FOUNDATIONS IN UNIVERSITY FINANCE UNIVERSITY BUDGETING

Transcription

1 FOUNDATIONS IN UNIVERSITY FINANCE UNIVERSITY BUDGETING

2 University Budgeting Alicia Robertson Associate Director University Budget Office Participant Outcomes Identify the key components of the university budget Differentiate current budgeting model and All Funds budgeting model Anticipate the budget process and timeline Be a good steward of university resources INDIANA UNIVERSITY 2

3 University Budgeting Agenda IU Budgeting Basics Budget Construction INDIANA UNIVERSITY 3

4 University Budgeting IU BUDGETING BASICS INDIANA UNIVERSITY 4

5 IU Budgeting Basics University Budget Office (UBO) Provides support to: University Administration Campus Budget Offices Academic Units Support Units INDIANA UNIVERSITY 5

6 IU Budgeting Basics What is a budget? Financial representation of the institution s plans Forecast of institution s financial position Control mechanism in an accountability environment INDIANA UNIVERSITY 6

7 IU Budgeting Basics Why bother with budgeting? Complex operating environment Variety of revenue sources Compliance requirements & restrictions Means of tracking revenues & expenses to effectively allocate resources Highlight costs of activities and assist with decision making on the use of resources INDIANA UNIVERSITY 7

8 IU Budgeting Basics Approaches to Budgeting Responsibility center (RC) management budgeting Focusing on increases or decreases to the base budget INDIANA UNIVERSITY 8

9 IU Budgeting Basics FY16 - Policies and Practices for Base Budgeting within Fund Groups General Fund Designated Restricted Auxiliary Enterprises Other Funds Budgeted in detail Base budgeted if recurring revenue stream Base budgeted if recurring revenue stream Budgeted in detail, including monthly budgets Salaries set for payroll load 9

10 IU Budgeting Basics FY17 - ALL FUNDS initiative General Fund Designated Restricted Funds Auxiliary Enterprises Other Funds Budgeted in detail Budgeted in detail Budgeted in detail Budgeted in detail, including monthly budgets Salaries set for payroll load 10

11 What portion of the FY16 budget are the General Funds? Use your clicker to submit your answer: A. 85% 33% 33% 33% B. 60% C. 57% A. B. C. *In the budget, the General Fund is comprised of the General Education Fund and Medical Practice Funds. INDIANA UNIVERSITY 11

12 IU Budgeting Basics Indiana University Official Budget General Fund 60% Medical Practice (Designated Funds) 6% Distribution by Fund Group Designated & Other Restricted 8% Contracts & Grants 14% Auxiliary 12% INDIANA UNIVERSITY 12

13 What is the total IU expenditure budget for ? Use your clicker to submit your answer: A. 3.3 Billion 33% 33% 33% B. 709 Million C. 5.3 Billion A. B. C. INDIANA UNIVERSITY 13

14 IU Budgeting Basics Indiana University Official Budget Summary by Fund Group General Educational Fund $ 1,900,364,896 $ 1,963,151,487 Medical Practice General Funds 179,421, ,459,295 Designated and Other Restricted 249,715, ,422,228 Contracts and Grants 418,900, ,700,000 Auxiliary Enterprises 400,502, ,173,501 TOTAL Expenditures $ 3,148,905,191 $ 3,274,906,511 Percent Change 4.0% INDIANA UNIVERSITY 14

15 What is the greatest general fund expense for the university? Use your clicker to submit your answer: 33% 33% 33% A. Financial Aid B. Capital C. Compensation A. B. C. INDIANA UNIVERSITY 15

16 IU Budgeting Basics General Fund Allocations of Resources by Category (Budgeted) FY16 1,238,382, ,729,515 Compensation & Benefits 63% 46% 1% 23,098,686 General Expense Library & Equipment Transfers In -211,059, % 16

17 State Appropriation dollars fund IU s General Fund, compared to All Funds, at what percentages? Use your clicker to submit your answer: A. 27% General Funds and 16 % All Funds B. 33% General Funds and 20% All Funds C. 32% General Funds and 23% All Funds 0% 0% 0% A. B. C. INDIANA UNIVERSITY 17

18 IU Budgeting Basics General Fund Revenue Distribution (Budgeted) FY16 Other Income 6% State Appropriation 27% Student Fees 67% INDIANA UNIVERSITY 18

19 IU Budgeting Basics Composition of Tuition and Fees Tuition/Fees approved by the Trustees: Instructional fees Mandatory fees: Student Activity, Technology, Health Fee rates approved by SVPCFO: Course-related: lab fees, student teaching Administrative: application, late enrollment, transcript On-line fees Fees approved by Campus Chancellors/Provost: Local impact: placement office, non-credit courses, locker fees, parking INDIANA UNIVERSITY 19

20 IU Budgeting Basics Importance of Getting Tuition Projections Right Tuition income as percent of total General Fund budgeted revenues ( ) Campus Tuition Income : General Fund Budget Bloomington 77% IUPUI 54% East 65% Kokomo 54% Northwest 57% South Bend 57% Southeast 59% INDIANA UNIVERSITY 20

