Statement by the President concerning the 2010-2011 AY Budget

19 January 2010

Dear students, faculty and staff,

I hope this message finds you well and in good spirits.

The recent financial crisis has affected all institutions of higher education around the world, including the most elite. While some are suffering more than others, only a few institutions have been able to respond in a way that has made them stronger and more financially viable. KIMEP is included in this select group of institutions that properly responded to the crisis.

Over the past year, KIMEP introduced an institution-wide restructuring program and strict cost-cutting measures. While these decisions were difficult to make, they paid off. Because of restructuring, we saved more than $3 million this year and now have a firm financial footing to carry us into the future. The monetary gains resulting from these measures are being used to maximize the quality of the education at KIMEP. We are recruiting more faculty members in areas of high demand, improving facilities and continuing to build KIMEP into the kind of world-class institution that everyone can be proud to call their own.

With this in mind, allow me to introduce our budget for the 2010-2011 Academic Year. During the budgeting process several factors had to be considered:

The economic contraction in Kazakhstan is still continuing;
The population of high school students in Kazakhstan is decreasing;
There will likely be a decline in enrollment at KIMEP, based on the credit hours taken;
Kazakhstan is experiencing an increase in price levels due to inflation. This will lead to an increase in administrative costs.

The current inflation rate, as stated by the Government of the Republic of Kazakhstan, is 8 percent. There is wide consensus that inflation in Almaty may be higher than this.

KIMEP also must satisfy the following needs, in order to continue to grow and develop as an institution:

We must provide a substantial financial aid program to students who need assistance;
We must continue to recruit exceptional faculty members and administrative staff;
There is a strong need for significant capital investments, including a renovation of the Dormitory and Sport Complex, repairing and maintaining other buildings around campus, replacing classroom equipment and improving our computer labs;
We must develop a significant reserve, in order to ensure financial stability.

The initial budget was designed by the KIMEP Budget Committee, which consists of eight members of the administration and faculty, as well as three students. All members approved a budget based on the following assumptions:

Number of credits	120,342
Number of credits change (vs AY 2009-10)	-6%
Tuition fee increase	12%
Other revenue increase	0%
Payroll increase	10%
Operating expenses increase	12%
Financial aid (of tuition revenue)	9%
Reserve Fund (of total revenue)	8%

The budget was then reviewed by the KIMEP Student Association (KSA), who met with the administration several times[i] to discuss the budget in detail. They were allowed to review any and all documents concerning the financial standing and budget planning process of KIMEP. After explaining their concerns to the KIMEP administration, KSA proposed a budget based on these assumptions:

Number of credits	120,342
Number of credits change (vs AY 2009-10)	-6%
Tuition fee increase	5%
Other revenue increase	0%
Payroll increase	7%
Operating expenses increase	8%
Financial aid (of tuition revenue)	9%
Reserve Fund (of total revenue)	5%

The KIMEP Board of Trustees was offered these two budget proposals, as well as a third proposal based on recommendations of KIMEP Management. After much deliberation, where different board members supported both the higher tuition increase and the lower tuition increase, the following budget was approved by the Board. I greatly appreciate all the work that was put into creating this year's budget. My deepest gratitude goes out to all of those students, faculty members, administrators and Board of Trustees members who sacrificed their time and energy during this exhaustive process.

The following assumptions were used to determine the final version of the 2010-2011 AY Budget:

Number of credits	120,342
Number of credits change (vs AY 2009-10)	-6%
Tuition fee increase	9%
Other revenue increase	0%
Payroll increase	10%
Operating expenses increase	9%
Financial aid (of tuition revenue)	9%
Reserve Fund (of total revenue)	6%

Following the budget that was approved by the Board of Trustees, tuition for the next academic year will increase 9 percent.

We are continually working to minimize costs throughout the institution. We are able to limit the increase in tuition thanks in part to the strict cost control measures we have taken this last year. A new review of the administrative costs of KIMEP has already begun, and I am certain that we will find ways to increase our efficiency and productivity. We will solve these areas of weakness by further training staff to deliver even better education services to our students.

We are increasing the amount of money set aside for financial aid to 9 percent of total revenue, or $2.1 million. Strengthening our financial aid program will alleviate the burden many of our students and their families are feeling during this difficult time. More students will be able to receive financial support, and many of the students already receiving financial aid may see their tuition discounts increased. KIMEP also has a social obligation to help qualified students receive the education they deserve, regardless of their personal financial situation. Combined with external scholarships and grants, this will give KIMEP one of the strongest and most comprehensive financial aid programs in the entire CIS.

We are also improving physical facilities throughout the campus. We are installing a new ventilation system in Halls 1 and 2 of the Valikhanov Building, at a cost of $61,000. We are renovating the sports complex. Based on the recommendation of the KIMEP Tender Committee, this project will cost approximately $874,026. This cost is still in negotiation.

We are planning to invest over a million dollars to improve our dormitory. KIMEP Administration is committed to its highly transparent tender process and to fiercely negotiating the price of this project. This will ensure that KIMEP receives the maximum value for the money invested.

Faculty payroll was increased 10 percent this year, and if possible, I would like to increase payroll further at the beginning of the next academic year. These increases are to help faculty members cope with inflation and recover from the February 2009 devaluation of the tenge, which reduced the dollar-value of their salaries by 25 percent. These increases will also allow us to continue to recruit and retain world-class faculty members, who will be instrumental in continuing the development of KIMEP into one of the best academic institutions in the entire world.

KIMEP has increased the amount of revenue kept in reserves to 6 percent, which will translate into almost $1.6 million. Throughout the accreditation process, the New England Association of Schools and Colleges emphasized that KIMEP keep at least three months' operating costs in reserve, to ensure financial stability. Regardless of the economic climate, it is imperative that KIMEP remain financially secure and able to maintain the very high quality of its academic programs. By the end of next year, we will have $4.2 million in reserves. This sum will continue to grow over time.

Cost cutting measures have kept us from filling various administrative positions over the last year. These needs must also be addressed. We are advertising key executive positions, who will be able to strengthen the administration of KIMEP and help us provide even better educational services.

In the end, KIMEP belongs to you. While I will eventually leave, KIMEP will remain, and the KIMEP name will be with you forever. It is my personal goal to build KIMEP into a world-class academic institution that provides the best possible education services given the resources we have available. We have made incredible progress these last few years, and I am proud to have been a part of it. I hope that KIMEP will remain a place that you too can speak of with pride, knowing that together we have worked to create one of the most remarkable institutions in the entire world.

Yours Sincerely,

Chan Young Bang, Ph.D.

[i] These meetings occurred on November 3^rd, 5^th and 11^th, each averaging two hours in length.

2010-2011 AY Budget Summary
Adobe PDF