Responsibility Accounting. Profitability Analysis- Revenue and Expense by Division/Department

Transcription

1 Responsibility Accounting Profitability Analysis- Revenue and Expense by Division/Department August 11, 2006

2 Overview- Definition Financial model to match all revenues and expenses associated with an Academic (i.e. Arts & Sciences, HSOM, etc) or Auxiliary unit (i.e. Residence Life, Athletics). This model is based upon Responsibility Accounting, a case study prepared by William Laird, Loyola University of Chicago. 2

3 Overview- Objective Objective is to determine the contribution margin and bottom line financial impact (or profit margin ) of each unit that management views as a distinct entity providing its own programs/services and having its own responsibility structure. The bottom line ties to the Income Statement on the internal financial statements. 3

4 Goals Ensure university remains financially healthy Supports long-term strategic planning by bringing visibility to net result of each academic unit Enhances awareness of costs and opportunities to generate income 4

5 Definition of Profit Centers Profit centers are significant units that provide their own programs and services and have their own responsibility structure Schools/Deans that have responsibility for their own teaching credit hours productivity and costs Auxiliaries that have responsibility for managing their own revenue stream, expenses and capital requirements 5

6 Allocation Methodology-Revenues Undergraduate Tuition and Financial Aid: Allocated to academic units based on proportion of credit hours taught rather than where student is enrolled. Financial Aid follows same methodology as tuition Credit Hours obtained from Registrar s office Majority of Graduate Tuition and Financial Aid goes directly to where the student is enrolled Credit Hour Taught follows enrollment, graduate students take courses in the programs they are enrolled. 6

7 Allocation Methodology- Revenues Grant Indirect cost recovery is attributed to the academic unit that received the award Direct Revenues are attributed to the unit that incurs the expense that generates the revenue Sales of goods and services (including auxiliaries) Grants and contracts Gifts Majority of Fees (Student Activity, Residence Halls) Endowment income designated for current operations Interest income attributed to general university 7

8 Allocation Methodology- Expenses Direct Expenses are costs incurred to run the core activities of a unit such as salaries, benefits, supplies and other nonpersonnel expenses. These are obtained from Banner. Indirect Expenses (Overhead) such as depreciation, facilities, interest, utilities, insurance, central and academic administration costs are allocated to the academic and auxiliary units based on a step down methodology. Tier I: Interest, Insurance, Depreciation and Plant Tier II: General and Administrative Costs Tier III: Academic Overhead 8

9 Allocation Methodology- Expenses Tier I: Interest, Insurance, Depreciation and Plant Depreciation, Insurance, Interest Expense, Utilities and Plant are allocated based on square footage so that the full cost of space is allocated to the unit that occupies that space. It is further pushed down to each dept ratably. Tier II: General and Administrative Administrative costs associated with institutional support and computer services were allocated to the units based on that units percentage of the operating expense budget 9

10 Allocation Methodology- Expenses Tier III: Academic Overhead and Other Allocations Costs associated with Academic Affairs, Library, Student Services and Divisional support were allocated to each academic unit based on total undergraduate and graduate credit hours, as deemed appropriate 10

11 Model Overview Revenue - Tuition - Fees - Grants - Gifts - Endowment Distribution - Scholarships - Federal and Institutional Aid - Financial Aid - Salaries & Benefits - Non-Personnel Expenses - Direct Expenses Academic and Auxiliary Units Contribution Margin - Depreciation, Interest, Plant, Utilities, Insurance - Institutional Support (President, Finance, HR, PR, IT) - Academic and Other Overhead (Student Services, Library, Athletics) - Indirect Expenses (Overhead) Academic and Auxiliary Units Profit Margin 11

12 Exhibits Exhibit I - FY 2005 Results of Operations Exhibit II- FY 2004 Results of Operations Exhibit III Profit and Cost Center Assignments 12