21 IU Budgeting Basics Tuition Setting Internal process Starts with departments, schools & campuses Timing: Critical To Get Done Early University review and approval General Assembly Statutory Requirements Institutions must set tuition rates for both years of biennium Each institution must hold an open forum INDIANA UNIVERSITY 21

22 IU Budgeting Basics Dollar Volume of Tuition Income* Tuition Category Resident Undergraduate Nonresident Undergraduate Reciprocity Undergrad Grad and Professional TOTAL Income Total $ M $ M $ 10.0 M $ M $1,244.7 M * General Fund Operating Budget INDIANA UNIVERSITY 22

23 University Budgeting BUDGET CONSTRUCTION INDIANA UNIVERSITY 23

24 Budget Construction Players Fiscal officers Campuses, with input from RCs UBO, VPCFO President, Trustees INDIANA UNIVERSITY 24

25 Budget Construction University Budget Office drives the budget process Student enrollment projections Operating appropriation request Data analysis and budget modeling Budget administration for all campuses Policies, procedures, guidelines, monitoring System development and maintenance Administration of the Calculated Salary Foundation (CSF)Tracker INDIANA UNIVERSITY 25

26 When checking the Calculated Salary Foundation (CSF) Tracker, the position funding will roll into budget construction. Use your clicker to submit your answer: 50% 50% A. True B. False A. B. INDIANA UNIVERSITY 26

27 Calculated Salary Foundation (CSF)

28 Budget Construction Fiscal Year versus Academic Year IU Fiscal Year Begins July 1 Ends June 30 IU Academic Year Begins August 1 End May 31 INDIANA UNIVERSITY 28

29 Budget Cycle July 1 Base Budget Budget Adjustments: base current Budget Construction Year-End Reversions Plans Adjusted Base Current Budget Actual Long-Term Short-Term INDIANA UNIVERSITY 29

30 Budget Construction Process Base Budget and Planning Fiscal Analysis and Use of Reserves Estimate RC Resources Available Develop Budget Guidelines Allocate Resources Detailed Budget Construction Obtain Final Trustee Approvals Upload Budget and Salaries to Systems INDIANA UNIVERSITY 30

31 Budget Construction 1 Base Budget and Planning Model realignments, reorganizations Apply preliminary planning assumptions Develop initial budget model Identify future needs, potential reallocation opportunities Detailed base/csf Tracker reviews Adjust budget assumptions... INDIANA UNIVERSITY 31

32 Budget Construction 2 Fiscal Analysis and Use of Reserves Projection of annual operations conducted in the fall and spring Currently General Fund only Estimated revenues, expenditures, and operating surplus or deficit Planned use of one-time, accumulated fund balance INDIANA UNIVERSITY 32

33 Budget Construction 3 Estimate RC Resources Available Other earned income: Interest income - as available and moved to GF Gift income - projected to be moved from IUF Sales and services - based on projected levels Indirect cost recovery - earned from C&G accounts Other - as projected INDIANA UNIVERSITY 33

34 Budget Construction 4 Develop Budget Guidelines Calculate pooled benefit rates Document known factors such as State Appropriations and debt service payments Obtain approvals for fee rate increases Salary guidelines Identify inter-campus support levels University tax INDIANA UNIVERSITY 34

35 What is University Tax? Use your clicker to submit your answer: 33% 33% 33% A. Sales tax the University has to pay B. University payroll tax C. Assessment for services provided by University Administration A. B. C. INDIANA UNIVERSITY 35

36 Budget Construction 5 Allocate Resources Compensation salaries, benefits, overtime Financial Aid - student fee rates & campus programs Other expenditures: Energy & utilities S&E - as supportable from revenues Budget allotments/assessments - campus-defined University tax/insurance/iuf Development fee Capital - as required, including life cycle funding 36

37 Budget Construction GROUP ACTIVITY Due to a decline in enrollment your revenue has been reduced. To compensate, your department will need to cut the expenditure budget by 1%. Where will you cut your budget? INDIANA UNIVERSITY 37

38 Budget Construction Group Activity Summary Tightening resources affects everyone Support budget reduction decisions and become active participants of responsible spending INDIANA UNIVERSITY 38

39 Budget Construction 6 Detailed Budget Construction KFS module Automated calculations and validations Pre-defined routing structure for review and approvals Reporting and download options Detailed reviews performed by departments, schools, campuses, UBO Conformity with guidelines regarding operating levels and salary-setting parameters INDIANA UNIVERSITY 39

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41 Budget Construction Closure of the Cycle 7 Obtain Final Trustee Approvals Request becomes July 1 Budget upon approval 8 Upload Budget and Salaries to Systems Account/object code data loaded to the general ledger Salary data loaded to the payroll system INDIANA UNIVERSITY 41

42 End of the Budget Cycle Fiscal Year-End Closing Close out revenue and expenses KFS budget reversion and carryforward process for General Fund INDIANA UNIVERSITY 42

43 Takeaways What we hope you learned today: 1. IU revenue is dependent on tuition 2. Departments need to manage resources within their budget 3. IU is moving to an ALL Funds budgeting model 4. Departments, schools, campuses, UBO, VPCFO, President, and Trustees all play a vital role in constructing the budget INDIANA UNIVERSITY 43