1 funding the enterprise financial perspectives: progress, challenges, and opportunities for funding...

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FUNDING THE ENTERPRISE

Financial Perspectives:

Progress, Challenges, and opportunities for Funding the Strategic Plan

To be presented at the

Vice Chancellor’s Retreat

August 2009

FUNDING THE ENTERPRISE

This presentation is structured as follows:

Progress

Challenges

Opportunities

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Funding the Enterprise

PROGRESS

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Progress made in Funding the Strategic Plan UWI’s Strategic Plan (2007/08) Funding Requirements:

Overall UWI received budget approval for most of the Strategic initiative funds requested With the exception of Mona, funds requested were approved

FY 2007/8 Cave Hill Mona St. Augustine Centre

Funds Requested

BD$2.3M J$ 40 M TT$13.3 M BD$1.9 M

Budgets Approved BD$2.3M - TT$13.3M BD$ 1.9M

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Progress made in Funding the Strategic Plan UWI’s Strategic Plan (2008/09) Funding Requirements:

Overall UWI received budget approval for 55% of the Strategic initiative funds requested

The J$100m approved for Mona included some funding for the Western Campus

FY 2008/9 Cave Hill Mona St. Augustine

Centre Open Campus

Funds Requested BD$21.2M J$520M TT$30M BD$3.3M BD$11.7M

Budgets Approved BD$10.5M J$100M TT$13.3 BD$3.1M BD$11.7M

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Progress made in implementing initiatives In spite of some funding gaps, progress was made in

both FY 2007/8 and FY 2008/9 in implementing initiatives by supplementing the amounts approved by the reallocation of resources

Cave Hill: There has been implementation of some of the initiatives in the areas of Student Centeredness ; Expansion of Access; Enhancing Regionality , Capacity Building ICTs , Capacity Building HRM to an approximate value of BD$ 4.8Million.


Progress at Cave Hill (cont’d)For 2009/2010 the TAC approved $1,000,000 for postgraduate

students/research. Additionally, the Government of Barbados is providing by way of a capital grant -$14 million. $8 million is being provided as part of $20 million for a new library (the balance due in 2010/2011) and $6 million for the Faculty of Medical Sciences – Clinical .

Mona: The Western Campus has been established. Mona has also spent approximately J$36M on Graduate Studies, Public Relation and Establishment of International Student offices. of which about 33% was from the reallocations of resources.

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Funding the Enterprise St. Augustine: To deal with the increase in student numbers and

changes in enrolment mix, approximately TT$25M was spent on Teaching & Learning by strengthening the various Departments. A portion was also spent on research assistants, with respect to Graduate Studies;

Centre: Funding was applied to the establishment of the Centre for Criminal Justice and Security; Centre for Disaster management, funding for Strengthening of the Strategic planning office; strengthen the Office of the Chief Information Officer; Increase staffing for Seismic Research Unit; funding for administrative transformation;

Open Campus: To date has spent approximately 75% of approved funds.

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Some progress has been made in cost saving and income generating initiatives

Source of operational savings regionally includes: Insurance Pooling Administrative transformation

Sources of potential income generation include UWI Consulting Inc. set up Establishment of an Endowment fund ( est. US$20 M over 5 years)

Cost savings from operations. Example energy saving project at the Mona Campus.

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CHALLENGES

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The Global Challenge

The latter half of calendar year 2008 and following through into 2009 has proven financially to one of the most difficult periods from a global and by extension regional perspective.

UWI experienced significant budget cuts for FY 2009/10, and this will have an impact on the implementation of its strategic initiatives and recurrent operations.

Going forward, UWI must find ways and means to rise to this challenge, and ensure that the strategic transformation started in 2007/8 effectively continues

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Funding Challenges : The Annual Funding Cycle

2. February/MarchTAC/ UGC meetingsUWI Budget cuts by Govt’s in line with their resources

3. April UWI reallocation of

resources

1. October/ NovemberAnnual preparing of Budgets

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Budget negotiations for FY 2009/10 proved to be most challenging regarding the provision for the Strategic Plan Initiatives

Strategic Initiative Funding Gap for 2009/10 is approx BD$ 39.6 Million or ~ 72% of what was requested

F/Y 2009/10 Cave

Hill

Mona St. Augustine

Centre Open Campus

TOTAL

Funds RequestedBD$28.7M J$200M TT$34.5M BD$2.1M BD$6.9M BD$54.6M

Budgets ApprovedBD$7.8M - - BD$0.2M BD$6.9M Bd$14.9M

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Whereas the core budgets were reasonably well funded (97%), there was overall a significant shortfall in the funding of the Strategic Initiatives.

Cave Hill Mona St. Augustine Centre OpenCampus

Shortfall

Approved

Requested

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The reallocation and sourcing of additional resources will be necessary to continue the implementation (support) of the strategic plan.

