1

University of Missouri February, 2013

Natalie “Nikki” KrawitzVice President for Finance and Administration

2

Board of Curators

PresidentTimothy M. Wolfe

Vice PresidentNatalie “Nikki” Krawitz

Secretary to the Vice PresidentMemoree Bradley

ControllerJane Closterman

AccountingFinancial Information Systems

Financial Reporting Sponsored Programs

PayrollTax Reporting

Assistant Vice PresidentManagement Services

Dave Sheahen

Facilities Planning & Dev.Risk & Insurance Mgmt.

Business ServicesRecords ManagementMinority Business Dev.

TreasurerTom Richards

Cash ManagementDebt Management

BankingRetirement &

Endowment Fund Management

Assistant Vice President for Budget Planning &

DevelopmentCuba Plain

Budget Planning, Development, & Monitoring

Appropriations RequestInstitutional Research &

Planning

Director of Financial ServicesNilufer Joseph

Internal AuditCompliance

Scholarships (Tuition Settlement, MOST)Financial Analysis

University of Missouri SystemOffice of the Vice President for Finance & Administration

Chief Procurement Officer &

Director, Sourcing and Supply Chain (UMHC)

Tony HallSystem-wide Procurement

3

State Budget Update

4

State of MissouriFY2013 Total Operating Budget - $24b

General Revenue, $8,013m 33%

Federal, $7,905, 33%

Other, $8,112m 34%

Sources of Funds

5

State of MissouriFY2013 General Revenue Total $8.014m

Elementary & Secondary

Ed $2,917m,

36.4%

Higher Ed $790m, 10.6%Judiciary & Elected Officials, Gen Assembly $290m, 4%

Corrections & Public Safety

$665m, 8.3%

Human Services

$2,372m, 39.6% All Other $919m, 11.5%

6

Higher Education: A Shrinking State PriorityFY

91FY

92FY

93FY

94FY

95FY

96FY

97FY

98FY

99FY

00FY

01FY

02FY

03FY

04FY

05FY

06FY

07FY

08FY

09FY

10FY

11FY

12FY

13

10%

11%

12%

13%

14%

15%

16%

17%

Percent Total General Revenue

Perc

ent

7

State support for higher education in Missouri is significantly lower than comparator states

FY2012 State Appropriations for Higher Ed per $1,000 in Personal Income

Arka...

Illinois

Iowa

Kansas

Kent...

Miss...

Nebr...

Okla...

Tenn... U.S.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

$9.17

$6.31 $6.03 $6.35

$8.42

$4.04

$8.49

$6.70 $6.08$5.63

8

Missouri ‘s support for higher education on a per capita basis is less than comparator states

FY2012 State Appropriations for Higher Ed per Capita

Arkansas

Illinois

Iowa

Kansas

Kentucky

Missouri

Nebraska

Oklahoma

Tennesse

eU.S.

$0

$50

$100

$150

$200

$250

$300

$350

$400

$307.55 $278.65

$241.34$257.59

$282.75

$154.74

$352.99

$249.31 $220.98 $233.28

9

To match the national average, Missouri would need to increase funding for H.E. by $472 million

FY2012Missouri ranked 44 Missouri per capita = $154.74National average = $233.28Funding gap = $ 78.54

Total Funding Gap = $ 472 m

10

There has been a shift in Funding for the University over the last 20 years

1993 Actuals 2013 Budget0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$310.8

$397.7

$134.2

$508.4

$312.0 $1,226.7

$309.0 $543.4

Revenue ContributionAll Funds

State AppropriationsNet Tuition & FeesSales & Services & Patient RevenuesOther

29% 46%

29% 20%

15%

29%

13%

19%

1993 Actuals 2013 Budget0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$280.6

$384.0

$143.5

$552.9

$44.7 $168.4

Revenue ContributionOperations Fund

State Appropriations Net Tuition & Fees Other

31%

50%

9%15%

35%

60%

11

State support is 10.4% below 2001; over the same time period the CPI has increased 26.7%

