Budget Forum. May 22, 2012

Transcription

1 Budget Forum May 22, 2012

2 Current Status of the RCM Model The model is an approxima?on of the underlying economics of our academic ac?vity The primary goal is to provide incen?ves for growth and fairly align resources with academic ac?vity using a model that is as simple and transparent as possible This model is the result of a series of itera?ons with the Deans with input from Huron Consul?ng A DRAFT model is currently under review by the Deans and their Budget Unit Managers and several aspects are s?ll under considera?on or being refined The purpose of this forum is to illustrate how various units are represented and how par?cular principles and incen?ves are built into the model. Feedback is sought about how well the structure and incen?ves in the model meet the goal and to gather input on the areas s?ll under considera?on.

3 Model Structure Colleges Other RCs Regional Campuses Auxiliaries Revenues Grant/GiN Direct Expenses Unit Margin Indirect Cost Alloca0ons Academic Resource Pools Subsidy & Tui?on Designated Tui?on/Fees F & A Recovery Other Sources Revenue and Expenses For Admin Cost Alloca?on Actual Expenditures within the unit Revenue Direct Expenses (unrestricted only) Library, Museum, Wellworks, Ch Dev, WOUB CAS COB PCOE SCOC RCENT COFA CHSP UNC HTC INST GVS HCOM OPIE Educa?on Abroad elearning Athle?cs Housing Dining Prin?ng Trans/Parking S?ll determining how the Other RCs should be represented and cleaning up revenue/expense flows. We could shin the current flow of revenues to elearning to the academic units and elearning would change from an RC to a Cost Pool. Also considering how best to represent some of the interdisciplinary research centers like EBI, NQPI and OMNI Administra?ve Cost Pools General Fee Cost Pools Unit Margin Strategic Investment Pool Final Unit Margin President, Provost, OIT, En Mgt, Facili?es, VPR, Advanement, VP Admin, Debt, Reserves, etc Student Affairs, Campus Rec, Athle?cs, Marching 110, etc ANer Indirect Alloca?ons Central Funds for balancing RCs and inves?ng in strategic priori?es The Indirect Cost Alloca0ons are essen0ally an alterna0ve calcula0on for the current overhead charges paid by Regional Campuses and Auxiliaries (as well as HCOM). This method of calcula0on will need to be reconciled with the current method of calcula0on

4 Analyses Feeding the Model Subsidy A]ribu?on Space Data Net Assignable Square Footage Space data is being verified and the space database will be undated this summer Tui?on A]ribu?on Top- Level Model Sources & Uses Actual Revenue and Expenditures Colleges are currently reviewing the revenue and expense transac?ons captured in Sources and Uses and determining is all ac?vity is correctly represented

5 Subsidy Associated with Ohio residents at the undergraduate level and all students at the graduate level Formula subsidy generated through course comple0ons Degree subsidy generated through degree comple0ons Doctoral includes alloca0on for federal (NSF NIH) research levels Outreach currently flows to elearning but is shiking in FY13 illustrates an area s0ll under analysis that will change these alloca0ons

6 Tui?on and Fees Undergraduate is net of scholarships funded at the college level but not central scholarships in financial aid (see later slide) Educa?on Abroad credit hours are s?ll mixed in and will need to be teased out if that unit remains an RC in the model Undergraduate is weighted by statewide costs essen?ally creates differen?al tui?on. 85% of revenue allocated this way Headcount por?on is allocated on major headcounts to reflect cost of a]rac?ng and retaining students. 15% allocated this way As Earned tui?on is also tracked to understand true tui?on flow Graduate tui?on is not weighted since most of it is waived Tui?on A]ribu?on

7 Grants/Contracts and GiNs F&A Recovery is a]ributed to the college. This does not signal a change to the current F&A distribu?on formula Line 8 is unrestricted grants and contracts for most units grants and contracts will be restricted Grants/Contract Revenue GiN Revenue Grant/Contract and GiN Expenditures Not used in Unit Margin calcula?on Typically come close to nedng out Captured for use determining total revenues and total expenditures for RCs for use when alloca?ng Administra?ve Costs. The concept here is that all expenditures will have an impact on administra?ve costs

