FY2012 Forecast vs. Budget

Transcription

1 FY2012 Forecast vs. Budget Financial Analysis of Unrestricted Annual Operaons 10/31/2011

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3 UNIVERSITY OF MAINE SYSTEM UNRESTRICTED ANNUAL OPERATIONS FY st FINANCIAL FORECAST HIGHLIGHTS As of October 31, 2011, the UMS is forecasting an unrestricted operating loss of $7.0 million for FY2012. It should be noted, however, that this includes the current $5.5 million loss in Temporary Investment Income as compared to budget. UMaine is projecting positive operating results of $2.7 million or $2.2 million above budget. UMA is still projecting to meet its budget of $43 thousand. UMF is forecasting positive operating results of $339 thousand or $259 thousand more than budget. UMFK budgeted an increase of $16 thousand but now projects a loss of $83 thousand. UMM is forecasting a $98 thousand loss as compared to a break even budget. UMPI had a break even budget but estimates positive operating results of $238 thousand. USM is projecting an operating loss of $1.6 million or a negative budget variance of $1.7 million. System wide Services is projecting to meet its break even budget. Major factors impacting the forecast: The temporary investment income budget is $2.0 million. Based on information available for the period ended October 31, UMS has experienced a year to date loss of $3.5 million for a total budgetto actual variance of $5.5 million. This forecast reflects only the loss realized thus far and does not include any projections for further losses or gains. In FY2011, the System realized a $3.4 million surplus in the employee benefit pool primarily from lower than anticipated employee medical and workers compensation costs. When the FY2012 benefit budget was developed, the total amount that should be recovered from campuses to offset the estimated benefit costs was reduced by $3.0 million and resulted in a lower FY2012 benefit rate. Although reducing the FY2012 campus recovery results in an estimated $3.0 million deficit in FY2012, the deficit will be mitigated by the utilization of the FY2011 surplus. Average FTE enrollments for Fall 2011 were 1.3% (305 FTE) below budget. FTE enrollments were below budget for UMaine, UMM, and USM. Residence hall occupancy was 5.8% (383 students) below budget with negative variances at UMaine, UMF, UMM, and USM. Page 1

4 University of Maine System FY2012 FTE ENROLLMENT FY2011 FY2012 FY2012 VARIANCE ACTUAL BUDGET ACTUAL # % Fall UMaine 9,358 9,137 9,120 (17) (0.2%) UMA 2,805 2,804 2, % UMF 2,003 1,947 1, % UMFK % UMM (60) (10.1%) UMPI 1, % USM 7,051 7,051 6,764 (287) (4.1%) Total 23,535 23,231 22,926 (305) (1.3%) Page 2

5 University of Maine System FY2012 RESIDENCE HALL OCCUPANCY FY2011 FY2012 FY2012 VARIANCE ACTUAL BUDGET ACTUAL # % Fall UMaine 3,414 3,462 3,405 (57) (1.6%) UMA % UMF 1,089 1,100 1,053 (47) (4.3%) UMFK % UMM (30) (10.6%) UMPI % USM 1,304 1,274 1,004 (270) (21.2%) Total 6,564 6,605 6,222 (383) (5.8%) Page 3