Gross Approp. Change in Percent CPI %Year Approp. Received Receipts Change JuneFY01 $442.0 $428.8FY02 $457.1 $376.9 ($51.8) -12.1% 1.1%FY03 $411.1 $385.0 $8.1 2.1% 2.1%FY04 $388.7 $377.1 ($7.9) -2.1% 3.3%FY05 $400.8 $388.8 $11.7 3.1% 2.5%FY06 $401.8 $389.8 $1.0 0.2% 4.3%FY07 $413.0 $401.8 $12.0 3.1% 2.7%FY08 $430.9 $419.1 $17.3 4.3% 5.0%FY09 $451.5 $437.9 $18.8 4.5% -1.4%FY10 $451.5 $437.9 $0.0 0.0% 1.1%FY11 $428.0 $415.1 ($22.8) -5.2% 3.5%FY12 $405.6 $383.6 ($31.5) -7.6% * 1.7%FY13 $400.0 $384.0 E $0.4 E 0.1% E 0.9% E

Cumulative Change FY01-FY12 ($44.7) -10.4% 26.7%

Dollars in Mill ions *-8.1% excluding $2.0 M special increase for School of Pharmacy

12

34% enrollment growth since FY 2001

Fall 2

000

Fall 2

001

Fall 2

002

Fall 2

003

Fall 2

004

Fall 2

005

Fall 2

006

Fall 2

007

Fall 2

008

Fall 2

009

Fall 2

010

Fall 2

011

Fall 2

01250,000

55,000

60,000

65,000

70,000

75,000

80,000

34% Growth

Enrollment Growth Fall 2000 – Fall 2012

Hea

dcou

nt E

nrol

lmen

t

13

State Appropriations per FTE Student have declined 35% since 2001

Note: Includes appropriations for Cooperative Extension and Ag Experiment Station*estimate

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

Stat

e A

ppro

pria

tions

/FT

E S

tude

nt

36.5% decline

$6,643

$10,462

14

UM’s resident UG tuition and fees is below the average for public doctoral institutions.

2012-13 2011-12$

Change%

Change

Public Doctoral - National Average $9,539 $9,126 $413 4.5%

MU $9,257 $8,989 $268 3.0%

UMKC $9,299 $9,029 $270 3.0%

Missouri S&T $9,350 $9,084 $266 2.9%

UMSL $9,314 $9,038 $276 3.1%

UM Average per SB389 definitions $9,167 $8,899 $268 3.0%

Average Public Doctoral In-State Undergraduate Tuition and Fees Compared to UM Campuses, FY2012-13

Tuition and Required Fees

15

Average Annual Tuition & Required Fee Change Over 5-years is the Lowest in the Region

Iowa State

Kansas State

Oklahoma State

Arkansas

Illinois

Iowa

Kansas

Kentucky

MU

Nebraska

Oklahoma

Tennessee

0%5%

10%15%20%25%30%35%40%45%50%

21.0% 21.8% 20.7% 18.2% 19.9%23.1%

26.2% 25.3%

9.0%

19.8%

13.1%

45.3%

5.3% 5.4% 5.2% 4.5% 5.0% 5.8% 6.5% 6.3%2.3%

4.9% 3.3%

11.3%

FY2009-2013 Changes in Undergrad Resident Tuition & Required Fees

5 Year change Average Annual Change

16

University of Missouri Consolidated Financial Statements

16

17

Total Assets: $6.4 billionCash & Cash Equivalents $362.78 million

Accounts & Other Receivables $390.56 million

Inventories, Prepaid & Other $66.58 million

Investments $2.66 billion

Property, Plant and Equip., net

$2.85 billion

Deferred Outflow of Resources

$30.41 million

Total Liabilities: $2.3 billionCurrent Liabilities $935.39 million

Bonds & Notes Payable & Capital Leases

$1,122.31 million

Other Noncurrent Liabilities

$215.24 million

FY 2012 Statement of Net Assets*

Total Net Assets: $4.1 billionInvested in Capital Assets, Net of Related Debt

$1.54 billion

Restricted $1.16 billion

Nonexpendable .77 billion

Expendable .39 billion

Unrestricted $1.38 billion

*Excludes the University Retirement and Other Postemployment Benefits Trust Funds

