FY2019 Forecast and FY2020 BudgetPost Mortem Meetingwith Faculty Financial Officers

Analysis, Planning and Budget (APB) Office of the Provost and Vice-Principal (Academic)May 22, 2019

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FY2019 Forecast

FY2020 Budget

Survey results

The year ahead

Additional Information

Agenda

FY2019 Forecast

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APB Trend Forecasts

were prepared by unit starting as early as period 4 (end of August)

were initially distributed for use in quarterly review meetings

combined FY2019 year-to-date activity and historical trends to arrive at a suggested forecast

were used until such time as each unit (or central FFM) weighed in with their own expectations

served as an early warning signal for problematic issues

made it easier to work towards an agreed forecast

were presented (unit-by-unit) at each meeting of the Budget Working Group throughout the year

Budget Presentation II, a preliminary outlook for FY2019, was presented to the Finance Committee of the Board of Governors on February 12, 2019 based on information gathered centrally, and input from units throughout the year.

Budget Presentation III, including the FY2019 forecast, was presented to Finance Committee on April 16, 2019 based on all central and unit trend forecasts combined.

Forecasting for Faculties, administrative units, and individual central funds

5-year outlook FY2019(from Budget Book)

FY2019(f) FY2020(b) FY2021(o) FY2022(o) FY2023(o) FY2024(o)

Total revenues 870,863 911,510 920,002 923,887 945,023 969,275 995,983

Total expenses (1) 886,305 912,060 928,670 934,876 958,526 974,526 994,226

Annual financed surplus (deficit) (15,442) (550) (8,668) (10,989) (13,503) (5,251) 1,757

Financed accumulated deficit (2) (128,989) (137,657) (148,645) (162,148) (167,399) (165,642)

Financed accumulated deficit/Revenues (%) 14.15% 14.96% 16.09% 17.16% 17.27% 16.63%

f = forecast; b = budget; o = outlook

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Operating Budget: Past, Present and Future Outlook ($000s)

(1) Excluding year-end actuarial adjustments and related accrual(2) FY2018 ending financed accumulated deficit = $128,439

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FY2019 Year-End Forecast – Unrestricted Funds ($M)

Anticipated major budget variances for FY2019 ($M)

FY2019 budgeted deficit

Lower than budgeted other non-salary expenses

Higher than budgeted tuition & fees

Higher than budgeted Provincial grants

Higher than budgeted sales of goods & services

Lower than budgeted benefits expenses

Higher than budgeted endowment revenue (investment income)

Higher than budgeted Support Staff and Academic salaries & payments

Higher than budgeted materials, supplies, and publications

Higher than budgeted contract services

Higher than budgeted building & occupancy costs

Higher than budgeted Inter-Fund transfers

Variations in all other revenue and expense categories

FY2019 forecast

($15.4M)

$25.4M

$17.9M

$9.2M

$7.7M

$5.4M

$4.3M

($3.9M)

($5.2M)

($6.1M)

($11.6M)

($18.9M)

($9.3M)

($0.6M)

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FY2019 Year-End Forecast – Unrestricted Funds ($M)

Anticipated major budget variances for FY2019 ($M)

FY2019 budgeted deficit

Lower than budgeted other non-salary expenses

Higher than budgeted tuition & fees

Higher than budgeted Provincial grants

Higher than budgeted sales of goods & services

Lower than budgeted benefits expenses

Higher than budgeted endowment revenue (investment income)

Higher than budgeted Support Staff and Academic salaries & payments

Higher than budgeted materials, supplies, and publications

Higher than budgeted contract services

Higher than budgeted building & occupancy costs

Higher than budgeted Inter-Fund transfers

Variations in all other revenue and expense categories

FY2019 forecast

($15.4M)

$25.4M

$17.9M

$9.2M

$7.7M

$5.4M

$4.3M

($3.9M)

($5.2M)

($6.1M)

($11.6M)

($18.9M)

($9.3M)

($0.6M)

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How have the forecasts panned out so far?

