campus budget reform - provost · office of the provost • uiuc portion of the increase in 2%...
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O F F I C E O F T H E P R O V O S T
Campus Budget Reform
September 2018
O F F I C E O F T H E P R O V O S T
Fall: Update on Campus Budget Reform• Campus budget overview• Budget reform Spring: Planning your Department’s Budget• Budget planning• Best practices• New tools
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Outline
O F F I C E O F T H E P R O V O S T
BUDGET OVERVIEW
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O F F I C E O F T H E P R O V O S T
State Funding Trend(2019 dollars)
4
$316,005,023
$65,465,499
$226,900,000
$65,547,547
$85,149,079
$78,298,923
$142,744,305
$223,262,566
$202,869,060
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18* FY19*UIUC State Appropriation UIUC Est. SURS (normal costs) UIUC Est. Health, Life, Dental
FY19 estimated CPI adjusted dollars; inflation of 2.5% assumed for FY19*FY18 & FY19 POB estimated at FY17 levels
O F F I C E O F T H E P R O V O S T
• UIUC portion of the increase in 2% General Funds Base:
$4.01 million allocated to tuition collegesbased on FY18 permanent budget base
• No decrease in budgetfor centrally-budgeted units
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Financial Plan OverviewFY19
State Appropriation
22%
Income Fund (Primarily Tuition)
78%
O F F I C E O F T H E P R O V O S T
• Funding uncertainty remains high
• Continued pressure on benefit shift
• Currently, two areas– Employees in Tier 1 that exceed governor’s salary– New 3% rule for calculating SURS obligation
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State Funding Issues
O F F I C E O F T H E P R O V O S T
Direct State Appropriations $227M
Income Fund$814M
Institutional Funds$169M
Sponsored Research & Fed Appropriations
$459M
Gifts & Endowment Income$169M
Auxiliary Enterprises & Departmental Activities
$453M
20%
7%
20%
7%
36%
10%
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FY19 Budget Sources
FY19 Total = $2.291B
O F F I C E O F T H E P R O V O S T
FY19 Budget Allocations (unrestricted)
Tuition Units$559M
Campus Level Research Units$42M
Campus-Wide Support, Initiatives & Risk
Management Reserve$221M
Technology Services, Facilities and
Utilities$139M
Other Centrally Budgeted Academic
& Admin Units$157M
Centrally Awarded Undergraduate Financial Aid$92M
8%
13%
4%
46%
18%
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Total = $1.210B
11%
O F F I C E O F T H E P R O V O S T
FY19 Unrestricted Budget
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$ Millions
189.0
169.1 163.1
150.9
110.5
91.6
68.6 62.2
45.4 41.230.2 28.6 22.9 18.5 17.3 13.8 10.7 8.0 6.6 4.8 1.9
0
20
40
60
80
100
120
140
160
180
200
O F F I C E O F T H E P R O V O S T 10
$ Millions
0
100
200
300
400
500
600
700
800
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Undergrad Grad Professional
Budgeted Tuition
O F F I C E O F T H E P R O V O S T 11
$ Millions
0
100
200
300
400
500
600
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Base Rate Non-Resident Differential International DifferentialProgram Differentials Summer/Winter Terms
Budgeted Undergraduate Tuition
O F F I C E O F T H E P R O V O S T
In-State Cost of Attendance First Year Students: Big 10 Publics: 2018-19
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Maximum tuition differentials @ IL = $5,004 additional cost
$18,400
$14,974
$16,225
$16,004
$14,516
$14,760
$10,726
$10,595
$10,534
$9,242
$10,680
$9,492
$9,992
$11,570
$12,706
$11,534
$11,308
$10,322
$9,910
$12,474
$12,429
$11,114
$11,430
$10,466
$11,172
$10,030
$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000
Penn State
Rutgers University
Michigan
Illinois
Michigan State
Minnesota
Ohio State
Maryland
Wisconsin
Nebraska
Indiana
Iowa
Purdue
Tuition/Fees Room & Board Books Other
O F F I C E O F T H E P R O V O S T 13
$ million Actual Budgeted
14.1 18.2 19.7 22.8
30.7 37.6
47.8 57.0
63.5
74.5 79.5
85.4 91.6
0
10
20
30
40
50
60
70
80
90
100
Central Investment in Financial Aid
O F F I C E O F T H E P R O V O S T 14
Historical Budget Strategies
FY16• Campus-wide
recurring reductions $49 Million
FY17• Campus-wide
recurring reductions $18 million
• $2 million reinvestment pool funded from activity based units
• Campus-wide cash rescissions $50 million
FY18• $10.6 million
reinvestment pool funded from activity-based units
• Centrally budgeted units recurring reductions$2.5 million
FY19• $5.3 million
reinvestment pool funded from activity-based units
• Tuition- based units increased $4 million
• No recurring reductions for centrally budgeted units
O F F I C E O F T H E P R O V O S T
BUDGET REFORM
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O F F I C E O F T H E P R O V O S T 16
O F F I C E O F T H E P R O V O S T
“We need to reinvent or redefine what a public land-grant university—an invention of the 19th century—is and should do for the citizens of a 21st century world."
