Finance Committee holds second annual Finance Town Hall

In place of the Undergraduate Student Senate meeting on April 21, the Finance Committee (headed by senator Diana Crookston) held the university's second annual Finance Town Hall. Presenters included Vice President for Finance and Chief Financial Officer Angela Blanton, Associate Vice President and Director of Enrollment Services Lisa Krieg, and Director of Finance, Student Affairs Jennifer Cox-Siegel.

Blanton shared information regarding the university’s revenues and expenditures. About 46 percent of Carnegie Mellon’s current income is student-based, while roughly 71 percent of its costs are associated with serving students. Blanton also broke down where the university’s revenues come from and where they go.

In fiscal year 2021 (FY21), the university had a total of $1.283 billion in operating revenue and support. Thirty-five percent came from sponsored projects (revenues from third-parties like the federal government for research projects), 11 percent was from gifts and endowment distributions (gifts received from donors and from the Carnegie Mellon endowment), one percent came from investment income, seven percent came from “other revenue” (government-received financial aid, royalties on investments, third party-sponsored reimbursement of Carnegie Mellon's international program), 44 percent comes from tuition and fees (undergraduate, graduate, and pre-college tuition; net of student-based financial aid), and two percent comes from auxiliary services provided by the university (housing, dining, parking, etc.).

The breakdown of tuition is $279 million from undergraduate ($397 million gross, $118 million from financial aid), $256 million from graduate ($315 million gross, $60 million from financial aid), and $34 million from other tuition.

The university had a total operating cost of $1.267 billion in FY21. The difference of $16 million between operating cost and revenue will go into future university investment. Blanton gave the example of the Highmark Health Pavilion, which will open fall 2023. Though a large part of the building's funds come from outside sources, the university will pay for some of the associated costs.

Blanton went on to discuss the university’s operating costs by function. Twenty-nine percent of costs are for sponsored projects (research related expenses sponsored and funded by third parties), three percent is for auxiliary services, four percent is for student services (student affairs administration, enrollment services, financial aid services, etc.), nine percent is for capital funded by operations (building construction and renovations), 11 percent put toward administration and institutional support (president, operations, legal, risk management), 13 percent goes into academic support (provost, college deans, libraries and computing services, etc.), and 31 percent is for instructional and departmental research (academic-related expenses focused on student instruction, curriculum development, and academic advising).

When comparing the revenue and expense coverage, Blanton noted that revenue for sponsored projects and auxiliary revenue covered their respective expenses. The rest of the revenue coming from students and other funding sources went toward student-serving expenses.

The next section focused on comparisons between Carnegie Mellon and peer universities. There was a brief discussion that Carnegie Mellon has 16 programs that rank into the top five of their field in the U.S. News and World Report Undergraduate Program Rankings, with nearly double that ranking in the top 20 of their category nationally. A graph showed the contributions of educational expenditures per student from external sources like gifts and endowment income compared to tuition share. Out of the universities shown (which included MIT, CalTech, UPenn, Brown, and others), Carnegie Mellon had the highest share of per-student expenditures come from tuition at 69 percent of the estimated $67,000 spent per student.

While Carnegie Mellon was toward the lower end of expenditures per student, the reason they had the highest percentage coming from tuition share is due to its comparatively low internal revenue sources. For instance, MIT has the highest expenditures per student at $239,000, but only 14 percent of that comes from tuition since they a large internal revenue from gifts and endowments.

In the upcoming academic year 2022-23 (AY22-23), tuition will increase by four percent, which is higher than the previous increase of 3.2 percent in AY20-21. There was no tuition increase during AY21-22 due to COVID-19. Carnegie Mellon annually raises their tuition at about the same pace as their private university peers. It was also noted that Carnegie Mellon meets the full need of its students who apply for financial aid in alignment with tuition increases to support access and persistence. In the past six years, the annual financial aid spending has increased 55 percent, totaling $120.8 million in FY22.

Blanton said the reason for the tuition raise is “to address increases in operating expenses, personnel costs (faculty, staff, students), academic facilities renovations, and the student experience.” The increased funds are expected to promote “a world-class education.” The Board of Trustees decided on a four percent increase following recommendation from university leadership. Analysis and simulations played a large role in how university leadership arrived at a recommendation, which encompasses the university’s mission and strategic goals, the anticipated increases in the cost of students’ educational experiences, and financial aid needed to meet the full need of students.

Krieg focused on undergraduate financial aid. Her first topic was the goals of financial aid, including access for students from all socio-economic backgrounds, supporting equal access and increasing enrollment diversity, meeting financial need and decreasing student financial stress, and promoting the university's retention rate.

Students who are U.S. citizens and permanent residents can apply for financial aid through Carnegie Mellon. They must complete two forms: the FAFSA from the U.S. federal government and the CSS profile from the College Board. Both give an estimated family contribution (EFC) of how much a family is expected to contribute to their child’s education. A student’s financial need is the difference between cost of attendance and a student’s EFC. According to Krieg, the FAFSA and CSS profiles may give slightly different numbers since the CSS profile takes more consideration of students' families' assets. Carnegie Mellon uses the EFCs from both to determine how much financial aid to provide.

