Statements in this presentation that are not historical facts are forward-looking statements based on current expectations of future events and are

Transcription

1 Statements in this presentation that are not historical facts are forward-looking statements based on current expectations of future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. In addition, we, through our management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. All of these forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. We therefore caution against placing substantial reliance on the forward-looking statements contained in this presentation. All forward-looking statements included in this presentation are made only as of the date of the materials included in this presentation and we assume no obligation to update any written or oral forward-looking statements made by us or on our behalf as a result of new information, future events or other factors.

2 Stanford University Budget Plan Faculty Senate May 31, 2012

3 Thanks University Budget Group Margaret Brandeau, Engineering Adam Daniel, H&S Harry Elam, H&S John Etchemendy, Provost Andrea Goldsmith, Engineering Patti Gumport, Education Neil Hamilton, Budget Office Rosemary Knight, Earth Sciences Randy Livingston, Business Affairs Maureen McNichols, GSB Dana Shelley, Budget Office Bob Simoni, H&S Buzz Thompson, Law Tim Warner, Budget Office Capital Planning Group Jack Cleary, Land & Buildings Megan Davis, Land & Buildings John Etchemendy, Provost Stephanie Kalfayan, Academic Affairs Bob Reidy, Land & Buildings Craig Tanaka, Land & Buildings Bob Tatum, Engineering Tim Warner, Budget Office Budget Plan 2

4 Presentation Outline Highlights Consolidated Budget Recovering from the recession: A five year review General Funds allocations Capital Budget and three year Capital Plan Budget Plan 3

5 Financial Position Stanford is in a strong financial position! Operating and general funds surpluses Growing fund balances across most units; central reserves rebuilding General Funds well positioned for future selective strategic investments Budget Plan 4

6 Strategic Directions of the Budget Process Faculty salary competitiveness Strengthening base budget support for undergraduate financial aid Responding to highest priorities of the schools and support units Budget Plan 5

7 Looking Forward Cautious optimism Slow recovery could impact investment returns Federal research funding will likely remain flat Effects of medical cost containment The above, offset by: Strong local economy Stanford Challenge Budget Plan 6

8 Consolidated Budget Budget Plan 7

9 Consolidated Budget by Line Item Actuals Projection Budget Plan 1-year change $688 $721 Student Income $ % 1,242 1,241 Sponsored Research 1, % Direct Costs University % Direct Costs SLAC % Indirect Costs % Health Care Services % Expendable Gifts & Net Assets Released % 935 1,016 Investment Income 1, % Endowment Income % Other Investment Income % Other Income % $4,075 $4,270 Total Revenues $4, % 1,992 2,117 Salaries and Benefits 2, % SLAC % Financial Aid % 1,146 1,216 Other Operating Expenses 1, % $3,734 $3,932 Total Expenses $4, % $341 $338 Revenues less Expenses 347 (158) (126) Total Transfers (128) $183 $212 Revenues less Expenses after Transfers $220 ($$ in millions) Budget Plan 8

10 Consolidated Budget by Fund Type $$ in millions General Funds Designated Restricted Grants & Contracts Auxiliary/ Service Ctr Student Income $602 $5 - - $138 $745 Sponsored Research ,272 Health Care Services Expendable Gifts & Net Assets Released Investment Income ,087 Other Income Total Revenues $1,125 $859 $1,060 $1,046 $354 $4,443 Salaries and Benefits ,222 SLAC Financial Aid Other Operating Expenses ,246 Total Expenses $953 $790 $782 $1022 $550 $4,096 Revenues less Expenses (196) 347 Total Transfers (129) (15) (158) (24) 199 (128) Revenues less Expenses after Transfers $43 $54 $120 $0 $3 $220 Total Budget Plan 9

11 Consolidated Budget Actuals Projection Budget Plan 1-year change $688 $721 Student Income $ % 1,242 1,241 Sponsored Research 1, % Direct Costs University % Direct Costs SLAC % Indirect Costs % Health Care Services % Expendable Gifts & Net Assets Released % 935 1,016 Investment Income 1, % Endowment Income % Other Investment Income % Other Income % $4,075 $4,270 Total Revenues $4, % 1,992 2,117 Salaries and Benefits 2, % SLAC % Financial Aid % 1,146 1,216 Other Operating Expenses 1, % $3,734 $3,932 Total Expenses $4, % $341 $338 Revenues less Expenses 347 (158) (126) Total Transfers (128) $183 $212 Revenues less Expenses after Transfers $220 ($$ in millions) Budget Plan 10