Robert J. Jones, Chancellor
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O F F I C E O F T H E P R O V O S T 18
Change Incentives
Improve Transparency
Unit Actions Budget Outcomes
Comprehensive, interconnected campus
Budget Model Needs to Support This Vision
O F F I C E O F T H E P R O V O S T 19
Integrated• Across disciplines,
mission areas
• Within strategic priorities
• Via strategic plan
• Offers units flexibility in future plans
• Provides commitment to investments
• Ensures consistency with values, priorities, and excellence
Value-Centered
Integrated and Value-Centered Budgeting
INVEST IN EXCELLENCE ACROSS MISSION AREAS
Research •Teaching • Outreach
O F F I C E O F T H E P R O V O S T 20
Budget Modeling • Revenue
o Tuitiono ICR
• Costs: space, utilities, technology
• College investments: administration, public goods, services
• University investments:campus, unit priorities
• Unit needs and wants• Best practices• Leadership training• Long-term forecasting tools• Collaborate w/System Offices
- accounting infrastructure
Financial Management
Reporting
Primary Foci
Processes &Practices
• Efficient processes• Effective & transparent
budget reviews • Decision-making at
the appropriate level• Streamlined approval
processes
O F F I C E O F T H E P R O V O S T
This model is a tool to make our decisions
about revenue, spending and transfersmore transparent.
The main difference from today is that these transfers will now be
intentional and transparent.
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O F F I C E O F T H E P R O V O S T
Adequate Time to
Transition
EffectiveShort and Long Term Planning
Data Available at All Levels
Data Support Systems
Predictability Enhances Planning
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Critical Implementation Elements
O F F I C E O F T H E P R O V O S T 23
Impacts
Colleges
Departments
Centrally Budgeted Units
http://provost.illinois.edu/budget/budget-reform/
O F F I C E O F T H E P R O V O S T 24
College BudgetsYear to Year Changes
Existing Model
IUsMajorsGraduate TuitionSummer/Winter TuitionICR/Remission
Salary and promotions Incremental campus adjustmentsCampus strategic investments
Unit Actions
Campus Actions
New Model
IUsMajorsGraduate TuitionSummer/Winter TuitionICR/RemissionSpaceUtility usageFTEExpenditures
Unit Actions
Incremental campus adjustmentsCampus strategic investments Change in campus goodsChange in administrative costs
Campus Actions
O F F I C E O F T H E P R O V O S T 25
College Budgeting Framework
SOURCES of FUNDS:
TuitionIndirect Cost Recovery (ICR)University Value-Based Investment
Sources Total
USES of FUNDS:
Existing College BudgetFacilities, Utilities & Technology ServicesInvestment in Administration & Public Goods
Uses Total
O F F I C E O F T H E P R O V O S T 26
Initial Conditions
University Value-Based Investmentsoffsets Uses of Fundsnot supported by Tuition and ICR
SOURCES of FUNDS:
TuitionIndirect Cost Recovery (ICR)University Value-Based Investment
Sources Total
USES of FUNDS:
Existing Unit BudgetFacilities, Utilities & Technology ServicesInvestment in Administration & Public Goods
Uses Total
O F F I C E O F T H E P R O V O S T
Transition: University Value-Based Investments
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Implementation• Administration and College
Leadership jointly establish a 3-year target
• Timeline for colleges to plan
• Increases across all units have to equal decreases
• Cost of instruction, class size, and pedagogy differs across colleges
• Space quality and space utilization varies across colleges
• Some mission-related activities may not generate revenue
• Programmatic differences across colleges
Rationale
O F F I C E O F T H E P R O V O S T 28
Tuition Revenue
Per MajorPer IU
O F F I C E O F T H E P R O V O S T
Indirect Cost Recovery: College Managed
Facilities and Administration F&A
45% College Distribution Home of College PI
27% Attributed Colleges
55% Campus Portion
Tuition Remission 100% attributed to college enrollment of RA
28% Central Campus Cost Offset
O F F I C E O F T H E P R O V O S T
Indirect Cost Recovery: IRU Managed
Facilities and Administration F&A
45% College Distribution Home of College PI
27% Attributed Colleges
55% Campus Portion
Tuition Remission 100% attributed to college enrollment of RA
28% IRU
O F F I C E O F T H E P R O V O S T
Institutional Fund Revenue
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O F F I C E O F T H E P R O V O S T
Revenue
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O F F I C E O F T H E P R O V O S T 33
