UCSF HUMAN RESOURCESFUNDING MODEL SUBCOMMITTEE RECOMMENDATIONSUpdate to Academic Senate Coordinating Committee 2/4/2013

2

Contents Background and overview of process Recommendations Appendices

3

Subcommittee chargeSubcommittee membershipSubcommittee process

Background and Overview of Process

4

Funding Model Sub-Committee Charge

Sub-committee charge Recommend rates for FY 13-14, based on review

of several aspects of the funding model, including funding streams, amortization of startup costs, population categories, and weighting based on percent effort

Ensure buy-in from members’ constituencies by facilitating discussions and agreement

HR Advisory Board role Endorse rate proposal and help communicate

decisions and rationale for rate changes to constituents

5

Subcommittee Membership Committee Members

Basic Science: Larisa Kure Clinical: Maye Chrisman, Chair EVCP: Suzanne Murphy FAS: Gary Forman SOD: Susan Schultz SOM: Anja Paardekooper SON: Lynda Jacobsen SOP: Michael Nordberg HR Representative: Cynthia Lynch Leathers

Committee Staff Mike Wang, UCSF HR Katharine Tull, UCSF PMO

6

Subcommittee Process Subcommittee represented all control points, clinical and basic science

departments, and HR leadership Subcommittee established principle that the scope of the subcommittee was to

provide oversight and guidance on the management of the budget, but not to analyze or attempt to make recommendations on budget details Specific budget-management details are the purview of HR leadership Provided recommendations of areas to consider in managing to budget

Reviewed proposed FY 13-14 budget as well as FY 12-13 budget to actuals and startup budget to actuals to understand the scope of issues associated with the HR budget The FY13-14 HR budget is approximately $25 million and includes 178 FTE Originally, startup costs were projected to be $2.3M; they were actually ~$4.6M*

Considered a range of options and determined an increase that would be reasonable for the campus to bear Strongly advocated for constituents Recognized important balance between keeping costs to a minimum but also ensuring

HR has the resources needed to stabilize and achieve service and process goals AVC HR and subcommittee chair pursued increased institutional support in

parallel based on recommendations from the subcommittee*See appendix two for detail on startup costs

7

Weighting recommendationHeadcount and billing freeze datesInstitutional supportGuiding principlesFY13-14 bill

Recommendations

8

Recommended Population Weighting for FY13-14

Population FY12-13 Percentage

FY 13-14 Percentage Proposed

Faculty 100% 100%Non-Faculty

Academics/Postdocs 80% 80%

Staffincludes the effort associated

with staff volunteers80% 80%

VCF/Volunteer Researchers 20% 20%

Students 20% 10%Non-Recall Emeritus 20% 0%

Based on input from Service Center directors, subcommittee recommends reducing the weighting for two employee categories for FY 13-14: students and non-recall emeritus

Quantitative and qualitative analysis should be performed during 2013 to provide comprehensive assessment of weighting for the other categories This will allow a full year of more stable operations and performance data to inform future

weighting recommendations

9

Recommended Headcount and Billing Freeze Dates Headcount and billing freeze date for FY13-14 should be February 1, 2013

Allows departments some time to conduct any pending clean-up efforts Headcount and billing freeze date for future years should be January 1

Allows one communication of rates for approval and planning that aligns with campus budget timeline

HR should invite departments to discuss planned headcount changes so that changes can be incorporated prior to freeze date

The subcommittee considered more frequent headcounts to determine billing, but concluded that the potential complexity and special considerations make it infeasible for HR to manage

The subcommittee considered how to accommodate departments requesting a mid-year adjustment to their bills due to staffing changes Because a change must involve an increase or decrease of 100-150 FTE in a department

for HR to modify its staffing, and because reductions often result in significant HR work, the subcommittee has the following recommendations to address departments’ needs: Department requests for adjustments up to $10,000 should be addressed with the control point Departments should make all efforts to discuss anticipated changes greater than $10,000. HR

Business Services will adjust the department’s bill appropriately (amount and timing of change) in consultation with the affected departments

Unanticipated mid-year changes greater than $10,000 should be discussed with HR Business Services to determine if a billing adjustment is appropriate

HR operating losses associated with adjusted bills due to changes greater than $10,000 should be absorbed in the following year’s billing rates

