18 percent from 1994 to 1999. Tuition and fees increased 55 percent for undergraduate and graduate nonresidents from 1989 to 1994, but increased about 30 percent for the period 1994-99.

Mandatory student fees, which must be approved by the Board of Regents, are used for such purposes as student government, cultural events, and student health insurance. Prior to board approval, fee proposals must go through a formal process involving input from students, faculty, and campus administration. In addition to mandated fees, there may be additional course fees to help offset the higher costs of specialized supplies and equipment unique to certain courses and laboratories.

Direct Lending Cuts Paperwork

CU-Boulder became a direct lending school in 1995, resulting in significant improvements in providing students their financial aid monies. These improvements include far less paperwork by students and their parents, as well as a more timely distribution of funds. In addition, the electronic transfer of funds to the students' accounts has resulted in reductions in administrative overhead.

Tuition Reform Proposals

In the past year, the Boulder campus has proposed a set of tuition-related plans aimed at addressing important financial needs. The plans would require approval both by the Board of Regents and the state legislature. Proposals currently under consideration by the regents include:

• Guaranteed tuition: Beginning in fall 2000, CU-Boulder proposes a program in which annual tuition (including course fees) for entering full-time freshmen would be guaranteed to remain the same for four years, or until 135 credit hours have been completed within a five-year period.

  Freshmen entering in fall 2000 would pay a tuition rate 2 percent greater than the rate set by the legislature. Tuition then would remain fixed at that rate for those students, according to the plan definitions. The 2 percent rate premium would be applied to each subsequent entering class as required, to offset predicted inflationary cost increases during the remaining three or four years of enrollment.

• Nonresident Tuition Financial Aid Surcharge: Beginning in fall 2000, the Boulder campus proposes a one-time 1.5 percent nonresident tuition surcharge, the revenues from which would be used to support institutional financial aid for need and merit purposes.

• Graduate Appointment Tuition Rate: All graduate students, whether resident or nonresident, who hold an academic appointment would be charged a special tuition rate, comparable to the resident rate. As a result of the substantial difference between nonresident and resident tuition rates, academic appointments for nonresidents use up resources at rates five times faster than those for resident students, thereby reducing the number of available appointments for all students. By charging the resident tuition rate for all graduate students with academic appointments, the campus would enhance its ability to recruit greater numbers of qualified resident and nonresident graduate students. This action would be revenue-neutral under TABOR, yet would improve significantly the flexibility of institutional funds to support graduate education.

Auxiliary Funding

A number of self-supporting auxiliary operations provide a wide range of services, such as housing, intercollegiate athletics, the bookstore, the Division of Continuing Education, and Wardenburg Health Center. The auxiliary units have experienced significant growth in the past decade, in line with the overall growth of the Boulder campus. Auxiliary revenues have increased about 73 percent over the past 10 years.

Restricted Funding

The restricted fund, which consists of contracts, grants, gifts, and endowments, has grown about 200 percent from FY 1989 to FY 1999. Most of this growth can be attributed to the campus’s active research enterprise. As discussed in Chapter V, CU-Boulder has achieved substantial success in serving its research and scholarship mission.

Scholarships and Fellowships

In 1995, CU-Boulder became a direct lending institution, an administrative change that contributed to an apparent steep increase in the amount of student financial aid offered through the campus. Direct lending currently represents about $74 million of the campus restricted scholarship funds. The campus actually has very limited institutional financial aid resources, particularly for resident student merit awards and for nonresident financial need or merit. This situation hinders the campus’s efforts to recruit a talented and diverse student body.

In comparison with peer institutions, CU-Boulder ranks among the lowest in institutional financial aid, at 6.3 percent of tuition and fee revenues. The vast majority of the campus’s existing financial aid is directed at residents with high financial need, without sufficient regard to merit. Additional merit-based aid is necessary to compete with other non-Colorado institutions, in order to keep more of the most outstanding high school graduates in Colorado. The Norlin Scholars Program, discussed further in Chapter V, is an example of a new program that targets residents and nonresidents with exceptional motivation and preparation. In its first year, the Norlin Scholars Program was able to offer merit scholarships to only 7 percent of qualified students applying to the program. Most of those applicants not offered a Norlin award enrolled in universities other than CU-Boulder.

The university generally is discouraged from using state appropriated funds for nonresident financial aid. Consequently, there is little institutional aid available to nonresident students. Some nonresident tuition revenue has been designated for this purpose, and the campus has proposed a plan to increase this amount (see prior discussion of tuition reform proposals).

Although originating from a modest base, the campus has worked to increase the amount of institutional aid available. Since FY 1989, institutional aid has increased more than 300 percent, from about $1.9 million to $7.8 million in FY 1999.

Private Giving

The Boulder campus is actively engaged in the fourth year of CU’s Total Learning Environment Campaign, a systemwide fundraising effort tied to the TLE goals. The overarching goals of the TLE Campaign for CU-Boulder are:

• To raise the level of annual private-gift fundraising in support of the campus strategic mission and IRMS goals;

• To strengthen the campus fundraising infrastructure for the future.

The campus campaign already has raised the threshold for private gifts. As recently as 1991-92, the campus raised about $22 million in private funds. At the end of FY 1998-99, the campus posted a record $56.3 million in private gifts, surpassing its $47.9 million goal by more than $8 million. Combined with previous campaign results from FY 1997 and FY 1998, the Boulder campus now has raised $128.9 million, or 43 percent, toward its campaign working goal of $300 million.

The success of the campus campaign can be attributed in part to more sustained focus by all schools and colleges on major-gift fundraising and increased involvement by deans, campus leadership, and faculty in development endeavors. The campaign also has encouraged increased involvement by college/school advisory boards in development activities. The campus goal for FY 2000 is to raise $65 million in private gifts and commitments for the TLE Campaign.

Integrated Resource Management Strategy (IRMS)

Resource constraints clearly form a fundamental obstacle that the University of Colorado at Boulder must overcome in order to continue serving its mission. The Integrated Resource Management Strategy (IRMS), implemented under the direction of President John C. Buechner, is a comprehensive multi-year, strategic planning process. This initiative aims to increase the resources of the four CU campuses by refocusing existing resources, enhancing traditional resources, and developing nontraditional revenue streams.

Revenues generated through IRMS strategies will be used to support and fund a variety of campus strategies and actions, including enhancing undergraduate education; increasing institutional financial aid; and designing, building, and renovating state-of-the-art facilities and infrastructure on campus.

Campus TLE goals and actions have been developed and reviewed by faculty, students, and staff, and approved by the Board of Regents. These goals currently are being linked to campus resources, using the IRMS framework.