12 Graduate Tuition Who Pays? Total = $157M Total = $300M Student Resources 45% Unrestricted 17% Student Resources 46% Unrestricted 18% Grants & Contracts 18% Restricted Student Aid 18% Grants & Contracts 9% Restricted Student Aid 25% Designated 2% Designated 2% Budget Plan 11

13 Undergraduate Tuition Who Pays? Total = $161M Total = $286M 2000 Family 2011 Resources Family 70% Resources 61% General Funds 3% Govt/ Other Awards 5% Athletic Aid 5% Endowment/ Gifts/Other 13% Endowment/ Gifts/Other 18% Govt/ Stanford Pres. General Other Athletic Stanford President s Fund 5% 1 time 1% Funds 1% Awards 2% Aid 5% Fund 4% t 1 time 7% Stanford Sources = 25% Stanford Sources = 37% Budget Plan 12

14 Undergraduate Tuition Who Pays? Total = $161M Total = $286M 2000 Family 2011 Resources Family 70% Resources 61% General Funds 3% Govt/ Other Awards 5% Athletic Aid 5% Endowment/ Gifts/Other 13% Endowment/ Gifts/Other 18% Govt/ Stanford Pres. General Other Athletic Stanford President s Fund 5% 1 time 1% Funds 1% Awards 2% Aid 5% Fund 4% t 1 time 7% Stanford Sources = 25% Stanford Sources = 37% Budget Plan 12

15 Undergraduate Tuition Who Pays? Total = $286M Total = $308M Govt/ Other Awards 2% Athletic Aid 5% Family Family Family Resources Resources Resources 61% 62% General 61% Funds 3% Endowment/ Gifts/Other 18% Endowment/ Endowment/ Gifts/Other Gifts/Other 18% 18% General Funds 6% Govt/ Stanford President s Other Athletic Stanford President s Fund 4% t 1 time 7% Awards 2% Aid 5% Fund 4% 1 time t 3% 3% Stanford Sources = 37% Stanford Sources = 36% Budget Plan 13

16 Consolidated Budget Actuals Projection Budget Plan 1-year change $688 $721 Student Income $ % 1,242 1,241 Sponsored Research 1, % Direct Costs University % Direct Costs SLAC % Indirect Costs % Health Care Services % Expendable Gifts & Net Assets Released % 935 1,016 Investment Income 1, % Endowment Income % Other Investment Income % Other Income % $4,075 $4,270 Total Revenues $4, % 1,992 2,117 Salaries and Benefits 2, % SLAC % Financial Aid % 1,146 1,216 Other Operating Expenses 1, % $3,734 $3,932 Total Expenses $4, % $341 $338 Revenues less Expenses 347 (158) (126) Total Transfers (128) $183 $212 Revenues less Expenses after Transfers $220 ($$ in millions) Budget Plan 14

17 Sponsored Research (excluding SLAC) $1.0B 900M 800M 700M Indirects Non Federal Federal M 500M 400M 300M 200M 100M 0M 82% 82% 80% 80% 76% 73% 74% 75% 74% 72% ARRA Surge Budget Plan 15 % Federal

18 Sponsored Research (excluding SLAC) $1.0B 900M 800M 700M Indirects Non Federal Federal M 500M 400M 300M 200M 100M 0M 82% 82% 80% 80% 76% 73% 74% 75% 74% 72% ARRA Surge Budget Plan 15 % Federal

19 Sponsored Research (excluding SLAC) $1.0B 900M 800M 700M Indirects Non Federal Federal M 500M 400M 300M Increasing CIRM* Activity 200M 100M 0M 82% 82% 80% 80% 76% 73% 74% 75% 74% 72% % Federal *California Institute for Regenerative Medicine Budget Plan 16