10

Recommended Institutional Support The original funding model assumed that departments

would cover all start-up costs; however, the subcommittee felt that the significant cost overruns should be covered partially by institutional funds

The subcommittee recommended that the institution provide one-time funds to offset the startup costs as follows: The overage between what was budgeted for capital projects

and the actual costs $971,117

The cost of the personnel file transfer project, which was not budgeted in the original startup budget $372,578

Total Recommended Institutional Support: $1.34M

11

Institutional Support Commitment The AVC HR and Funding Model Subcommittee Chair worked

with the Senior Vice Chancellor to secure additional institutional support

Total central funding commitments for FY12-13 and FY13-14: $1.26M FY12-13:

$200K one-time from SVC FAS to offset startup costs FY13-14:

$200K one-time from SVC FAS to offset startup costs $400K one-time from CFP (Chancellor’s Financial Plan) to

support service excellence $457K from FAS and CFP to support fixed-cost increases in the

same proportion as rate revenue (6.5%) FY14-15:

$374K from FAS and CFP to support fixed-cost increases in the same proportion as rate revenue (4.9%)

12

Recommended Guiding Principles for Managing HR Budget

Given all the factors outlined, the subcommittee recommends the following guiding principles for managing the HR budget Accept inflationary/fixed-cost increases to the HR budget for FY13-14 and FY14-15

because the organization is stabilizing 6.5% increase in aggregate rates for FY 13-14, assuming 5% merit* and 10% increase in benefits

(1.7 percentage point increase) 4.9% increase in aggregate rates for FY 14-15 Depending on external factors that put financial pressure on departments (e.g., an NIH budget

cut), the funding model subcommittee may need to revisit the above parameters for FY 14-15 If merits are greater or lesser than projected, the approval assumes the budget will be adjusted

upward or downward accordingly Expect to start seeing flat or reduced rates after the next two years Central sources of funding (non-revenue model revenue) should bear equivalent

inflationary increases so that departments don’t bear disproportionate amount of increase This is a shift away from the “permanent budget” approach to the funding model that was

originally implemented Delay amortization of startup costs over 5-10 years instead of the originally planned 3

years The annual HR budget, as well as proposed variances from the HR budget greater than

1%, should be reviewed by this funding model subcommittee (or group that represents the same roles from each control point, clinical and basic science departments) to advise and make recommendations on possible alternatives Exclusions would be self-supporting recharges that set rates independently Restructuring of how specific services are recharged to departments should be reviewed by the

subcommittee*See appendix one for detail on merit assumptions

13

FY13-14 HR Bill Department bills for FY 13-14 will be driven by

three components Fixed cost increase is 6.5% due to under-collection

of revenue in FY12-13, 5% merit in FY13-14 and increasing benefits rates Overall across the campus, departments will experience a

6.5% increase in HR costs The published rates for each population will differ

from the 6.5% given weighting adjustments Reduction of student weighting by 50% and elimination of

charges for non-recall emeritus Individual departments may pay more or less than a

6.5% increase based on their February 1 headcount

14

Merit assumptions for FY 13-14 and future yearsDeans’ Offices’ Support and SOM ContributionManagement Suggestions

Appendix One: Additional Issues Addressed by the Subcommittee

15

Merit Assumptions Updated budget based on most recent merit assumptions

FY12-13: No merit increase FY13-14: 5% merit increase as of July 2013 In previous version of budget, assumed 2% merit as of

January 2013 (FY12-13) and 3% merit as of July 2013 (for FY13-14)

Resulting changes in budget: FY12-13 expenses were reduced $114K, resulting in a smaller

FY12-13 deficit (from $376K to $262K) Total expense for FY13-14 over FY12-13 increased from 6% to

6.5% Funding model revenue and related revenue increases by the

same 6.5%

16

Deans’ Offices’ Support Deans’ Offices’ contributions were historically

based on the work associated with Academic Affairs

The subcommittee recommends shifting the philosophy of the Deans’ Offices’ support to be considered a percentage of the entire HR budget, consistent with the following recommended guiding principles: The subcommittee makes recommendations on

the overall HR budget, and HR decides how to manage the budget

All funding sources bear cost increases and share in savings

17

SOM Dean’s Office Support Due to a disagreement about the expected contribution from the SOM