Since fall 2016, Carnegie Mellon has met the full need for every admitted first-year. Currently, 45 percent of undergraduates at Carnegie Mellon receive grants from the university. Additionally, 14 to 16 percent of each first-year class receive Pell Grants, awarded by the federal government to students with exceptional financial need. Admission at Carnegie Mellon has a “need-blind stance,” so financial need of U.S. applicants is not considered for admission. It was also noted following a question from the audience that domestic and international students are treated equally in the application process; international students are not treated differently even if they will not receive financial aid.

In AY20-21, $150.3 million was distributed to students for financial aid. Of this, $113.9 million from Carnegie Mellon grants, $8.2 million from federal grants, $6.9 million from tuition remission (students who are dependents of Carnegie Mellon staff or faculty have at least part of their tuition at Carnegie Mellon or another institution paid by the university), $3.7 million is from other grants, and $17.6 million is from “self-help.” Any aid that a student has to apply for on their own falls under self-help. This includes $10.4 million in federal student loans, $6 million in private student loans, and $1.2 million in federal work study.

Krieg said nearly all financial aid applicants have historically been awarded federal direct subsidized loans. These are preferred over unsubsidized loans since no interest is accrued while the student is enrolled in an educational institution. The cohort that graduated in AY20-21 had 38 percent of students borrow federal loans, with the average student graduating with $20,353 in federal loan debt. It was also noted that almost all Carnegie Mellon students repay their loans. For the past five years, less than one percent of federal loans borrowed for Carnegie Mellon tuition default in their first three years of repayment.

In the past three years, the average amount of federal debt that the average Carnegie Mellon student graduated with decreased from $25,900 to $20,000. This coincides with a decrease in the number of students who graduated over the last four years, starting at 59 percent in 2018 to 38 percent in 2020 and 2021.

Krieg also showed the institution grant amounts Carnegie Mellon distributed over the past six years and forecasts for the next four. The main growth between 2016 and 2021 came from undergraduate tuition. Gift amount makes up a very small fraction of the total funds distributed to undergraduates, and endowment funds remained fairly stable until extreme increases in the past three years. Projections for the next four years estimate an increase of about $30 million, including a sizable increase from endowments and undergraduate tuition.

The main reason Krieg gave for the increase in institutional spending is the university’s “meet-full-need approach.” Though most of the increase in aid spending comes from tuition revenue, Krieg highlighted the importance of giving to the Carnegie Mellon campaign to raise funds for financial aid when possible, citing personal donations made to the financial aid office.

The next point of discussion regarded Higher Education Emergency Relief Funds (HEERF) that Carnegie Mellon received and distributed in response to the COVID-19 pandemic. A total of $13.9 million in HEERF and CARES emergency grants were given to students. Sixty-eight percent of these funds went to undergraduates and 32 percent went to graduate students. The university maximized the student grant allocation from HEERF funds and distributed 100 percent of their emergency grant allocation. The financial aid office is prepared to respond to student emergencies.

The priority of HEERF requests was housing, food, technology, course materials, health care, and child care, respectively. It was also noted that over 75 percent of applicants indicated more than one expense category that was provided when explaining why they needed HEERF.

The Tartan Emergency Support Fund (TESF) also provided assistance for students during the course of the pandemic. More than $795,000 was distributed to over 1,000 students, across undergraduate and graduates and domestic and international students. The TESF was established through “funds through the generosity of alumni, friends of the university, Undergraduate Student Senate, Graduate Student Senate, and student organizations.” Its main goal is to give students “emergency funds to assist with unforeseen expenses related to pandemic disruptions.”

For each year of the pandemic, roughly 450 students have requested a review of their financial aid due to a major change in their financial situation. During a normal year, Krieg said, this number is usually around 150 to 200. Most of these cases were because the student’s family lost some, if not all, of their income as a direct result of the pandemic. Krieg stated that each request is reviewed individually by the office for financial aid and adjustments are made based on the family’s unique circumstances.

The presentation concluded with Cox-Siegel, who discussed finances from the SLICE Office. There are four ways student organizations spend funds: expense reimbursement (personal funds are used which are then reimbursed), PCard purchasing (the organization uses a university-issued credit card), purchase orders (purchase made through a vendor), or journal entries (funds transferred between organizations). In FY19, the last fully in-person year, SLICE had 6,086 expense reimbursement requests, 4,706 PCard purchases, 935 purchase orders, and 2,505 journal entries. After students submit requests for payment to the SLICE finance inbox, the finance team follows up with the student until all details are resolved, the transaction is processed, and the appropriate paperwork is filed.

There is an ongoing evaluation to determine how to make this process more efficient and effective. Recent improvements include transitioning to processing student employees through a streamlined employee reimbursement process, converting to electronic submission of all backup documentation, and eliminating tax exemptions. Due to the nature of the student activity fee, it was much more difficult and time consuming for SLICE to process requests that were tax exempt.

Upcoming changes include submissions changing to an online web form with built-in logic gathering necessary information, completed forms routing to workflow queues to allow oversight of volume and outstanding items, and new electronic record retention.

The Senate Business Affairs Committee will be hosting a hybrid forum for student workers on Monday, April 25, from 5 p.m. to 6:30 p.m. in Doherty 1211 and over Zoom. Students are encouraged to attend and share their experiences with employment at Carnegie Mellon.