18

University of Missouri System Long-term Debt Ratings-- Moody’s – Aa1

-- Standard & Poor’s – AA+

Moody’s Long-Term Debt Rating Definitions-- Aaa - strongest creditworthiness

-- Aa - very strong creditworthiness

-- A - above-average creditworthiness

-- Baa - average creditworthiness

University of Missouri System Credit Ratings

19

Retirement Fund / Endowment Pool -Annualized Historical Performance

1 Year 3 Years 5 Years 10 Years 20 Years

Retirement Fund - Actual 0.139 0.084 0.013 0.084 0.085

Retirement Fund - Benchmark 0.153 0.085 0.017 0.087 NaN

Endowment Pool - Actual 0.15 0.081 0.016 0.08 0.081

Endowment Pool - Benchmark 0.168 0.083 0.016 0.086 NaN

1%

3%

5%

7%

9%

11%

13%

15%

17%

Annualized Returns - Periods Ended 9/30/2012

n/a

n/a

19

20

Endowment Spending Policy & Distribution

Goals: transparency, improved budgeting, long-term growth without sacrificing short-term benefits

The new policy applies a distribution rate of 4.5% to the trailing 28 quarter average market value of the Endowment Pool.

Transition from 5.0% to 4.5% would be methodically phased in over 5-7 years in a manner that would not cause year over year decreases in the annual distribution.

Measurement date changed from June 30 to Dec 31 Budget exact amount for next fiscal year Improves transparency Actual distribution of budget prorated over 12 months of fiscal year Actuals allowed to go negative to the extent of the budgeted distribution

21

Operating Revenues: $2.1 billion

($ Millions)

Net Tuition & Fees $545

Government Grants & Contracts

$ 241

Private Grants & Contracts $ 71

Sales & Services $ 380

UM Health Care $ 813

Other $ 55

Nonoperating Revenues: $609 million

($ Millions)

State Appropriations $ 398

Federal Appropriations $ 28

Federal Pell Grants $ 62

Endow/Invest Income $ 31

Private Gifts $ 90

FY2012 Statement of Revenues Expense and Changes in Net Assets: Revenues *

*Excludes the University Retirement and Other Postemployment Benefits Trust Funds

22

By Natural Classification

($ Millions)

Salaries and Wages $1,318

Staff Benefits $ 360

Supplies, Services and Other $ 763

Scholarships/Fellowships $ 60

Depreciation $ 161

By Function

($ Millions)

Instruction $ 605Research $ 210Public Service $ 147Academic Support $ 134Student Services $ 75Institutional Support $ 103Oper. & Maint. Of Plant $ 97Scholarships/Fellowships $ 60Depreciation $ 161Auxiliaries $ 465Hospital & Clinics $ 605

FY 2012 Operating Expenses: $2.66 billion *

*Excludes the University Retirement and Other Postemployment Benefits Trust Funds

23

University Stewardship

The University of Missouri takes its stewardship responsibility seriously and engages in a continuous process to identify opportunities to reduce costs and increase efficiencies.

Since 1998, the University of Missouri System has systematically collected and reported on initiatives that have resulted in increased effectiveness and efficiency of University operations.

24

Cost Management: $246 million in FY2009-FY2012 Cost Management – initiatives that produce cost savings or

eliminate costs

FY2009 FY2010 FY2011 FY2012$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

Operating Expense Cuts/Other

Energy Conservation & Savings

Deferral of M&R

Strategic Procurement

Workforce Reductions$ Millions

25

Summary Impact of Actions Over Last 4 Years $411.7 million

FY2009 FY2010 FY2011 FY2012 Total $0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