8 Scholarships and Waivers We are s?ll refining the data collected on central waivers now that we have switched to PeoplesoN Graduate fee waivers allocated directly to colleges and the non- resident and special summer waivers provided centrally are deducted against the graduate tui?on and fee revenue typically wiping out most of the fee revenue Undergraduate financial aid is distributed to the colleges in propor?on to their undergraduate tui?on and fee revenue - essen?ally taking it off- the- top so that the model is blind to where students with need actually enroll

9 General Fee Each college is credited with genera?ng the general fee revenue associated with its credit hour produc?on The general fee revenue is then allocated back out to pay for all the units funded on the general fee in propor?on to their general fee revenue which essen?ally creates a pass- through in the model where general fee revenue goes directly to general fee expenses.

10 Other Revenues and Direct Expenses Designated tui?on fees include revenues from course fees, technology fees and off- campus graduate programs (RDP) These are all other revenues from sources such as online courses, clinic revenue, external revenues, rentals, transfers, etc These are all the actual expenditures from the unrestricted opera?ng budget for personnel, 3-9s and transfers to other units Unit Margin subtracts the direct expenses from the revenues to determine how much revenue is len for indirect costs a nega?ve number means the RC has revenue len to cover central costs.

11 Indirect Cost Alloca?ons Academic Resource Pools are units that are closely related to instruc?on by serving as learning laboratories but also serve as common benefit to the university and community. These units are onen embedded within a college budget but have been removed and the costs are shared across all RCs. Costs are spread across Athens academic units with the library and WOUB par?ally allocated to Regional Campuses. Auxiliaries par?cipate in all these cost pools except the library. Alloca?ons are in propor?on to either Total Headcount (HC- T students and employees) or Employee Headcount (HC- E) see Code column Aspects s?ll under considera?on: Using headcount vs FTE for alloca?ons need clean FTE data for employees Should colleges using these units for instruc?on have a higher alloca?on What is the appropriate adjustment to the regional alloca?on to reflect the par?al impact of these areas outside Athens

12 Indirect Cost Alloca?ons - Admin Administra?ve Cost Pools cover all the rest of the support units. The model uses various allocators (see Code column) to determine what por?on of those costs will be a]ributed to each RC. Since the budget is always balanced, the RCs will collec?vely cover all of these costs. This creates a closed system where if an alloca?on is reduced for one RC, the resul?ng variance will simply result in an increase to some other RCs. Several administra?ve costs are spread across the RCs in propor?on to their total expenditures from all funds including grants/contracts and gins (EXP in the Code column). VP Research is allocated in propor?on to all grant and contract expenditures. This makes the alloca?on blind to whether a grant includes F&A which creates an incen?ve for colleges to build that in whenever possible since that would add revenue to the college without increasing the VPR alloca?on. We know that clinical subsidy and contracts for CORE partners are warping the HCOM alloca?on and need to be excluded Execu?ve Dean for Regional campuses is allocated only to regional campuses in propor?on to their expenditures. Grounds is allocated with the majority of the cost going directly to athle?cs (30%) and housing (30%) with the remainder shared by the other Athens academic RCs in propor?on to total expenditures. The percentages for Athle?cs and Housing need to be refined this is just a rough es?mate currently.

13 Indirect Cost Alloca?ons - Admin Enrollment Management (including Admissions, Registrar, Financial Aid) is allocated in propor?on total undergraduate credit hour produc?on (SCH- U). Revenue from fees and fines (applica?ons, transcripts, diplomas) reduces the amount allocated by $2M. Headcount or FTE could also be used to allocate these costs Graduate College is allocated in propor?on to the graduate student headcount (HC- G) in each unit OIT is allocated in propor?on to the total headcount (HC- T students plus employees) Advancement is to be allocated on alumni headcount if we can get that data we are using degrees granted since 1986 as an approxima?on for now. Human Resources and employee fee waivers are allocated in propor?on to the headcount number of employees (HC- E). Further refinement will be done to get just benefits eligible employee counts for fee waiver alloca?on Considering the use of FTE in place of headcount if we can get accurate FTE consistently across the units