20 Consolidated Budget Actuals Projection Budget Plan 1-year change $688 $721 Student Income $ % 1,242 1,241 Sponsored Research 1, % Direct Costs University % Direct Costs SLAC % Indirect Costs % Health Care Services % Expendable Gifts & Net Assets Released % 935 1,016 Investment Income 1, % Endowment Income % Other Investment Income % Other Income % $4,075 $4,270 Total Revenues $4, % 1,992 2,117 Salaries and Benefits 2, % SLAC % Financial Aid % 1,146 1,216 Other Operating Expenses 1, % $3,734 $3,932 Total Expenses $4, % $341 $338 Revenues less Expenses 347 (158) (126) Total Transfers (128) $183 $212 Revenues less Expenses after Transfers $220 ($$ in millions) Budget Plan 17

21 Endowment Payout History Payout Growth Payout Growth (typical fund) 15.0% 13.9% Actual Payout Growth (includes new gifts, buffer additions, etc.) 10.0% 11.8% 10.1% 5.0% 0.0% 5.5% 6.1% 4.2% 3.0% 7.3% -5.0% -10.0% -10.5% -8.3% -15.3% -10.0% -15.0% Budget Plan 18

22 Consolidated Budget Actuals Projection Budget Plan 1-year change $688 $721 Student Income $ % 1,242 1,241 Sponsored Research 1, % Direct Costs University % Direct Costs SLAC % Indirect Costs % Health Care Services % Expendable Gifts & Net Assets Released % 935 1,016 Investment Income 1, % Endowment Income % Other Investment Income % Other Income % $4,075 $4,270 Total Revenues $4, % 1,992 2,117 Salaries and Benefits 2, % SLAC % Financial Aid % 1,146 1,216 Other Operating Expenses 1, % $3,734 $3,932 Total Expenses $4, % $341 $338 Revenues less Expenses 347 (158) (126) Total Transfers (128) $183 $212 Revenues less Expenses after Transfers $220 ($$ in millions) Budget Plan 19

23 Salary & Benefits Growth (excludes SLAC) 7.0% 6.0% Non Sponsored Salary Growth 5.5% Sponsored 5.0% 4.0% 3.0% 2.0% 1.0% Total 5.7% Faculty Salary Adjustments 0.5% Total 1.8% Salary Growth 2.1% 0.0% 1.0% Benefits 0.3% Benefits 0.3% Budget Plan 20

24 Faculty Salary Adjustments Goal and Analysis Goal: Bring salaries in top ranked departments to levels of our peers Focus: Stanford s position against top 5 competitors, by department, by professorial rank Data: American Association of Universities Data Exchange average salary data $5.6 million of incremental general funds allocated for this purpose Budget Plan 21

25 Recovering from the recession: a five-year review Budget Plan 22

26 Recovering from the recession: a five-year review Revenues Federal support Reserves fund balances and buffers Endowment market value Expenses UG Financial Aid Headcount Budget Plan 23

27 $4,500M 4,000M 3,500M 3,000M 2,500M 2,000M 1,500M 5-Year Review: Revenues 2008 % of Total 10% 7% 11% 16% 28% Total Revenues, 3.6% Annual Growth Other Income, 4.0% Total Gifts, 2.2% Health Care Services, 7.5% Student Income, 5.1% Investment Income, 0.9% 2013 % of Total 10% 7% 13% 17% 24% 1,000M 500M 28% Sponsored Research, 4.0% 29% 0M Budget Plan 24

28 5-Year Review: Federal Funding (excludes SLAC) Inflation-Adjusted 2013 $$ in millions Annual Growth TA/RA Salaries $31 $29 $31 $31 $30 $28-1.7% Graduate Tuition % Graduate Stipends % Grad Support Subtotal % Undergraduate Aid % Other Direct Research % Indirect Cost Recovery % Total $621 $564 $659 $708 $685 $ % Budget Plan 25

29 5-Year Review: Expendable reserve balances: School, Department, Faculty $$ in Sponsored Research-Intensive Research-Intensive Academic Units Other Academic Units millions ES SUSE Educ SoE H&S Med DoR Law GSB VPGE VPUE Total 2007 $25 $23 $162 $174 $458 $92 $21 $63 $21 $17 $1, $1, * $1,471 Annual Growth Rate 2012 as % of Budget 13.6% 8.8% 6.7% 10.3% 5.3% 6.3% 0.9% 2.1% * 18.6% 5.2% 6.8% 84% 64% 67% 71% 40% 63% 31% 37% 154% 45% 52% * GSB used $30M of balances to create funds-functioning-as-endowment during 2011 and Budget Plan 26