$450.0

Revenue EnhancementsCost Management Cost Avoidance

$ Millions

26

FY 2013 University Budget

27

FY2013 $2.7 billion Budget by Fund Type

Operations, $1105.3, 40%

Hospital Operations, $682.7, 25%

Other Un-restricted,

$585.7, 21%

Restricted, $302.6, 11%

Loan, Endowment & Plant, $91.7, 3%

Dollars in Millions

28

FY2013 $2.7b Budget Sources

Net Student Fees18%

State Appropriations14%

Grants and Contracts13%

Gifts2%

Endowment & Investment In-

come4%Auxiliary Enterprises

20%

Patient Revenues24%

Other Income2%

29

FY2013 $2.7b Budget Uses

Salaries and Wages49%

Benefits14%

Operating Expense29%

Interest Expense2%Depreciation

6%

30

FY2013 $2.7b Budget Uses: Programmatic

Instruction; 25.2%

Research, 8.6%

Public Service; 5.6%

Academic Support, 5.8%

Student Services, 2.7%

Institutional Support; 4.1%Plant O&M; 4.5%

Scholarships; 3.0%

Auxiliaries; 18.2%

Hospitals, 24.9%

30

31

FY 2014 University Budget Outlook

32

FY 2014 UM Preliminary Budget Issues

Control rate of increase in expenses relative to revenues

RevenuesFlat state supportConstraints on tuition increases

ExpensesIncrease in salaries and wages: merit & marketIncrease in medical benefitsIncrease in required contribution to Retirement FundIncrease in M & R

32

33

Other Issues on the Horizon

Performance fundingLimited capacity to increase tuition & feesPressure to reduce costs Pressure to increase productivityPressure to increase output

Retention ratesGraduation rates# of Degrees Granted

Transparency and accountability

34

Projected Marginal Costs for FY2014 Budget - $51.2 million

Dec Jan

1. Salary & Wages Increase $19.2 $19.92. Benefits on Salary & Wages Increase 5.4 6.43. Flat Rate Benefit Increase (1.5% of Salary

& Wages) 7.8 9.1

4. Total Compensation $32.4 $35.45. Increase in M&R (inflation) 1.4 1.46. Other Marginal Cost Increases 7.6 9.17. Costs Due to Enrollment &Priorities 4.9 5.38. Total Marginal Cost Increases $46.3 $51.2

$ in Millions

35

Projected Marginal Revenues for FY2014 Budget - $21.1 million

Dec Jan

1. Increase in Net Tuition from Inflation (2% Dec; 1.7% Jan)

$9.5 $8.1

2. Increase in Net Supplemental from rate changes

2.4 2.3

3. Increase in Net Tuition Above Inflation 1.6 1.94. Increase in Net Tuition & Fees from

Enrollment6.6 4.9

5. State Appropriations Change 0.0 0.06. Increase in Other Revenues (incl. dedicated) 1.2 3.9

7. Total Marginal Revenue Increases $21.3 $21.1

$ in Millions

36

Preliminary Funding Gap of $30.1 million

Dec Jan1. Marginal Cost Increases $46.3 $ 51.22. Marginal Revenue Increases $21.3 $ 21.1

3. Net Funding Gap $25.0 $ 30.14. Gap as a % of Operating Expenses 2.3% 2.7%5. Impact of 1% inc/dec State Approps (net) $ 3.8 $ 3.86. Impact of 1% Rate inc in Net Tuition & Fees

$ 4.8 $ 4.8

7. Add’l Cost to reach M&R policy (FCNI of 0.30) $ 49.3 $ 49.38. Strategic Reallocation 1-2%

$ in Millions

37

FY2014 Core Operating Appropriations Summary

I. Minimum Funding for Core OperationsFY13 Base $398M; UMKC/MSU Pharmacy $2M; MOFAST $0.3M; Core Operating Support $15.7M; St. Louis Equity $1.9M

$417.9

II.a. Advancing Missouri's Competitiveness–STEM Workforce Needs in STEM $20.2M; Science & Engineering Equipment $2M; STEM Enrollment Growth $16.6M; STEM Infrastructure $16.4M