6 University of Maine System Unrestricted Annual Operations FY2012 YTD ACTUALS vs. YTD BUDGET as of October 31 ($ rounded in thousands) FY2011 FY2012 FY2012 FY2012 YTD Actual vs. Budget ACTUAL BUDGET ACTUAL VARIANCE as of 10/31/10 as of 10/31/11 as of 10/31/11 $ % Operating Revenue Tuition & Fee Revenue Dining & Residence Revenue Tuition Waivers/Scholarships Net Student Charges Revenue State Appropriation State Fiscal Stabilization Funds ARRA Other Income Total Operating Revenue $131,109 $133,289 $133,960 $ % 30,199 30,396 28,895 (1,501) (4.9%) (23,627) (24,318) (24,777) (459) 1.9% 137, , ,078 (1,289) (0.9%) 60,060 60,760 60, % 1, % 34,494 29,784 23,498 (6,286) (21.1%) $233,278 $229,911 $222,396 ($7,515) (3.3%) Operating Expense Compensation & Benefits (excl. Retiree Health) $101,985 $104,908 $103,251 $1, % Retiree Health 4,124 5,766 4,676 1, % Fuel & Electricity 4,179 4,983 3,732 1, % Interest Expense 0 8,183 8,193 (10) (0.1%) Depreciation 9,107 9,676 9, % Other Expenses/Transfers 42,596 44,006 42,442 1, % Total Operating Expense $161,991 $177,522 $171,970 $5, % Net Increase (Decrease) from Operations $71,287 $52,389 $50,426 ($1,963) (3.7%) Modified Cash Flow Net Increase (Decrease) from Operations $71,287 $52,389 $50,426 ($1,963) Plus Depreciation 9,107 9,676 9,530 (146) Less Capital Expenditures & Reserve Funding (2,856) (3,333) (2,986) 347 Less Debt Service Principal 0 (9,068) (9,303) (235) Net Change $77,538 $49,664 $47,667 ($1,997) Page 4

7 University of Maine System Unrestricted Annual Operations FY2012 YTD ACTUALS vs. YTD BUDGET as of October 31 ($ rounded in thousands) FY2011 FY2012 FY2012 FY2012 Actual vs. Budget ACTUAL BUDGET ACTUAL VARIANCE as of 10/31/10 as of 10/31/11 as of 10/31/11 $ % Operating Revenue UMaine $107,177 $106,795 $107,338 $ % UMA 17,106 15,355 16,897 1, % UMF 17,596 17,770 17,698 (72) (0.4%) UMFK 5,383 5,261 5,072 (189) (3.6%) UMM 4,698 4,828 4,406 (422) (8.7%) UMPI 7,752 6,836 7, % USM 62,311 63,973 60,165 (3,808) (6.0%) System Wide Services 11,255 9,093 3,394 (5,699) (62.7%) Total Operating Revenue $233,278 $229,911 $222,396 ($7,515) (3.3%) Operating Expenditures (includes capital expenditures utilizing operating funds) UMaine $70,742 $79,462 $78,839 $ % UMA 11,414 12,369 11, % UMF 13,371 14,693 13, % UMFK 4,068 4,417 4, % UMM 3,359 3,938 3, % UMPI 5,180 5,552 5, % USM 41,460 48,933 44,916 4, % System Wide Services 7,210 10,883 10, % Employee Benefits (1,064) 0 1,408 (1,408) % Total Operating Expenditures $155,740 $180,247 $174,729 $5, % Net Inc (Dec) from Operations UMaine $36,435 $27,333 $28,499 $1,166 UMA 5,692 2,986 4,974 1,988 UMF 4,225 3,077 3, UMFK 1, (92) UMM 1, (349) UMPI 2,572 1,284 1, USM 20,851 15,040 15, System Wide Services 4,045 (1,790) (6,861) (5,071) Employee Benefits 1,064 0 (1,408) (1,408) Net Inc (Dec) from Operations $77,538 $49,664 $47,667 ($1,997) Page 5