Unit input was very important. The APB Trend Forecast, combined with input from units and central FFMs resulted in the forecasts shown below. Each forecast is compared to the period 14 actuals as of today (excluding central funds 199998, 199999):

FY2019 Year-End Forecasts vs. Period 14 results (as of May 22)

Revenue / Expense Category Combinedforecast to BOG Activity at end of P14 Difference

Tuition and Fees $350,000,000 $349,600,000 ($400,000)

Sales of Goods and Services $147,630,000 $148,540,000 $910,000

Tenure Track Salaries $198,820,000 $197,930,000 ($890,000)

Academic Settlements & Retiring Allowances $620,000 $810,000 $190,000

Materials, Supplies & Publications $34,470,000 $33,250,000 ($1,220,000)

Hardware and Software Maintenance $11,490,000 $11,510,000 $20,000

Inter-Fund Transfers $5,610,000 $6,520,000 $910,000

FY2020 Budget

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The FY2020 budget was created using the following components:

Institutional 1A revenue expectations (modeled in APB, or in consultation with central FFMs)

Unit 1A revenue expectations (based on combined unit estimates provided at the end of period 9)

Unit 1B-1F revenue expectations (based on combined unit estimates provided at the end of period 9)

Institutional 1A expenditure expectations, including amounts held for distribution to units (e.g. salary policy)

Unit 1A permanent budgets at January 31, 2019

Allocations provided to units through the agreement process, compacts, and historical allocations, as well as amounts otherwise identified by units

Unit 1B–1F expense expectations (based on combined unit estimates provided at the end of period 9)

Budget Presentation III, including the proposed FY2020 budget, was presented to Finance Committee on April 16, 2019.

Our underlying expectation is that 1A and 1B budgets in all units will be balanced.

Creating the FY2020 budget

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Operating Budget: Past, Present and Future Outlook ($000s)

5-year outlook FY2019(from Budget Book)

FY2019(f) FY2020(b) FY2021(o) FY2022(o) FY2023(o) FY2024(o)

Total revenues 870,863 911,510 920,002 923,887 945,023 969,275 995,983

Total expenses (1) 886,305 912,060 928,670 934,876 958,526 974,526 994,226

Annual financed surplus (deficit) (15,442) (550) (8,668) (10,989) (13,503) (5,251) 1,757

Financed accumulated deficit (2) (128,989) (137,657) (148,645) (162,148) (167,399) (165,642)

Financed accumulated deficit/Revenues (%) 14.15% 14.96% 16.09% 17.16% 17.27% 16.63%

f = forecast; b = budget; o = outlook

(1) Excluding year-end actuarial adjustments and related accrual(2) FY2018 ending financed accumulated deficit = $128,439

3.5%, $32,000

39.1%, $359,822

38.9%, $358,037

15.9%, $146,729

1.1%, $9,867

1.1%, $10,053

0.4%, $3,493

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FY2020: Operating Revenue = $920.0M

Grants - Canada

Grants - Quebec

Tuition and Fees

Sales of Goods & Services

Gifts & Bequests

Endowment Revenue (Investment Income)

Sort-Term Interest Revenue (Interest Income)

3.4%, $30,970

39.5%, $360,090

38.4%, $350,000

16.2%, $147,630

1.0%, $9,490

1.1%, $9,840

0.4%, $3,490

% Change

0.9%

3.3%

-0.1%

2.3%

-0.6%

4.0%

2.2%

0.1%

Forecast FY2019: $911,510 Budget FY2020: $920,002($‘000)

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FY2020: Operating Expenses = $928.7M

31.1%, $283,590

26.5%, $242,120

1.6%, $14,800

3.7%, $33,730

11.8%, $107,610

0.0%, $-74.8%, $681,850

24.6%, $224,600

0.6%, $5,610

Academic Salaries

Admin & Support Salaries

Student Salaries

Student Aid

Benefits

Salary adj. to pay periods

Total Salary Expenditures

Non-Salary Expenditures

Interfund Transfers

31.5%, $292,100

26.9%, $249,380

1.6%, $15,130

3.7%, $34,230

11.8%, $110,040

0.4%, $3,700 75.9%, $704,580

23.5%, $218,650

0.6%, $5,440

% Change

1.8%

3.0%

3.0%

2.2%

1.5%

2.3%

-

3.3%

-2.6%

-3.0%

Forecast FY2019: $912,060 Budget FY2020: $928,670($‘000)

Survey Results

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Survey Results

Once again this year, we ran a survey. Given that the process has changed, the questions differ from last year. Nonetheless, we present both last year’s results and this year’s results for comparative purposes.