55.2

II.b. Advancing Missouri's Competitiveness – Caring for Missourians – Phase 2

10.3

Total Core Request $ in Millions

$483.4

38OPEN – GB – INFO 2

Other Strategic Operating Investment Needs

1. Protecting the University’s Infrastructure Base M&R – year 1 of 2 year request

$12.3

2. MU Medical School Partnerships 10.1

3. Translational Science 20.0

4. Academic & Research Parity w/ Peers 15.6

Total Other Strategic Investment Needs $ in Millions

$58.0

39

FY 2014 Capital Appropriations Request

State Request Campus Total

Total Tier I $381,190,000 $41,020,000 $422,210,000

Total Tier II $109,432,000 $28,412,000 $137,844,000

Total Tier III $145,221,000 $27,211,000 $172,432,000

Total Rehab & New Construction $635,843,000 $96,643,000 $732,486,000

Total Engineering Equip $1,432,800 $1,432,800 $2,865,600

40

Rehabilitation & New Construction State Request Campus TotalCritical Facility Needs $190,042,000 $0 $190,042,000Benton/Stadler Renovation-UMSL $60,000,000 $0 $60,000,000

College of Engineering - Lafferre Hall Reconstruction, Additions & Renovations-MU

$54,735,000 $13,684,000 $68,419,000

School of Medicine Renovation and Health Sciences Education Building Phase II –UMKC

$48,459,000 $27,336,000 $75,795,000

Chemistry and Biological Science Renovation-S&T

$27,954,000 $0 $27,954,000

Total Tier I $381,190,000 $41,020,000 $422,210,000State Historical Society Building & Museum $49,062,000 $0 $49,062,000

FY 2014 Tier 1 Capital Appropriations Request

41

Strategic Planning

42

Developing system and campus strategies in a time of tremendous challenge and change

Some challenges confronting the system:

1. Reduced state and federal funding

2. Limits on tuition increases3. Changes in student

demographics4. The impact of technology on

teaching and learning5. Public accountability6. The economic crisis7. The demand for greater higher

education access and increased number of degrees conferred

8. Skilled workforce demands

“We don’t have a viable business model.”

“We’re going to hit a brick wall at some point.”

“What is the end to this? What will be cut next?”

“We have survived the funding cuts by growing enrollment, but

we’re reaching capacity.”

“With the shift to online learning, there are big

questions…”

“Our laboratories are in worse shape than the high school laboratories.”

“We are being forced to do more with fewer resources and at some

point it does affect quality.”

“Faculty members feel overloaded and deans are concerned that

research productivity is declining.”

“We need to fight to keep our formula funds.”

© Copyright 2012 Innosight LLC

43

Strategic Planning Goals

Develop campus strategies and a system strategy that build on our unique advantages and reflect clear trade-offs;

Develop campus strategies and a system strategy that clearly serve the identified needs of the state and the regions we serve;

Develop ways to incorporate disruptive innovations into the business model;

Develop sustainable financial plans to support the strategies; Identify ways that we can further leverage being a system both

academically and operationally; Identify criteria, other than history, for allocating a portion of state

resources toward strategy execution beginning with 5 - 10% of the 2014 appropriation and growing over time.

44

Strategic Planning Timeline

• Develop draft strategy statements

June Workshop

• Establish situational awareness

• Identify key “themes” and “levers”

• Learn principles of ideation

October Workshop

• Make case for change

• Build consensus

• Finalize strategy statement, themes and levers

November - February

• Learn to identify, plan and measure activities that will support the strategy, theme and levers

March Workshop

• Plan activities• Engage

activity owners

• Develop final strategic plan

April – June

Output

• Draft strategy statements

• Draft themes and levers

• Finalized strategy statements, themes and levers

• Draft activities and metrics

• Final strategic plan with detailed activities and metrics

© Copyright 2012 Innosight LLC

45

OBJECTIVE SCOPE

A concise strategy statement has discrete building blocks

A single objective Measurable and specific Time bound Addresses key challenges

Describes in detail which customer you are pursuing

Describes in detail the product or service you are offering to the customer

Describes the unique activities or assets that no other organization can claim

EFFECTIVE: “Increase enrollment to 20,000 by 2020”

INEFFECTIVE: “Increase the number of qualified graduates”

“Career-focused education for full-time undergraduates who are interested in STEM subjects”

“Aligned curriculum and student experience for undergraduates”

3 required components:

“Internship programs with 40 partner employers in the St. Louis area”

“World class instructors”

ADVANTAGEOBJECTIVE

© Copyright 2012 Innosight LLC

Source: Collis, David J., and Michael G. Rukstad. "Can You Say What Your Strategy Is?“Harvard Business Review (April 2008). Print.; Innosight analysis.