13 Rockhurst University Revenue and Expense by School/Department As of June 30, 2005 Biology Chemistry Communication & Fine Arts English History Math, CS and Physics Modern Languages Music Philosophy Political Science Psychology Sociology Theatre Arts Theology Other A&S Total A&S Operating Revenues: Tuition $ 1,500,405 $ 859,186 $ 1,618,747 $ 1,841,544 $ 1,120,021 $ 1,484,707 $ 794,581 $ 123,172 $ 1,616,332 $ 725,146 $ 1,809,543 $ 312,157 $ 47,699 $ 1,871,129 $ - $ 15,724,369 Fees 88,590 49,684 61,870 65,139 39,617 59,517 28,106 27,782 57,173 25,650 64,657 11,042 3,987 66, ,999 Total Tuition and fees 1,588, ,870 1,680,617 1,906,683 1,159,638 1,544, , ,954 1,673, ,795 1,874, ,198 51,686 1,937,315-16,373,368 Institutional Financial Aid (663,583) (379,992) (715,922) (814,459) (495,351) (656,641) (351,419) (54,475) (714,854) (320,710) (800,306) (138,057) (21,096) (827,543) - (6,954,408) Tuition and fees net of financial aid 925, , ,694 1,092, , , ,268 96, , ,086 1,073, ,141 30,590 1,109,772-9,418,961 Net grant revenue (expense) 11,494 6,582 14,419 14,107 8, ,536 6, ,382 5,555 13,862 2, ,334 5, ,638 Private gifts and grants 50 62, , ,100 71,105 Investment income (interest, dividends & realized gains/losses) Endowment distribution income 37,574 21,223 39,985 45,488 27,666 36,674 19,627 3,042 54,960 17,912 44,697 7,711 1,178 46, , ,986 Other Total operating revenues 974, ,312 1,019,098 1,151, ,533 1,071, , ,465 1,025, ,553 1,132, ,243 32,434 1,170, ,132 10,308,689 Expenses and Losses Salaries 397, , , , , , , , , , , , ,979 4,335,640 Benefits 82,669 59,049 64,055 83,342 36, ,857 27, ,110 26,432 67,158 25,123-71, , ,664 Non-salary 48,540 27,108 21,439 10,366 5, ,456 52,760 6,507 5,017 7,186 13,273 3,154 2,398 9, , ,337 Total operating expenses 528, , , , , , ,518 7, , , , ,163 2, ,781 1,082,797 5,677,641 Contribution margin 445, , , , , , ,464 92, , , ,734 44,080 30, ,068 (918,665) 4,631,048 CM % of Operating Revenue 46% 38% 62% 59% 60% 22% 58% 92% 65% 64% 64% 23% 93% 65% -560% 45% Allocation of interest, insurance and plant costs 79,384 79,384 79,384 79,384 79,384 79,384 79,384 79,384 79,384 79,384 79,384 79, ,249 79,384 1,209,234 Allocation of institutional support (G&A) costs 123,641 69,986 87, ,460 68, ,082 37,874 1,471 79,830 39,639 96,471 35, , ,279 1,242,896 Allocation of other divisional operating expenses 115,280 66, , ,490 86, ,074 61,050 9, ,187 55, ,032 23,984 3, ,763 (1,082,797) 125,344 Allocation of academic affairs overhead 20,414 11,690 22,024 25,056 15,239 20,201 10,811 1,676 21,991 9,866 24,620 4, , ,942 Allocation of computer services 22,421 12,691 15,854 20,031 12,366 29,392 6, ,476 7,188 17,494 6, ,993 42, ,385 Allocation of student development and library 320, , , , , , ,851 26, , , ,811 66,727 10, ,976-3,361,267 Profit Margin $ (213,864) $ (175,209) $ (25,893) $ (75,856) $ (65,917) $ (453,874) $ (69,506) $ (25,497) $ 18,716 $ (48,967) $ (2,583) $ (165,869) $ (161,952) $ 16,781 $ (72,147) $ (1,521,635) Credit Hours 2,485 1,423 2,681 3,050 1,855 2,459 1, ,677 1,201 2, ,099 Contribution Margin per credit hour $ 179 $ 166 $ 236 $ 221 $ 228 $ 97 $ 220 $ 455 $ 250 $ 242 $ 241 $ 85 $ 380 $ 245 Profit Margin per credit hour $ (86) $ (123) $ (10) $ (25) $ (36) $ (185) $ (53) $ (125) $ 7 $ (41) $ (1) $ (321) $ (2,050) $ 5 ** Adjunct faculty salaries for evening courses in A&S and GPS are assumed by GPS Exhibit I-1

