3 For fiscal year 2024-25, we are projecting a modest increase to total revenues as we benefit from a 7.7% increase to state appropriation (slightly more than the 6.5% allocation to the System) but lose the CSFRF revenue that was spread out over the prior two years. We are anticipating flat enrollment which we believe is attainable after seeing our fall FTE enrollment in the prior year increase by 1.6% representing our first enrollment increase in several years. We have built in modest fee increases to our housing and dining auxiliary operations as previously approved by our Council of Trustees. The financial challenge moving forward is covering the full impact of the recently approved collective bargaining agreements. We will see our salary and benefit costs increase by $9 million or 8.5% in just one year. Thanks to our prior efforts in right sizing our budget, we are able to weather this storm without having to make drastic reductions. The primary impact will be seen in a smaller transfer to plant and a more modest increase to our net assets and cash balances. This will have less of a short-term impact but may limit our options in future years. For fiscal years 2025-26 and 2026-27, we are following the System guidance to reflect a more modest 2% increase to state appropriations and no increase to the undergraduate in-state tuition rate. We continue to project flat enrollment which we believe is backed by our substantial investment in student financial aid of $16 million and supported by the enrollment trends within the counties that represent our primary source of new students. We have built in modest fee increases for our auxiliary operations, but the overall impact only results in a revenue increase of approximately $2.5 million or 1.5% in the two future years. These conservative assumptions do put a strain on our ability to balance our budget and will require additional cost cutting measures. We have reflected additional reductions to our fall FTE faculty in the amount of 5 FTE per year which we believe we will be able to attain through normal turnover and retirements in lower enrolled academic departments. This action is needed to balance the budget in the out years and will result in a studentto-faculty ratio of 19.3 which is just shy of the System average from 2010. We also see a reduction in our debt principal payments in future years as we continue to pay off old debt that was borrowed to support renovations across campus. In order to address our deferred maintenance needs, we are showing a substantial investment in a future residence hall renovation in the amount of $20 million spread across these two future years. The impact of those plans would result in a slight decline to our unrestricted net assets and cash balances through 2026-27. These plans are still under consideration but certainly represent an acceptable use of reserves and a clear justification behind the declining balances displayed in the above chart. As displayed and explained throughout this CPP submission, we believe Kutztown University has shown tremendous progress in improving its financial sustainability as measured by the State System and are confident that we are positioned well to address future challenges. We are committed to a balanced budget without the use of cash reserves and will continue to take the necessary steps on an annual basis to ensure that is achieved.
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