46

A strategy statement is not a mission statement

MISSIONWhy we exist

VALUESWhat we believe in and how we

will behave

STRATEGYWhat our competitive game plan

will be

Metrics and Financial PlanHow we will monitor and

implement that plan

The basic elements of a strategy statement:

OBJECTIVE = Ends

SCOPE = Domain

ADVANTAGE = Means

“…discover, disseminate, preserve and apply knowledge…”

Hierarchy of organizational statements

“…Respect, Responsibility, Discovery, Excellence…”

© Copyright 2012 Innosight LLC

Source: Collis, David J., and Michael G. Rukstad. "Can You Say What Your Strategy Is?" Harvard Business Review (April 2008). Print.; Innosight and University of Missouri analysis.

47

A critical test: The strategy should explain how a campus will leverage its unique strengths to overcome challenges

Mission and Vision

STRATEGY

Current State

BarriersWhat specific barriers

does your campus face?

© Copyright 2012 Innosight LLC

48

UM System Draft Strategy Statement

The UM System will collaborate with the campuses in achieving, by 2018, mutually agreed upon, best-in-class, performance by: 1. Leveraging our unique campus strengths and resources, 2. Developing and applying leading practices, and 3. Advocating for higher education and the university.

© Copyright 2012 Innosight LLC

49

Questions?

5050

Appendix - Statistics

51

Operating Statistics

Statistics – FY 2012• Accounting Transactions (14.1 million)• Bank Reconciliation (53 bank accounts)• Accounts Payable (~ 322,500 payments; ~$2.0 billion)• Payroll Processing (47,141 Form W-2s; 4,838 Form 1099-MISCs; 9,103

Form 1099-Rs; 81,295 Form 1098-Ts)

Total Current Funds Budget (FY2013) = $2.7 billion• Operations Budget = $1.1 billion• Auxiliaries & Service Operations Budget = $1.3 billion• Restricted Budget = $302.6 million

Appropriations Request for Operations (FY2014)• Core Mission = $483.4 million• Other Programs = $25.1 million

52

Retirement Fund • Defined benefit plan: $2.8 billion (as of 9/30/2012), 46 Investment Managers

Endowment Fund• Multiple pooled funds: $1.1 billion (as of 9/30/2012)

• Endowment Pool, 46 Investment Managers

• Fixed Income Pool, 1 Investment Manager

• Almost 5,000 individual endowments

• Funds held in trust by outside organizations: $120.8 million (as of 6/30/2012)

General Pool• Represents the University’s cash and reserves

• $1.7 billion (as of 9/30/2012)

Operating Statistics

53

Debt Issuance• System Facilities $1.368 billion outstanding as of 06/30/12• Bond Rating Aa1 with Moody’s, AA+ with Standard & Poor’s

Bank Relationships• One primary bank with 12 different depository banks and 4 campus bank facilities in Missouri• Checks deposited annually over $468 million; electronic receipts of over $2.2 billion• Ensure funds are available for 505,000+ vendor and employee payments issued annually,

totaling approximately $3 billion • Fund transfers for purchase of securities of $5.5 billion; ACH/wire transactions to pay vendors

and employees of $2.3 billion annually; checks issued to pay vendors and employees of $707 million

Credit Cards• Manage credit card operations at 330 locations on four campuses, Hospital and internet• Annual volume $88.4 million

Lockbox• Dollar amount of checks and credit cards processed in calendar year 2012: $332 million

Operating Statistics

54

Property Owned in Missouri: 2,123 acres on-campus

17,314 acres off-campusOwned in Other States: 582 acres

Transactions during FY12:Sales 3 @ $ 790,500Acquisitions 8 @ $ 13,171,836Leases to Others 78 @ $ 4,577,913Leases from Others 59 @ $ 2,652,170

Operating Statistics

55

Facilities Planning & Development 1,596 Buildings, 29.2 million gross square feet Replacement Value $ 7.8 billion Plant Operating Expenditures $ 69.4 million Maintenance & Repair Expenses$ 57.8 million Design & Construction Contracts $ 134.8 million