8 University of Maine System Unrestricted Annual Operations FY2012 ANNUAL FORECAST vs. ANNUAL BUDGET ($ rounded in thousands) FY2012 FORECAST vs. BUDGET FY2011 FY2012 FY2012 VARIANCE ACTUAL BUDGET FORECAST $ % Operating Revenue Tuition & Fee Revenue $262,160 $264,478 $262,629 ($1,849) (0.7%) Dining & Residence Revenue 59,499 60,637 57,085 (3,552) (5.9%) Tuition Waivers/Scholarships (45,435) (47,340) (47,474) (134) 0.3% Net Student Charges Revenue 276, , ,240 (5,535) (2.0%) State Appropriation 178, , , % State Fiscal Stabilization Funds ARRA 6, % Other Income 84,894 66,278 62,430 (3,848) (5.8%) Total Operating Revenue $546,619 $523,013 $513,680 ($9,333) (1.8%) Operating Expense Compensation & Benefits (excl. Retiree Health) $307,799 $320,374 $324,545 ($4,171) (1.3%) Retiree Health 19,741 23,062 19,531 3, % Fuel & Electricity 19,582 24,273 22,485 1, % Interest Expense 9,131 8,183 8,193 (10) (0.1%) Depreciation 28,528 29,028 29, % Other Expenses/Transfers 128, , ,035 1, % Total Operating Expense $513,121 $531,061 $528,817 $2, % Net Increase (Decrease) from Operations $33,498 ($8,048) ($15,137) ($7,089) 88.1% Modified Cash Flow Net Increase (Decrease) from Operations $33,498 ($8,048) ($15,137) ($7,089) Plus Depreciation 28,161 28,591 28,591 0 Less Capital Expenditures & Reserve Funding (27,442) (10,729) (11,105) (376) Less Debt Service Principal (8,608) (9,068) (9,303) (235) Net Change $25,609 $746 ($6,954) ($7,700) Page 6

9 University of Maine System Unrestricted Annual Operations FY2012 ANNUAL FORECAST vs. ANNUAL BUDGET ($ rounded in thousands) FY2012 FORECAST vs. BUDGET FY2011 FY2012 FY2012 VARIANCE ACTUAL BUDGET FORECAST $ % Operating Revenue UMaine $254,877 $245,593 $246,832 $1, % UMA 39,183 36,982 36, % UMF 39,437 39,342 39, % UMFK 12,526 12,025 11,854 (171) (1.4%) UMM 10,663 11,030 10,307 (723) (6.6%) UMPI 17,655 15,826 16, % USM 144, , ,947 (4,770) (3.4%) System Wide Services 27,357 20,499 14,976 (5,523) (26.9%) Total Operating Revenue $546,619 $523,014 $513,681 ($9,333) (1.8%) Operating Expenditures (includes capital expenditures utilizing operating funds) UMaine $248,914 $245,081 $244,133 $ % UMA 37,340 36,939 36, % UMF 37,896 39,262 39, % UMFK 12,526 12,009 11, % UMM 10,622 11,030 10, % UMPI 16,985 15,826 16,169 (343) (2.2%) USM 141, , ,516 3, % System Wide Services 18,727 20,499 20, % Employee Benefits (3,389) 0 3,000 (3,000) % Total Operating Expenditures $521,010 $522,268 $520,635 $1, % Net Inc (Dec) from Operations 1 UMaine $5,963 $512 $2,699 $2,187 UMA 1, UMF 1, UMFK 0 16 (83) (99) UMM 41 0 (98) (98) UMPI USM 3, (1,569) (1,664) System Wide Services 8,630 0 (5,523) 1 (5,523) Employee Benefits 3,389 0 (3,000) 2 (3,000) Net Inc (Dec) from Operations $25,609 $746 ($6,954) ($7,700) Temporary Investment Loss 2 Offset by FY2011 surplus Page 7

10 Variance Analysis by University UMaine: $2.7 Million Net Increase For the period ending October 31, 2011, UMaine s net increase from operations exceeded first period budget by 4.3%. Total operating revenues were 0.5% above first period budgeted amounts, with expenditures, including capital expenditures, 0.8% below first period budgeted amounts, resulting in a combined $1.2 million variance. UMaine is projecting an overall FY2012 net increase from operations of $2.7 million or $2.2 million (one time) above budget. This year, the projection includes $500K in campus projects not previously included in the forecasting process. Fall FTE enrollments (9,120) were 0.2% below an FTE budget of 9,137 and 2.5% below Fall 2010 Actuals. It is important to note that although fall semester budgeted FTE enrollment was not met, UMaine did exceed its fall semester credit hours by 0.1%, and more importantly, exceeded its out of state budgeted credit hours, which directly impacts total revenue. Spring enrollment will be monitored carefully to ensure that retention efforts succeed. Tuition and fee revenues are projected to be 0.4% or approximately $464K above budget due to a slight increase in actual vs. budgeted credit hours and due to the increase in out of state credit hours. If the increase continues into the spring semester, funds will be re directed to enrollment initiatives, scholarships, or capital improvements. Dining and Residence revenues are projected to be 1.4% or approximately $446 thousand below budget due to a decrease in student population and a smaller than expected Orono HS UMaine International Program (26 projected versus 9 actual). Because the economy has been stagnant, the preferred housing option for local students still includes living at home and commuting. Much of the lost revenue is offset by offering large singles (doubles as singles) as early as the third week of the semester. Efforts continue to reduce the cost of Residence and Dining operations to ensure balanced budgets. Any additional revenues generated from indirect cost recovery will be utilized for additional indirect costs to include replacing capital equipment for researchers, facilities infrastructure needs, and other campus costs. Fuel and electricity contracts are in place for FY2012, but making budget is always dependent on the severity of the winter season. UMaine maintains its focus on concerted and aggressive conservation efforts. UMaine continues to be prudent in its cost containment efforts. Page 8