14 Rockhurst University Revenue and Expense by School/Department As of June 30, 2005 Accounting Economics & Finance Bus Admin Management Marketing Univ of Health Sciences Executive MBA MBA Other HSOM Total HSOM Education Masters of Education CSD OT MPT/DPT American Humanics/ NPLS Undergrad SPS Other GPS** Total GPS Operating Revenues: Tuition Fees Total Tuition and fees Institutional Financial Aid Tuition and fees net of financial aid Net grant revenue (expense) Private gifts and grants Investment income (interest, dividends & realized gains/losses) Endowment distribution income Other Total operating revenues Expenses and Losses Salaries Benefits Non-salary Total operating expenses Contribution margin CM % of Operating Revenue Allocation of interest, insurance and plant costs Allocation of institutional support (G&A) costs Allocation of other divisional operating expenses Allocation of academic affairs overhead Allocation of computer services Allocation of student development and library Profit Margin $ 592,313 $ 1,391,120 $ 913,527 $ 787,939 $ 539,784 $ 775,738 $ 922,550 $ 2,197,993 $ - $ 8,120,963 $ 550,048 $ 866,700 $ 488,424 $ 726,776 $ 1,281,345 $ 185,966 $ 530,123 $ - $ 4,629,382 20,951 49,207 32,313 27,871 19, ,436 25, ,215 4,335 6,578 18,752-58, ,264 1,440, , , , , ,550 2,197,993-8,270, , , , ,991 1,285, , ,875-4,688,318 (261,962) (615,250) (404,025) (348,481) (238,730) - - (15,966) - (1,884,414) (243,269) (82,247) - - (325,516) 351, , , , , , ,550 2,182,027-6,385, , , , ,991 1,285, , ,875-4,362,801 4,537 10,657 6,998 6,036 4, ,364 19, , ,500-21, ,759 4, ,700 6, ,000 51, ,631 34,362 22,565 19,463 13,333 4,161 10,185 64,280 94, ,424 13,587 34,392 21,551 16,391 29,858 4,594 13,095 56, , , , , , , , ,735 2,246,306 97,144 6,702, , , , ,382 1,316, , , ,079 4,851, , , , , ,955 47, , , ,222 2,570, , , , , ,591 32, , ,297 2,264,886 34,217 80,364 52,774 45,519 31,183 9,732 22, , , ,152 47,623 47,623 83,265 46,123 91,237 6,758 56,894 84, ,528 1,355 (1,000) 24, , ,272 37, , ,728 17,304 32,446 36,121 24,088 57,843 14, , , , , , , , , , , ,784 3,602, , , , , ,670 54, , ,550 3,147, , , , , , , ,221 1,346,375 (673,640) 3,100,263 70, , , , ,493 63, ,065 (606,471) 1,703,164 46% 46% 42% 46% 46% 78% 67% 60% -693% 46% 19% 66% 28% 59% 55% 54% 39% -470% 35% 31,688 31,688 31,688 31,688 31,688 31,688 31,688 31, ,507 41,329 41,329 41,329 41,329 41,329 41,329 41, ,304 83, ,460 15, ,346 60,970 87,909 39,126 19, , , ,212 7,644 97,906 71, ,705 12,924 78, , ,753 67, , ,738 90,340 61,888 19,314 45, ,171 (770,784) 71,347 80, , ,244 96, ,293 27,122 77,315 (735,550) 52,485 8,059 18,927 12,429 10,720 7,344 2,292 5,373 34,790-99,935 7,484 18,944 11,871 9,028 16,446 2,530 7,213-73,516 15,096 26,196 2,872 36,874 11,056 15,941 7,095 3,625 23, ,529 23,250 1,386 17,754 13,000 29,867 2,344 14,162 21, , , , , , , , ,579 39, , ,652 $ (144,266) $ (90,751) $ (16,688) $ (187,231) $ (59,919) $ 483,507 $ 550,035 $ 1,259,909 $ (804,745) $ 1,057,760 $ (304,165) $ 320,242 $ (78,357) $ 219,184 $ 326,719 $ (60,463) $ (96,212) $ 8,507 $ 335,455 Credit Hours Contribution Margin per credit hour Profit Margin per credit hour ** Adjunct faculty salaries for evening courses in A&S and GPS are assumed by GPS 981 2,304 1,513 1, , ,306 1,445 1,099 2, $ 177 $ 174 $ 158 $ 174 $ 174 $ 2,170 $ 958 $ 318 $ 78 $ 256 $ 138 $ 399 $ 362 $ 205 $ 252 $ (147) $ (39) $ (11) $ (143) $ (67) $ 1,733 $ 841 $ 297 $ (334) $ 139 $ (54) $ 199 $ 163 $ (196) $ (110) Exhibit I-2