Thank you for your continued involvement and input. We take your feedback seriously and appreciate your engagement with us.

We are doing our best to make this process as collaborative as possible.

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Feedback from last year’s budget process (Mean = 6.54; Median = 7; Mode = 8)

At last year’s Feedback session you indicated that your greatest pain points were related to the BPX:

Time provided to complete and submit BPX

Timing of BPX within your unit’s competing priorities

Usefulness of the BPX for budgeting the next fiscal year for other funds (restricted, endowment, plant)

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Feedback from last year’s budget process (We were listening)

With your help we were able to:

discontinue the BPX

introduce the APB Trend Forecast to allow for an ongoing conversation between APB and individual units (or central FFMs)

shift the focus to 1 Funds by removing budgeting of 2-9x funds from the unit purview

make several technical updates to BANNER for FY2020 Budget Distribution for ease of navigation and population

introduce the Allocation Feed as a part of Budget Distribution to increase accuracy and promote transparency

Post all FY2020 budgets by May 1, 2019!

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Feedback from this year’s budget process (Mean = 8.15; Median = 8; Mode = 10)

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Feedback from this year’s budget process (Mean = 8.15; Median = 8; Mode = 10)

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Feedback from this year’s budget process: FY2019 APB Trend Forecast

Unit comments

Helpful, easy to navigate for finance employees

Start Forecasting at period 6

Include the Carry Forward

APB Comments/Responses

Populate all required fields: Keep in mind we are pre-populating the information as a help but we realized you still have to do you own forecasting & budgeting so you have to review and correct these amounts, as applicable

Be mindful of deadlines: We have a tight deadline for presentation to the Board

Response: The APB Trend Forecast can be used as early as period 4 to project some of our most significant tuition and fees revenues with tremendous precision. We will start to produce all trend forecasts at the end of period 4.

Response: Carry forwards essentially represent an authorization to overspend the current year’s budget. They are not included in the reports because any spending beyond the base budget increases the University’s deficit.

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Feedback from this year’s budget process: FY2020 Provisional Budget

Unit comments

Useful to confirm the allocations

Not a planning tool but more a way to confirm information

Not used much

APB Comments/Responses

Populate all required fields: Keep in mind we are pre-populating the information as a help but we realized you still have to do you own forecasting & budgeting so you have to review and correct these amounts, as applicable

Be mindful of deadlines: We have a tight deadline for presentation to the Board

Response: The former FBM/BPX budget expectation was quite stringent in terms of requiring units to detail their proposed plans for each revenue and expense category, within each fund type, and across multiple future years. Although we have simplified the process to require only the overall revenue and expense expectations within each fund type for the upcoming year, the unit is nonetheless responsible for setting these expectations, and is also responsible for for meeting them.

Only units with 1A allocations and no external revenues should fall into the “not used much” category.

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Feedback from this year’s budget process: FY2020 Budget Distribution: Allocation Feed

Unit comments

Need for more clarity and fixing issues when adding row

APB Comments/Responses

Double check your FOAPAL strings

Response: We will take this feedback into consideration when updating next year’s guidelines. Please refer to them at that time.

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Feedback from this year’s budget process: Overall Process

Unit comments

Communication, timelines were good and the process was not painful

Not being allowed to enter something different in Banner versus the amounts submitted on Feb 28th

Keeping the budget the same as January does not feel like budgeting

APB Comments/Responses

The FY2020 budget is now set, no matter what we do. To the extent possible, please turn your attention to managing your revenues and expenses rather than redistributing your budget.

