Budgeting In Higher Education

Fun-Dah-MentalsLanny ArvanJuly 2009

1

Flow of Funds From a Campus PerspectiveLet’s look at an actual table from the University of Illinois at Urbana-Champaign

Source - http://www.obfs.uillinois.edu/aboutobfs/documents/2009_BSO_Full.pdf

2

3

Campus Balance Sheet

4

Balance Sheet Revenues Blown Up

5

Balance Sheet Expenditures Blown Up

6

Hierarchy for BudgetingChancellor

Provost/VCAA

Dean of College

Department Head

Associate Dean for

Undergraduate Affairs

CIO/Assoc Provost

Librarian

Director Facilities

Director Campus Parking

Director Intercollegiate Athletics

7

Budgeting versus Accounting• Focus on Vertical Pairs in the

Hierarchy– Provost has budget officer, so does

Dean.– Many other “Kibbitzers”

• Budgeting is about Planning– What activities will be supported?– What funds are required for that?

• Accounting about After the Fact• When actuals deviate from plan???

8

Discretionary Funds versus Sunk Expenditures• This year’s budget looks like last

year’s– Upward of 70% is for personnel

• Unallocated revenues are discretionary

• Already allocated funds are sunk– E.g., salaries for tenured faculty

• Higher ups like to hold back funding– Take advantage of new opportunities– Plan for a rainy day

• Tight budgets mean less discretion

9

Operating Budgets versus Capital Budgets

• Capital Budgets are for new Building or Plant or Major Renovation

• Operating Budgets– Typically done on an annual basis– Covers all activities

• IT typically within operating budget although hardware/software are capital.– If investments are lumpy who is the

bank?– Should replacement be done all at

once or spread over the cycle?

10

Soft Money versus Hard Money• Soft Money – Non recurrent

Good for startup activity & pilots– Grants– Gifts– One Time appropriations of

discretionary funds• Going from soft money unit to hard

money center– What is the source of recurrent

funding?• New appropriation? Elimination of

another unit?

11

Questions for further thought:• Within the hierarchy, what funding is

allocated by formula and what by discretion?

• Where is a certain type of spending in the hierarchy?

• If you have staff under you, can you allocate their time to activities?

• What per cent of Campus Budget is IT? How that that share changed over time?