15 Rockhurst University Revenue and Expense by School/Department As of June 30, 2005 Auxiliary Services (bookstore, cafeteria) Residence Life South Campus Other Total Auxiliary Academic Affairs Athletics Computer Services Other Non- Operating Institutional Support Student Services Library Int, Ins & Plant Other RU Total Admin Total Operating Revenues: Tuition Fees Total Tuition and fees Institutional Financial Aid Tuition and fees net of financial aid Net grant revenue (expense) Private gifts and grants Investment income (interest, dividends & realized gains/losses) Endowment distribution income Other Total operating revenues Expenses and Losses Salaries Benefits Non-salary Total operating expenses Contribution margin CM % of Operating Revenue Allocation of interest, insurance and plant costs Allocation of institutional support (G&A) costs Allocation of other divisional operating expenses Allocation of academic affairs overhead Allocation of computer services Allocation of student development and library Profit Margin Credit Hours Contribution Margin per credit hour Profit Margin per credit hour ** Adjunct faculty salaries for evening courses in A&S and GPS are assumed by GPS $ - $ - $ - $ - $ - $ - $ 408,159 $ - $ - $ - $ - $ - $ - $ - $ 408,159 $ 28,882,873 1,820,762 2,130,328 77,114-4,028,203-75, ,684 4,961,258 1,820,762 2,130,328 77,114-4,028, , ,843 33,844, (2,003,156) (2,003,156) (11,167,495) 1,820,762 2,130,328 77,114-4,028,203 - (1,519,313) (1,519,313) 22,676, , ,251-3,127 41, , , , , ,044,010 1,517,211 31, ,627,630 2,757, , , , , ,437-16, ,027 3, , ,259 1,466, , , ,405 1,820,762 2,130,328 77, ,688 4,338,891 - (1,463,981) 41,228-1,836,468 1,517,211 60,843 3, ,454 2,210,170 28,411, , , , , , , , ,543 41,056 2,855,926 2,236, ,275 1,385,213 48,281 8,426,216 18,143, ,688 28,686 40, ,254 53, , ,141 8,713 1,677, ,868 78, ,437 10,160 2,816,518 4,807,117 1,515, , ,952 41,559 2,306,518 59, , , ,015 2,518,119 1,085, ,995 9,443, ,335 14,888,720 18,573,808 1,525, , , ,535 2,964, ,945 1,122,479 1,278, ,784 7,051,336 3,784, ,899 11,111, ,776 26,131,454 41,524, ,741 1,306,791 (258,580) 30,153 1,374,104 (392,945) (2,586,460) (1,237,451) (374,784) (5,214,868) (2,267,133) (777,056) (11,107,265) 36,678 (23,921,285) (13,112,706) 16% 61% -335% 10% 32% 177% -3001% -284% -149% -1277% % 17% -1082% -46% ,072 1,607, ,072-2,124,118-6,019, , , , ,109 (11,071,885) - (3,876,162) 0 327, ,821 63,934 79, , , , ,469 (5,848,512) 842, , ,969 - (3,383,627) (0) (280,535) (280,535) - 31, ,360 (0) (392,945) 5, (387,392) 0 59,328 36,779 11,594 14, ,039 18,502 38,681 (1,226,187) 218, ,804 37, ,241 - (613,582) (0) , (3,784,344) (837,899) - - (4,534,994) (0) $ (197,498) $ (504,003) $ (672,586) $ 231,616 $ (1,142,471) $ (102,031) $ (8,943,365) $ (1,628,322) $ (374,784) $ 17,878 $ 548,553 $ (477,727) $ (847,349) $ 36,678 $ (11,807,147) $ (13,112,706) 676 (3,826) (13,230) Exhibit I-3