Budgeting & Finance

Senior Administrator Orientation

August 16, 2012

Two Broad Financial Responsibilities

• Financial Planning—ensuring the effective deployment of a unit’s resources in support of its goals.

• Financial Oversight—ensuring that expenditures meet institutional, state and federal regulations and guidelines. Beyond that, are public funds being spent wisely?

University Structure

Board of Trustees

UI at Urbana-

Champaign

Planning & BudgetingOBFS:

Budget OfficePurchasing Grants & ContractsAccountingAITSHuman ResourcesUniversity Audits

University Administration

UI atSpringfiel

d

UI at Chicago

• CITES• Management Information• Human Resources• Facilities and Services • Office of Sponsored Programs & Research Administration

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University Structure

Board of Trustees

University Administratio

n

President

Vice Presidents

Assistant Vice

Presidents

University Policy Council

President

Chancellors

Vice Presidents

Centralized Business Services

Provosts Plus GroupVice Presidents

Provosts

UI atSpringfield

UI atUrbana-Champaign

UI atChicago

ChancellorsProvosts

Vice Chancellors

$Campus Budget

$ FY13 UIUC Budget

State Appropriations $242,784Tuition 631,512

Institutional Funds 158,164Grants, Contracts, & Fed Appropriations 476,035

Gifts & Endowment Income 116,586Departmental Activities 127,571

Auxiliary Enterprises 211,941Total $1,964,593

(000s)

State Appropriations

12%

Tuition32%

Institutional Funds8%

Grants, Contracts, & Fed

Appropriations24%

Gifts & Endowment

Income6%

Departmental Activities

7%

Auxiliary Enterprises

11%

FY13 UIUC Budget

State Appropriations

24%

Tuition16%

Institutional Funds10%

Grants, Contracts, &

Fed Appropriations

25%

Gifts & Endowment

Income7%

Departmental Activities

7%

Auxiliary Enterprises

11%

FY03 UIUC Budget

$Managing Your Slice

Duties of an Administrator

• To develop the academic unit strategically within the scope of mission and within resources accessible to the unit; and

• To present the case (be an advocate) at the college/campus level concerning the unit’s relationship to strategic concerns of the campus.

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Duties of an Administrator• To ensure that the academic unit has an effective process for planning and budgeting;

• To manage the academic unit’s resources as required to adapt to changing opportunities and needs;

• To ensure that units, programs, and other subsidiary organizations are accountable on appropriate grounds.

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Duties of an Administrator• To be appropriately entrepreneurial—look to gifts, self-supporting activities, and partnerships with other units;

• To work with the resources available to your unit (no deficits!);

• To be responsive to the needs of the institution as a whole.

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Managing Unit Finances• Develop a summary plan for

the year that involves all funds

• Each month someone needs to reconcile your account statements. Sit down quarterly to review status

• Know who owes you money; don’t forget to collect

• Have at least two people review transactions

• Have your staff attend training

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Fund Accounting• Universities track “funds”

separately. For most departments: – State/tuition. The main operating

account for most units– ICR. Overhead on grants & contracts– Gifts. Each separately tracked.

Individual restrictions important– G&C. Each separately tracked.

Individual purpose important

Big Picture/Small Details• Know the full set of resources

available to unit: –Unrestricted for unit use: State/tuition,

ICR, unrestricted gifts– Restricted funds whose use coincides

with unit need: some restricted gift funds, self-supporting

• Each fund separately tracked– Each statement reconciled– Rules of fund use honored (particularly

watch donor intent)

Budget Process&

Distribution of Funds

$

Budgets are About Making Choices

The Budget Process

• Spring – Campus/U of I requests developed• July – BOT reviews preliminary budget request• September – BOT approves U of I budget

request• Oct/Dec – IBHE/University interaction• December/Jan– IBHE recommendations

submitted to the Gov. • February – Governor’s budget recommendations

submitted to Legislature• May/June – Legislature acts• June/July – Governor signs appropriation

- Budget allocation to units

$

College Level Planning• Nov./Dec. - Colleges develop

annual report following campus planning guidelines

• Feb./Mar. - Budget hearings (one per college) led by Provost with assistance of Campus Budget Oversight Committee (CBOC)

• Late Spring – campus allocates funds to colleges

• Summer – College leadership reconciles request with actual allocation

State Planning Environment

Major Financial Challenges

• State of Illinois– Pension shortfall– State competitiveness

• Access and Affordability• Maintaining & Improving Facilities

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60

$65

$70

$75

$80

$85

$90

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

(At end of Fiscal Year, FY 2003-04 sale of Pension Bonds)