Minority Business Development Services & Supplies Financial Services

Architecture/ $ 5,753,912 Broker Transactions $39,872,746 Engineering Services Bonds Issued $ 610,000 Construction Services $ 20,620,030Procurement $ 26,376,968

Operating Statistics

56

Records Management • 110,825 boxes stored• 35,750 activities (lookups, filings, destruction)

Risk & Insurance Management (estimated FY13)• Total cost of risk $ 23,335,510• Commercial Insurance $ 2,976,149• Self Insurance $ 17,744,431• Excess Commercial Insurance $ 2,614,930

Operating Statistics

57

The Procurement & Supply Chain departments work under a Shared Services model utilizing comprehensive Memos of Understanding (MOU’s) and report to the Chief Procurement Officer, this includes:

UM Procurement ServicesProcurement Services is responsible for the contracting and procurement for the entire University including UM System, Columbia, Missouri S & T, UMSL and UMKC campuses. They produce a comprehensive scorecard quarterly for the Vice Chancellors (in a shared governance model) that report on pre-determined service level expectations and key performance indicators.

UM Procurement OperationsIn their role they work closely with Procurement Services and the Healthcare Supply Chain team and are responsible for implementing, maintaining, and managing procurements software and web applications, as well as developing and reporting data from those applications. This includes providing a Hotline (comprehensive call center) for a customer base of nearly 5000 users.

MUHC Sourcing and Supply Chain (SSC) SSC provides end to end supply chain services for all of MU Health Care. They differ from UM Procurement Services in addition to contracting and procurement they also provide Distribution, Motor Transport (Couriers) and a comprehensive Value Analysis program. Their operations are subject to a many regulatory compliance requirements including the Joint Commission and Centers for Medicare & Medicaid Services (CMS). Their offices and warehouse are located off-site in the Quarterdeck Building and are a 24/7-365 operation.

Procurement/Supply Chain

58

Operating StatisticsSavings/Revenue FY 12 $13,750,297

Process SavingsRFP/B Resulting in PO $ 3,981,145RFP/B Resulting in contract $ 384,070Cost Avoidance using SMS $ 655,798

Negotiated SavingsRFP/B Resulting in PO $ 1,724,707RFP/B/GPO results in contract $ 4,934,589

RevenuePCard Rebate $ 1,523,024SMS Rebate $ 546,964

UM Procurement/Procurement Operations

11,246 calls were handled by the Operations Hotline in FY 12

52,883 Purchase Orders were processed for $167,376,490

44,784 Show Me Shop Orders were placed for $ 31,688,178

UM produced 368,179 Procurement Card/Fleet transactions for a value of $ 99,626,540

The University Procurement team impacts approximately $370 Million in expenses annually and is a six (6) year National Procurement Institute award winning operation. They have representation providing services on each of UM’s campuses in a centralized shared service model.

59

MUHC Sourcing and Supply Chain (SSC)

Operating Statistics

Savings/Revenue in FY 12 Total $13,209,954

Process SavingsRFP/B Resulting in PO/Contract $ 752,796Par/Inventory Reductions $ 63,051Cost Avoidance/ UHC/Novation $ 5,366,599

Negotiated SavingsReduction in previous price paid $ 1,634,921Contract negotiated savings $ 2,964,398

RebatesManufacture/Standardization Rebates $ 433,874UHC Patronage Equity Credits $ 481,942PHS Indigent Drug & Device Recovery $ 312,373Perpetual Inventory Project BS Adj. $ 1,200,000

The supply chain services University Hospital, MU Psychiatric Center, Missouri Orthopedic Institute, Women’s and Children’s Hospital, Ellis Fischel Cancer Center, Missouri Center for Outpatient Surgery, Missouri Rehabilitation Center and all clinics (local and outlying).

In FY 12 the health systems perpetual inventory locations averaged 17.4 turns on a goal of 12.

Nearly $4M in inventory is managed in Perpetual Locations and Non-Perpetual Locations account for $ 11,514,634 in inventory.

Average monthly issues from inventory = $ 2,240,244

Inventory Picks/Month average 467,932 lines

60, 643 Purchase Orders were processed in FY12