Our expectation is that all units will have balanced budgets or surpluses.

Response: As the upcoming timeline will demonstrate, our budgets are built based on your FY2020 expectations. Once the proposed budget has been reviewed by governance bodies, we cannot change it.

Response: In order for us to set up Budget Distribution, we must have a baseline budget. We pushed it from December 31 to January 31, but that’s as late as we can go if we are to open budget distribution on March 1.

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Feedback from this year’s budget process: Banner-related

Unit comments

Uploading the budget from Excel as opposed to keying the information in Banner

Message if using a terminated account code

Possible upgrades (TBD)

Response: We are working with IT to further facilitate budget distribution to the extent possible. Some examples include:

Adding actual spending in the Budget Development module

Pre-populating the FY2021 budget with the FY2020 budget (at January 31)

Double clicking on FZABDFP kicking us out into FZABDFO

When returning into FZABDFP it takes us back to the top of the screen instead of putting us back where we were

Entering salary in FZABDPN, it sometimes cut us off after two digits

Adding 600125 on 1B fund was not possible

Response: We can provide the terminated account codes with the guidelines next spring, but we may not be able to modify Banner to accommodate this request.

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Feedback from this year’s budget process: Additional information from APB

We are cleaning up our reports

Updating your favourite reports

Consolidating similar reports

Retiring reports not often used

If there are budget reports on the FIS site you want, we suggest you download the crystal version and let us know.

Check out the shared drive

APB Trend Forecast

In-Year Transactions (EXCEL)

Prior year(s): Masterlist, FBM/BPX, budget evolution etc…

If you are having trouble accessing this drive please let us know.

We are considering the possibility of replacing multiple Crystal Reports with one or two Excel files that would perform the same tasks.

The year ahead

Budget Timeline

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Agreements are finalized FY2021 Budget Kick-off meeting

(January)January 31, 2020 cut-off

(PERM budgets and Org structure)Budget Presentation II to the

BOG (February 13, 2020)

Budget Distribution (March-April)Budget Presentation III to the BOG (April 23, 2020)Posting Budgets (May 1, 2020)Budget Book (May)Post Mortem meeting (May)Carry Forward (June)

High-level priorities are establishedAgreement discussions beginPreliminary Budget ModelBudget Presentation I to the BOG (December 12, 2019)

Salary Policy/Pay Equity/Adjustment to Pay Period (July)Compact AdjustmentsSenior Admin Adjustments (July)

Summer Fall

WinterSpring

Ad hocBudget transfersMid-Year Allocations (i.e. positions)Retro FOAPAL ChangeTenure Track Adjustments

WeeklyApproval of budget transfers (Monday)Benefits adjustments (Wednesday)

MonthlyAPB Trend ForecastWrong charge (Org/Prog) correctionsIn-year reportPosition Control Report

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Key dates for unit input

Monthly

We will provide FY2020 revenue and expense forecasts to the Budget Working Group and BWG sub-group on a regular basis.

Based on APB Trend Forecast until such time as we receive input from the unit or central FFM

Deadline: October 25, 2019

Review of period 5 trend forecast to help identify potential variances and major issues related to FY2020

Deadline: January 31, 2020

Review of period 8 trend forecast to help identify potential variances and major issues related to FY2020

Deadline for PERM transfers which will be used as the foundation for the FY2021 budget

Review of provisional FY2021 budget allocations

Deadline: February 28, 2020

Review of period 9 trend forecast to confirm final unit revenue and expense expectations for FY2020

Review of provisional FY2021 budget allocations

Confirmation of 1A revenue expectations, and 1B through 1F revenue and expense expectations for FY2021

Date Units APB P7 Finance Committee Senate BOG

Oct. 25, 2019

Nov 5, 2019 Presentation IPresentation IFY2020 update

(potential variances,uncertainties and risks)