O F F I C E O F T H E P R O V O S T 34
Direct Cost Assessments
Building&
Space
F&S Building Costs to Allocate Centrally-held budget accounting for direct-billed
services
Includes centrally-funded leases
F&S attributed costs from campus
Adjusted for direct billing by F&S for services
Centrally-budgeted costs added to cost of the F&S
O F F I C E O F T H E P R O V O S T 35
Allocation of CostsTuition Units
By Space Type Office (DMI) Lab 100% Office 46% Classroom 37% Study 38% Special 37% General 37% Support 37% Health Care 100% Residential 100%
Based on:CBRE Group, Inc. (formerly Whitestone Research Corporation)
Updated from white paper
Adjusted for college-funded space costs: Division of Responsibility
General classrooms allocated to campus
College controlled classrooms allocated to colleges
O F F I C E O F T H E P R O V O S T 36
Building Costs
Building &Space
Rate Calculation
F&S Tuition Unit Allocated Building Costs
Adjusted Net Assignable Square Ft (ANASF)
$27 Million
3 Million ANASF= $9.0 per ANASFFY17 Preliminary Estimate*
* This is a draft estimate: ANASF needs to be adjusted for Division ofResponsibility
Likely need to have incremental increases to address deferred maintenance
O F F I C E O F T H E P R O V O S T 37
Utility Costs
Utilities
Utilities Costs to Allocate Direct usage costs
Indirect utility costs: energy administration and overhead
Indirect charges allocated in similar proportions to direct cost
Utility costs for centrally-budgeted units get added to centrally-budgeted unit cost
O F F I C E O F T H E P R O V O S T 38
Central Technology Services
TechnologyServices
Tech Services Costs to Allocate
Centrally-held budget adjusted for direct-billed services
Tech Services attributed costs from campus (utility, space, etc.)
Accounts for direct billing by Tech Services and library IT fee
Student weight 25%
Employee weight 75%
O F F I C E O F T H E P R O V O S T 39
University System Office
Changing their budget model
Likely based on size of budgets among Universities
Neutral impact in first year
For an organizational charthttp://www.pb.uillinois.edu/documents/staffing/SO-Org-Chart.pdf
Incomplete list
President’s OfficeVP Academic AffairsUniversity Council
Business and Financial ServicesAccounting
AuditsPayroll
TreasuryCapital Financing
Cash ManagementRisk Management
Budget Planning \ReportingGovernment Relations
System HR Economic
Development/InnovationOTMAITS
O F F I C E O F T H E P R O V O S T 40
Research and Campus Interdisciplinary Research Units
Institutes generate resources
Campus portion of ICR used to reduce the costs allocated to colleges
Building, space, utilities and tech services costs added
Allocation: 25% on all expenditures (adjusted) 75% on research expenditures
OVCRBeckman
NCSAIGBiSEEIHSIIPRHPRI*
* PRI has a separately budget allocationfrom the state and costs are notallocated to the units.
O F F I C E O F T H E P R O V O S T 41
Administrative and Campus Public Goods
Centrally-Budgeted Units
Costs allocated based on all expenditures (adjusted)
* PRI has a separately budget allocationfrom the state and costs are notallocated to the units.
Incomplete list
LibraryEnrollment Management
Extension Grad CollegePublic Safety
OVCIACITL
Office of ProvostOffice of ChancellorHuman Resources
MuseumsKrannert
O F F I C E O F T H E P R O V O S T 42
Investments, Initiatives and Risk Management
Risk Management Enrollment changes Shifts in demand across colleges Provide stability buffering in
costs/salary programs
Costs Allocated based on all expenditures (adjusted)
Incomplete list
Fire service contract Promotion and tenure
Hazardous wasteLeases
Grad assistant benefitsWorker’s comp
MedicareAdvancement road map
funding TOP
DUALRisk Management
O F F I C E O F T H E P R O V O S T 43
O F F I C E O F T H E P R O V O S T
NEXT STEPS
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O F F I C E O F T H E P R O V O S T
• Meeting with College teams in Oct to review baselines and initial budget allocations
• Data available unit levels this Fall • Look for colleges to develop 3 year plans uses of
budget– Encourage transparent discussions– Focus on comprehensive budgeting – not transaction
budgeting
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Baseline Discussions
O F F I C E O F T H E P R O V O S T 46
Operational Excellence @ Illinois Initiative
coming soon
Develop Smarter
BudgetingSystems
Innovate Processes
and Services
Manage Cash Strategically
Streamline Decision Making
Enhance Productivity
Identify Cost and Scale
Efficiencies
Reduce Redundancies