State of Illinois Unfunded Public Pension Obligations(SERS, SURS, JRS, GARS, TRS)

(Dollars in Billions)

Cumulative Change in State Tax Appropriationby Higher Education Sector

Page 23

-40%

0%

40%

80%

120%

160%

200%

240%

-30.3%-24.3%-21.8%

233.2%In Constant 2011 Dollars (CPI)

FY02 – FY12 excludes $45 million from higher education for Health Insurance payment to CMS.SURS: FY05-FY12 includes State Pension Fund, FY10 & FY11 SURS includes full funding from pension obligation bonds.

ISAC

SURS

Community Colleges

Universities

Change in Real Gross Domestic Product by State

1997 – 2010

Page 24

Source: U.S. Bureau of Economic Analysis

*Average of top five performing states.

100

110

120

130

140

150

160

170

Ind

ex United States

Illinois

Top Five States*

Accessibility and Affordability

• Tuition—One of the highest cost publics; cost growing beyond capacity to pay. All publics receiving pushback

• Unmet aid is growing

ILLINOIS FAMILY INCOME

% ChangeCALENDAR YEAR 2007 2008 2009 2010 07 to 10

Quintile 1Min $0 $0 $0 $0Mean $18,027 $16,903 $15,030 $14,806 -18%Max $31,519 $30,005 $26,601 $25,967 -18%

Quintile 2Min $31,520 $30,006 $26,602 $25,968 -18%Mean $42,401 $40,657 $37,415 $36,450 -14%Max $52,695 $52,093 $49,998 $48,267 -8%

Quintile 3Min $52,696 $52,094 $49,999 $48,268 -8%Mean $65,965 $64,218 $61,425 $60,386 -8%Max $79,265 $76,492 $73,510 $74,826 -6%

Quintile 4Min $79,266 $76,493 $73,511 $74,827 -6%Mean $96,763 $94,650 $91,957 $92,353 -5%Max $117,973 $116,017 $115,209 $115,511 -2%

Quintile 5Min $117,974 $116,018 $115,210 $115,512 -2%Mean $201,286 $193,886 $193,703 $202,794 1%Max on up on up on up on up

Updating Facilities

• We have relied on state funding for facility upgrades

• Large state-funded projects are over for the next 5-10 years

• Student fee helps us not fall further behind on deferred maintenance (roofs, windows, HVAC. . .)

• How do we support facility renovation?

Campus Planning Efforts: Taking action so that Illinois can

thrive• Protecting our ability to:–Hire & retain the best faculty—our

reputation depends on it– Protect quality and access for our

students– Ensure Illinois remains a leader in

higher education

Moving from a Defensive to Competitive Posture

Ensure Financial Stability

Reduce Central Costs

Reduce College Costs

Enhance Our Revenue Base

Strengthening our Foundation

Through interconnected efforts to:

Enhancing Financial Stability

& Reducing Central Costs• Increased financial oversight• Reducing staff size to control costs

and accelerate efficiencies (400+ FTE decline)

• Implementing sunset provisions for centrally funded projects

• Investing in energy conservation—$8m+ in annual savings

However, most work is at the unit level

Well Positioned for Challenging Times

• Solid financial position• Major facilities projects• 240 faculty searches in two years• Strategic Excellence Hiring Program• Small class initiative—major

expansion of small classes in areas that matter

• Major financial aid initiativeHowever, challenges remain

Planning is More Important than Ever

Unit Budget Planning• Unit’s planning should come from goals

in its strategic plan—units should look for tie in with college and campus plans

• Know how your unit is spending its resources. Does that spending match goals?

• In challenging times, planning should not be dependant on growth. How can a unit best deploy existing resources?

• Be creative—find ways to partner with others, find new funding sources, focus efforts on highest priorities

Take Control!

• Meet with those who have been successful

• Attend leadership/training programs• Make choices—don’t do everything

you have always done, but with less• Find ways to reduce “backroom”

costs. Shared services are taking off• Start from the bottom up in

redesigning your organization

Resources

• Accounting Customer Service—Ron Miner, Assoc. Director. 265-5315

• Budgets and Financial Analysis—Suzanne Rinehart. 333-9526

• University Audits—Darla Hill, Director. 265-5400