11 UMA: $43 Thousand Net Increase For the period ending October 31, 2011, UMA s net increase from operations exceeded the first period budget by $2.0 million primarily from Summer and Fall 2011 enrollments exceeding budgeted credit hours and savings realized from vacant positions. Fall enrollments were 0.7% (19 FTE) above budget and were also above Fall 2010 actual enrollments. Although Fall enrollments were above budget, UMA is continuing to forecast a net increase of $43 thousand as budgeted. Due to the volatility of the economic environment and the extent to which even small changes in the job market and in the cost of living impact UMA s largely nontraditional student population, no changes in enrollment or associated revenues are being made at this time. Projections will be reviewed and reassessed when the level of Spring enrollments is known. UMF: $339 Thousand Net Increase For the period ending October 31, 2011, UMF s net increase from operations exceeded the first period budget by $890 thousand. Fuel costs, normally realized in the first period, will not be realized until the second period and are a major contributor to the first period surplus. Fall enrollments were 1.8% (36 FTE) above budget; Residence hall occupancy was 4.3% or 47 students below budget. At this time UMF is projecting that year end revenue will equal budget. FY2012 fuel will be procured at 80 cents per gallon less than budgeted resulted in projected fuel savings of $250 thousand or 10.5% below budget. Primarily as a result of savings associated with the cost of fuel, UMF is projecting a net operating increase of $339 thousand as compared to a budgeted increase of $80 thousand. UMFK: ($83) Thousand Net Decrease For the period ending October 31, 2011, UMFK s experienced a $92 thousand shortfall as compared to the first period budget. Although total enrollments were above budget, the mix of in state and out of state students negatively impacted tuition revenue. Fall enrollments were 0.6% (4 FTE) above budget. Although in state credit hours were up 7.2%, out of state credit hours were 25.7% below budget resulting in a projected loss of $190 thousand in net tuition and fee revenue. Page 9

12 Residence hall occupancy was 2.5% (5 students) above budget and 7.9% (15 students) above actual Fall 2010 residency levels. Assuming that spring enrollments meet budget targets, UMFK is forecasting a $83 thousand loss for FY2012. UMM: ($98) Thousand Net Decrease For the period ending October 31, 2011, UMM experienced a $348 thousand shortfall as compared to the first period budget. Despite a 17% increase in first year students, fall enrollments were 10.1% (60 FTE) below budget as transfer students and those seeking re admittance were fewer than projected. Matriculated students increased by 2% but the multi semester trend of declining numbers of non degree and part time students continued to gall. Major recruitment and retention efforts are underway including the start up of the new Advising Center, a planned redesign of orientation and first semester seminars for next fall, and planning for an evening based community education program designed for local part time adult learners. Residence hall occupancy was only 6 students fewer than Fall 2010 but was 30 students (10.6%) below the Fall 2011 budget. Fuel contract has resulted in projected savings of $75 thousand or a 9.5% savings. Anticipated revenue shortfalls due to reduced enrollments will be partially offset by position vacancy savings, fuel savings, and approximately $150 thousand in spending curtailments; however, UMM is still projecting a loss of $98 thousand. UMPI: $238 Thousand Net Increase For the period ending October 31, 2011, UMPI s net increase from operations was $670 thousand above budget. This is due primarily to residence hall occupancy exceeding budget by 16 residents (5.6%), increased conference activity, vacancy savings, and filling heating fuel tanks at the end of FY2011. Currently, UMPI is projecting that tuition and fee revenues will exceed budget by $160 thousand (2.0%) Due to fall residence hall occupancy exceeding budget, dining and residence revenues are projected to exceed budget by $117 thousand (5.8%). Page 10