30 5-Year Review: Central Reserves $1,400M 1,200M Tier I Buffer Tier II Buffer 1,000M 800M 600M 400M 200M 0M Budget Plan 27

31 5-Year Review: Central Reserves (assuming 10% annual endowment return) $1,400M 1,200M 1,000M 800M Tier I Buffer Earnings from EFP go to Tier I until 35% threshhold is hit (2015)... 35% threshhold Tier II Buffer... then earnings flow to Tier II Buffer 600M 400M 200M 0M Budget Plan 28

32 5-Year Review: Central Reserves (assuming 10% annual endowment return) $1,400M 1,200M Tier I Buffer Tier II Buffer 1,000M 800M 600M 400M 200M 0M 2014 combined balance reaches previous peak of $1.9B Budget Plan 29

33 5-Year Review: Endowment Market Value $18B 16B Other Investments Merged Pool 14B 12B 10B 8B 6B 4B 2B 0B MP Return 23.4% MP Return 6.2% MP Return 25.9% MP Return 14.4% MP Return 22.4% MP Return tbd Est Budget Plan 30

34 $4,500M 4,000M 3,500M 3,000M 2,500M 2,000M 1,500M 5-Year Review: Expenses 2008 % of Total 31% 7% 11% 14% Total Expenses, 4.2% Annual Growth Other Operating Expenses, 2.0% Student Aid, 9.8% SLAC, 1.5% Benefits & Other Comp, 5.9% 2013 % of Total 28% 9% 9% 16% 1,000M 500M 37% Salaries, 4.9% 39% 0M Budget Plan 31

35 Undergraduate Financial Aid $160M 140M 120M 100M M 60M 40M 20M M Endowment/Gifts New Endowment Stanford Fund Tier II Buffer General Funds Budget Plan 32

36 5-Year Review: Non-Teaching Staff (excludes SLAC) Total Headcount (2.6% Annual Growth) 9,061 9,495 9,888 9,635 9,901 10,323 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Research Heavy Academic: ES, Ed, Eng, H&S, Med, DoR 3.6% Annual Growth Other Academic: GSB, Hoover, Law, VPGE, VPUE 0.8% Annual Growth Admin/Auxiliary Units 1.6% Annual Growth * Earth Sciences, Education, Engineering, Budget Plan 33 H&S, Medicine, Dean of Research

37 5-Year Review: Student Population 6,689 Undergraduates (0.7% Annual Growth) 6,759 6,812 6,878 6,887 6,927 8,201 8,186 Graduates (1.4% Annual Growth) 8,328 8,441 8,779 8,796 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Doctoral 1.7% Annual Growth Graduate Students Professional 0.3% Annual Growth Masters 1.7% Annual Growth * Earth Sciences, Education, Engineering, Budget Plan 34 H&S, Medicine, Dean of Research

38 Conclusions Our financial position is near the high water mark of 2008 Beware of yellow flags around research funding, medical cost containment, and investment income! Budget Plan 35

39 General Funds Budget Budget Plan 36

40 General Funds within Consolidated Budget Total Revenue = $4.4B Grants & Contracts 24% Auxiliaries 8% Formula Units $177M Restricted 24% General Funds 25% $1,125M Non- Formula Units $735M Designated 19% Central Obligations $213M Central Obligations include debt service, insurance, Capital Facilities Fund, university reserve, UG financial aid, etc Budget Plan 37

41 General Funds Allocations Strategic Directions Strengthen competitive salary position Enhance base funding for undergraduate financial aid Support units highest priority requests Maintain base surplus Budget Plan 38

42 General Funds Budget Increment Non-Formula Additions = $56.6M Non-Salary $5.7M Facilities $8.2M Salaries & Benefits $11.8M Incremental Programs $19.1M Faculty $7.1M Academic Programs $2.3M Staff $1.8M Graduate Student Support $2.5M Library $1.2M Undergraduate Financial Aid $11.8M Administrative $3.2M Student Services $1.0M Budget Plan 39