This will mean an examination of Internal / External funding sources INTERNAL FUNDS

EXTERNAL FUNDS

1. Operational Savings

2. Admin charges on Projects

3. Budget Reallocations (virements)

1. Government (Public) Funds

2. Grants ( Operating / Project)

3. Funding agencies

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5. External Business partners4. Commercial Ops

4. Tuition Fees

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Bridging the BD$ 39.6 M Strategic Plan Funding Gap for FY 2009/10

Bridging of this gap will involve the following:

Operational Savings – both staff and non-staff Budget Virements Project Admin Fees Surpluses from Commercial Operations Seeking increased External Funds


Potentially a major source of external funds could be from the EU and multi-lateral lending agencies who are willing to lend directly to the University, with or without a government guarantee.

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Research Funding : Special Challenge of UWI Increase in Research Funding is vital for the expected deliverables of the

University, and for the University to play its role in the transformation to the Knowledge Economy.

Academic output should include teaching, research and public service: the challenge is to how to measure the research component.

UWI is the leading in research University in the region: the challenge is to enhance that.

How can we effectively improve and enhance our acquisition of funds from external sources for this vital area.

Different types of research possibly require differ types of funding strategies

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OPPORTUNITIES

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To Enable Transformation to happen in UWI

Some of the measures to raise funds to support the implementation of the themes and thereby enable the transformation, and also diversify our sources of income, will include the following:

Obtaining funds through grants,

Planned giving,

Entrepreneurship and commercialization

The above should be revisited with planned approaches

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Plan to achieve or surpass the UWI Regional endowment Fund target of US$20M within 5 years

Follow through on the Capital Development Task Force recommendation of the leveraging the land. The objective here is to use unutilized campus land directly as collateral for commercial loans (without the necessity for government guarantees), which could then be used to finance capital projects (both commercial and non-commercial)

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Adjustments to the ratio of tuition fees/ government Sponsorship from the current 20/80 progressively towards acquiring more than the 20% recovery from tuition fees

•Tuition Fee increases may have negative impact on enrollment

•Students could be facilitated through adequate loan facilities. Linked to this will be provision of student loans on an income contingent basis from a pool of funds.

•UWI should consider assisting Governments in obtaining loan funds directly from international lending agencies which are willing to lend for such purposes

•There should be a marketing programme that informs and educates stakeholders and the public well before any increases in Tuition Fees.

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Consideration for usage of the Triple Helix approach for Research Funds

The concept is built upon the cooperation between Industry , Academia and the Public sector.

This model was applied successfully by the Scandinavian Countries

This approach could assist the UWI in building on the existing arrangements it has with the industry for enhancement of research funding.

Committee to be established to explore the implementation of the Triple Helix concept.

Perhaps at the outset, this could be more applicable to cluster research

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Triple Helix Concept: Symbiotic relationship between

Public Sector; Business/Industry and Universities

Businesses Fund Applied / Directed Research; Utilize University facilities at reduced costs;Build on innovations created by university

Generate increase taxes for government

Universities undertake Applied research developInnovative products for Businesses

Public Sector provide incentives to businessesAnd Universities

Applied And

Directed Research

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Some Strategies with respect to Alternative Funding Arrangements

Preferential treatment for UWI Consulting Inc.

UWI issued (revenue) bonds /Securitization

Government issued serial bonds

Government incentives for philanthropic giving to the UWI Regional funds pool (Income Stabilization Fund)

Selected development of Commercial Operations ( BDO’s)

Most if not all have been mentioned before, but what we need are firm realistic plans with deadlines

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• UWI could consider the use of debt instruments as one of the methods to bridge the funding gap

• Based on financial parameters UWI has an additional loan capacity of US$75Million

• UWI is actively engaging the IFC (International Finance Corporation) for a US$50M loan facility. Positive feedback has been received

• Long-term bonds should be considered for capital Development and operation requirements

•Rolling long-term debt on maturity of bonds

•Main requirement would be the interest servicing cost, which would be included in the budget

Utilizing Loan facilities

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An Outline of a Securitization Structure for UWI

Collection Account

Administered by Paying Agent

Investors

UWI

Users

4. Amounts in collection

account used to service

5. Excess collections are

pass thro ugh to UWI

1. UWI issues bond to investors

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Designated Account

Transaction Structure – Ongoing

2. Proceeds of Bond

• UWI could use securitization to effectively credit/enhance its additional potential debt obligations ( thereby having lower debt service costs)

•Could be applied to some capital projects which are income generating e.g. car parks etc)

Payments to

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Income Stabilization Fund

Regional governments have promoted education as the vehicle for regional and national development. They should be encouraged to continue to demonstrate that commitment.

Various types of funds have been established by the regional governments: Funds for the establishment of the Caribbean Court of Justice and a Caricom Development Fund are examples

The idea is not simply to tap into the Fund every time there is a budget short fall, but to assess the impact of the shortfall on the critical aspects of the operations and plans of the campuses and Centre.

Utilization of the fund will depend on certain triggers and agreed criteria.

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Funding of the Stabilization Fund

Fund should be managed through the establishment of a regional Committee with external representation.

The most traditional method of funding stabilization schemes of this nature is using Pre-funding by Annual assessments

1 funding the enterprise financial perspectives: progress, challenges, and opportunities for funding...

Documents

funding requirements

funding gaps

enterprise progress

approved funds

seismic research unit

approved fy

strategic initiative

strategic planning office