Presentation I

Nov 21, 2019 Presentation I

Dec 4, 2019 Presentation I

Dec 12, 2019 Presentation I

Jan 31, 2020

Presentation IIFY2020 outlook,

FY2021– FY2025 budget hypotheses

Feb 5, 2020 Presentation II

Presentation II

Feb 11, 2020 Presentation II

Feb 13, 2020 Presentation II

Feb 19, 2020 Presentation II

Feb 28, 2020

Presentation IIIFY2020 forecast,

FY2021 budget (for BOG approval)

Apr 6, 2020 Presentation III

Presentation III

Apr 16, 2020 Presentation III

Apr 21, 2020 Presentation III

Apr 23, 2020 Presentation III

Governance Dates

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Jan 31, 2020

Feb 28, 2020

Oct. 25, 2019

Additional Information

Updated in July

Including Salary Policy adjustment

Ensure you process your labour distribution changes before June 30, 2019

Updated in January

For the January cut-off

Onboarding and Departure

It is your responsibility to inform us of these changes so we can make the budget adjustment ‘off-cycle’

For changes after January 31, 2020, only TEMP budget will be provided

Budget adjustments for Senior Administrators

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Budget Transfer Rules

We have created a quick reference guide for budget transfers (1A and 1B only)

They will be available on our website

When performing a transfer:

Within your own FIS access you can process yourself within Banner

Outside your FIS access but within your unit your VP’s office or Dean’s office can process within Banner

Across Units (ex: between Arts and Education) Use the newly created Webform to request ABP to process the budget transfers on your behalf

Budget transfers

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Ensure to involve the Analysis, Planning & Budget team early in your process – and all other stakeholders that have a significant role to play as well.

APB will work on improving coordination of budget and institutional approval processes.

APB is developing guidelines to ensure adequate management of new initiatives.

We ask that you provide a business case with budget proposals.

A spreadsheet of revenue and expenses projections is not acceptable without a business case.

Creation and Development of New Programs/New Initiatives

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The Budget Book provides an integrated outlook of the Budget for all funds for 2019-2020.

The emphasis is on the Unrestricted Fund as this is the fund that the University uses to align the budget with the University’s priorities – external constraints on the Restricted Fund, Plant Fund and Endowment Fund.

https://www.mcgill.ca/budget/budget-book

McGill Budget Book

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Position Budgeting

Requires monthly review by your units to ensure positions are properly budgeted

Should facilitate the validation of salary policy increases that are funded centrally

Position Control has been presented to the BOG as an option. It is not possible without:

Position budgeting

A process that includes permanent salary budget availability as a necessity to fill a permanent position

Restrictions on the movement of permanent funds between salary and non-salary

Restriction on the use of self-financing unrestricted funds to circumvent any new process established

Position Budgeting and Position Control

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Can be included as part of your performance dialogue

Targeted offerings will be made available through APB

Online training is available for pivot tableshttps://www.linkedin.com/learning/excel-pivottables-for-beginners/what-is-a-pivottable

Tutorials are also readily available on YouTube

Refreshing your Excel skills

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All requests should be centralized through the Agreement process:

Funding for new initiatives

Continued funding for historical initiatives (subsequent years)

Carry forward exceptions

Use of reserve

Overhead exceptions

Ad hoc allocations should be reflected in the subsequent year’s Agreement

Funding requests that are approved are time-limited. If they are not acted upon in the intended year, or the subsequent year, the funding may be forfeited.

We have informed the BOG that we are:

“Working to reduce internal decisions impacting the Unrestricted Fund that are made outside the Agreement process that are nonetheless binding on the institution”

“Working to reduce authorization to carry forward surpluses in individual funds”

Requests made through the Agreement process

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Your APB Contacts

Marilyn Baron, Director, Resource Allocations @2312

Serge Bergeron, Budget Director @2988

Cindy Bolduc, Budget and Resource Officer @7185

Josie Corsentino, Budget Administrator @6993

Joseph Hakim, Business Officer @2322

Karim Moussaly, Senior Financial Planning Analyst @6585

Melanie Pepin, Budget Manager @1330

Ilya Sabino-Ifill, Budget Officer @3753

Bradley Tucker, Executive Director @2322

Website: https://www.mcgill.ca/apb

Questions

Comments

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