Dean’s Office, SOM requested a review of its contribution: $555K in FY12-13 SOM proposed characterizing its two components:

Annual recurring contribution of $363K (equivalent to supporting 3.9 FTE in FY12-13)

Transition support to bridge the gap between $363K and the original $555K, with the transition support gradually reduced to zero by FY 15-16

Subcommittee recommendations: The SOM Dean’s Office’s recurring contribution of $363K in FY12-13 should

be escalated at the rate of all other fixed-cost increases in future years SOM should provide transitional funding to gradually reduce their

contribution from the original HR allocation to the proposed permanent amount: 100% transitional funding in FY13-14 50% transitional funding in FY14-15 No transitional funding in FY15-16 and beyond

The recommendations are based on the expectation that the reduced contribution will be managed by improved efficiency and reduced HR expenses, not by increasing costs billed to departments or other funding sources

18

Management Suggestions for Consideration Departments may need to reassess the HR work that continues to be performed in

departments to better understand the impact of that work on departmental budgets and staffing

Departments and HR need to partner to improve process standardization in order to achieve efficiencies HR should provide departments with feedback about their participation in the

partnership, perhaps through annual review indicating areas that departments could more smoothly interact with HR

HR should assess span of control HR organization seems very “top heavy”

Policy changes should be vetted, as appropriate, with the campus community and clearly communicated prior to implementation so departments can prepare and adjust accordingly

HR should assess need for increased positions in HR Business Services unit relative to original budget

HR should assess value of further investment in HR SRS HR should share with departments the service issues identified, including

implementation timeline and deliverables Departments would like to see concrete efforts to change processes to increase

efficiency and reduce costs. Possibilities include expanded partnering with the Medical Center and outsourcing options, reconsidering LER practices, and evaluating TEP

HR should assess the balance between staff and academic staffing levels

19

Initial HR budget assumptionsHR startup cost detailHR operational strategies

Appendix Two: HR Budget Background

20

Initial HR Budget Assumptions and Implications

The initial funding model was based on certain assumptions that need to be adjusted based on the experience of the start-up year’s operations Startup costs

Costs were much higher than budgeted due to unanticipated costs of construction, personnel file transfer, and managers’ salaries prior to go live

Change in weighting Based on feedback from departments, the weighting and rate for volunteer clinical faculty

was reduced, without an offsetting increase to rates for other categories Contingency staff

Five contingency positions were included that would decrease to two in FY 13-14, and zero in FY 14-15

All five positions have been filled and are expected to be needed through FY 14-15 Salary setting

Salary estimates were based on projected midpoint for all positions Decisions to hire internally and not decrease salaries dictated that most salaries are above

midpoint Benefit escalation percentage

1% difference between what was budgeted for benefits escalation and actual benefits escalation (e.g. for FY 12-13, budgeted increase was 37%, actual is 38%)

Additional FTE Employment, HRIS, and Investigations specialty centers had insufficient FTE budgeted for

the required work (due to change in scope, technology or unexpected volume) Added three FTE in service centers to address service level concerns

21

HR Startup Cost Detail

Original Budget Actual VariancePersonnel 1,050,000$ 2,149,207$ 1,099,207$ Capital Projects 750,000$ 1,721,117$ 971,117$ Computers 500,000$ 260,831$ (239,169)$ Phones 43,979$ 43,979$ File Project 372,578$ 372,578$ Training 37,322$ 37,322$ Billing 36,303$ 36,303$ Other 45,743$ 45,743$ Total 2,300,000$ 4,667,080$ 2,367,080$

Over Budget 2,367,080$

UCSF HR Start Up Cost Summary

22

HR Operational Strategies to Manage Costs and Service During the start-up year, HR leveraged opportunities to

reduce staffing costs Did not replace Benefits/Employment manager when retired

Shared Employment manager with Medical Center Added Benefits manager role to Class/Comp manager position

Shared managers with Medical Center for HRIS and L/ER Joined efforts with Medical Center for operating the Learning

Management System Financial impact for FY 12-13 is approximately $200K

Addressed customer service in response to customer demands through project-focused contract positions Added Project Manager and Programmer to support HR Service

Request System enhancements Added Personnel File Coordinator to manage ongoing file

maintenance until e-file project can be implemented Financial impact for FY 12-13 is approximately $266K