43 General Funds Budget Faculty support Faculty support $7.1M Salary increases to address competitive gaps Faculty position in new Geobiology program Academic Programs $2.3M Graduate Student Support $2.5M Joint faculty appointments for Institute for Computational and Mathematical Engineering (ICME) Continued support for Faculty Incentive Fund and Faculty Development Initiative Faculty $7.1M Administrative $3.2M Staff $1.8M Student Services $1.0M Library $1.2M Budget Plan 40

44 General Funds Budget Academic programs Academic programs $2.3M Operating support for Dean of Research centers/institutes Base funding for Masters in Public Policy and ICME programs Research computing and research administration staffing Other academic support in SULAIR, Earth Sciences, Education, H&S Faculty $7.1M Academic Programs $2.3M Administrative $3.2M Staff $1.8M Graduate Student Support $2.5M Student Services $1.0M Library $1.2M Budget Plan 41

45 General Funds Budget Graduate student support Graduate student support $2.5M Support for financial aid funding gap in Law NIH training grant tuition shortfalls in H&S Increased Central support for NSF tuition shortfalls Faculty $7.1M Academic Programs $2.3M Staff $1.8M Graduate Student Support $2.5M Library $1.2M Administrative $3.2M Student Services $1.0M Budget Plan 42

46 General Funds Budget Staff support Staff support $1.8M Academic Programs $2.3M Graduate Student Support $2.5M Enhance existing staff bonus program to strengthen competitive position Faculty $7.1M Staff $1.8M Library $1.2M Administrative $3.2M Student Services $1.0M Budget Plan 43

47 General Funds Budget - Library Library $1.2M Address erosion of buying power in Library Materials Budget due to publisher inflation and endowment payout declines Reinstate Japanese technical services librarian position Faculty $7.1M Academic Programs $2.3M Staff $1.8M Graduate Student Support $2.5M Library $1.2M Administrative $3.2M Student Services $1.0M Budget Plan 44

48 General Funds Budget Student services Student services $1.0M Service enhancements in Vaden Health Center, Judicial Affairs/Office of Community Standards Two additional Academic Directors in VPUE Faculty $7.1M Academic Programs $2.3M Staff $1.8M Graduate Student Support $2.5M Base support for longstanding student programs (e.g, Grad Student Orientation) Administrative $3.2M Student Services $1.0M Library $1.2M Budget Plan 45

49 General Funds Budget - Administrative Administrative $3.2M Public Affairs staff to manage Stanford s growing profile and digital presence ($445k) Development ($1.0M) and Alumni ($250k) support for programs to reach untapped donor pools, boost outreach and volunteer efforts, increase stewardship capacity Augment HR communications efforts, enhance quality control and audit efforts in Business Affairs ($1.5M) Faculty $7.1M Academic Programs $2.3M Administrative $3.2M Staff $1.8M Graduate Student Support $2.5M Student Services $1.0M Library $1.2M Budget Plan 46

50 Capital Budget and 3-Year Capital Plan Budget Plan 47

51 Capital Plan Selected Major Projects Construction Projects Project Schedule Total Project Cost Capital Budget Stanford Energy Systems Innovations (SESI) $457.4 $134.2 Bioengineering/Chemical Engineering Foundations in Medicine Biology Research and Teaching/Old Chem EV Comstock Graduate Housing McMurtry Building GSB Housing Expansion GSB South Repurposing Stanford Research Computing Facility Lagunita Undergraduate Housing Anderson Collection Satellite Research Animal Facility Other Projects Planned Total Construction Projects 1, Infrastructure Programs Capital Plan and Budget Totals $2,133.2 $529.5 ($$ in millions) Budget Plan 48

52 Capital Plan Impact on Consolidated Budget $$ in millions and later Debt Service General Funds $0.7 $1.4 $1.5 $3.6 Formula and Other Schools Auxiliary Service Center Total Debt Service $12.6 $7.7 $33.9 $54.3 Operations & Maintenance General Funds $0.5 $9.5 $9.4 $19.4 Formula and Other Schools Auxiliary Service Center Total Operations & Maintenance $9.5 $11.5 $24.1 $45.1 Total Consolidated Budget Impact $22.1 $19.2 $58.0 $99.0 Total Budget Plan 49

53 End Budget Plan 50