14 Indirect Cost Alloca?ons - Space Space Costs are allocated on Net Assignable Square Footage (excludes hallways, stairs, lobbies, mechanical, etc. 72% of the Athens space is in the RCs (including HCOM, Housing, Dining, etc) so 72% of the space costs are allocated here to the RCs essen?ally charging them for the space they control. The remaining 28% of the space belongs to the academic resource centers, administra?ve units and general fee units. The costs associated with this space are added to that units budget and the combined total is then spread across the RCs. For example, the library budget is $10,829,757. It has 236,272 NASF which equates to $2,202,941 in space costs. The RCs are allocated the combina?on of these two costs or $13,032,698 in the model. This way RCs with larger amounts of space don t get charged a dispropor?onately larger por?on of central space costs because of that.

15 Indirect Cost Alloca?ons - Exclusions Some RCs do not par?cipate in every cost pool. Regional campuses do not par?cipate in cost pools related to Athens space and other services where they pay directly for their own costs or do not have access to the Athens service (the gray areas represent this exclusion). For other cost pools the Regional Campuses u?lize the service at a lower rate. These will become par?al alloca?ons shown in yellow. The exact percentage for their par?cipa?on is s?ll being determined so these are placeholder numbers

16 Indirect Cost Alloca?ons - Exclusions Auxiliaries are also excluded from some cost pools. For example, academic services like the library, enrollment management and research are not allocated to auxiliaries. Housing and Dining pay their own u?li?es so they don t par?cipate in the central u?li?es alloca?on. They also pay directly for their employee fee waivers and debt and maintain their own reserves. They don t generate any general fee revenue to pay for general fee costs. HCOM is excluded from enrollment management and graduate college cost pools since they do their own admissions and financial aid. They also have their own separate reserves. We are s?ll determining their impact on central pools items and debt.

17 The Athle?cs Supported Auxiliary The Athle?cs Responsibility Center reflects its posi?on as a supported auxiliary. The general fee revenue that flows originally in through the credit hour produc?on of the academic units is transferred to Athle?cs to create their budget and shows up as general fee revenue (yellow highlight) Like the other auxiliaries, indirect costs for Academic Resource Pool and Administra?ve Pools are then allocated as addi?onal costs for which Athle?cs is not given revenue. This essen?ally means that some general fund revenues (tui?on and subsidy) go to suppor?ng these indirect costs. To capture the addi?onal revenues used to support these costs, an addi?onal cost alloca?on is made that is based on the RCs total subsidy and tui?on revenue which essen?ally skims a por?on of those revenues off the top The same approach is used to deal with the space costs associated with the remaining general fee units that are not covered by general fee revenue

18 The Strategic Ini?a?ve Pool Note: Numbers shown are only for illustra?on Total Indirect Cost Alloca?ons are subtracted from the Unit Margin computed earlier to produce the Unit Margin ANer Cost Alloca?ons which shows the balance for the RC aner the indirect costs have been subtracted. The sign has been flipped at this point so that a nega?ve number means that revenues associated with the unit are not sufficient to cover all the indirect costs currently assigned. A placeholder has been created for a Strategic Ini?a?ve Pool that is calculated as a percentage of the total unrestricted revenues. The rate on that pool has not yet been determined since we currently are currently refining the impact from transfers associated with items like royal?es and quasi- endowments, and adjustments that s?ll need to be made for auxiliaries and other areas where not all the expenses have been lined up with the revenues. We will also be looking at how best to represent the calcula?on needed to both balance differences between units as well as fund strategic ini?a?ves so this is not intended to be a completed calcula?on. This also means that the Final Unit Margins aner taking out the Strategic Ini?a?ve Pool are also basically placeholders and not the final numbers. These lines are here to illustrate how this part of the model will be constructed.

19 Next Steps The data in the model will be refined based on the review currently under way by the Deans and their Budget Unit Managers. Further refinements to data sources like space, graduate waivers, VPR alloca?ons, etc. will be incorporated. Input from these forums and further discussions with the Deans will result in adjustments to the model and preliminary decisions for the aspects are s?ll under considera?on. By the end of summer we will have another year of credit hour data and the FY12 financial data will be closed which will allow us to roll the model forward one year. The completed model can then be presented and used in the FY14 budget construc?on process.