13 Increased Gentile Hall memberships and conference activity are expected to result in additional revenues but will be offset by the associated increased expenses. Oil tanks were filled at the end of FY2011 and fuel prices were locked in early, resulting in projected savings of $49 thousand (4.2%). Increased spending in the areas of maintenance and outside services are expected. UMPI is projecting a net operating increase of $238 thousand at year end. USM: ($1.6) Million Net Decrease Summer Session credit hour enrollments were 0.8% (194 credit hours) below budget. Fall credit hours were 4.0% (3,905 credit hours) below budget. Based on these results, USM forecasts FY2012 tuition and fee revenue will be 2.3% ($1.9M) below budget. This forecast reflects the belief that the credit hours generated during spring and the portion of Summer Session occurring during May and June 2012 will also be below budget. The campus has initiated a number of new marketing, student recruitment, and retention initiatives to address this. Expenses are being reduced to achieve a balanced E&G budget by year end. Residence Hall occupancy was 21.2% (270 students) below budget. As a result, fall room and board revenue is 21.3% ($1.4M) below budget. For the year, this revenue is forecast at 23.4% ($3.1M) below budget. USM s new students have historically represented the largest proportion of USM s residence hall population. USM experienced an 8% (134 headcount) decline in new student enrollments (first time, transfer, and readmit). Additionally, the number of new students interested in on campus housing declined by 12% (117 headcount). This exacerbated a decrease in continuing students opting to continue to live on campus. o o Spending is being reduced. These reductions however will not be sufficient to balance the overall Residence Life budget by year end. USM currently forecasts a year end Residence Life deficit between $1.5 and $1.8 million. The deficit will be covered by funds from the Residence Life reserve, currently at $2.5 million. For spring semester, Residence Life has undertaken new initiatives to bring more students on campus. These initiatives include marketing to new and continuing students as well as targeted scholarships. Indirect cost recovery is 8.1% ($153K) below budget for the period. The timing of when this revenue is received tends to be highly variable. Based on an analysis of scheduled grant and contract activity, the campus forecasts that actual revenue will exceed budget by 4% ($200K) by year end. Sales and services revenues were 15.9% ($659K) below budget for the period. Expenses were also lower. Actual and budgeted revenues and expenses are expected to align before the end of the next reporting period. Salary and wages are 5.0% ($1.1M) below budget for the period. This is attributed to savings from reorganization, position vacancies, and the reallocation of funds budgeted for salaries to Page 11

14 pay for direct cost sharing in grants and contracts. A 2.1% ($1.5M) year end variance is forecast and USM anticipates using some of these savings to off set the loss of anticipated (budgeted) tuition and fee revenue. Fuel and Electricity spending is 30% ($196K) below budget for the period. This is partially accounted for by conservation efforts, contracting for fuel and electricity at below the anticipated level, and facilities improvements. FY2012 spending, after accounting for an expected January increase in the cost of natural gas is projected as being 9.6% ($400K) less than budget. Since the heating season is just beginning, this estimate is seen as highly variable. USM anticipates using energy savings to off set the loss of anticipated (budgeted) tuition and fee revenue. Spending on the supplies and services and other expenses categories is 38.1% ($2.4M) below budget for the period. This reflects reductions being made in Residence Life as a result of lower than expected occupancy and E&G reductions necessary to off set the loss of anticipated (budgeted) tuition and fee revenue. System wide Services: $0 Net Increase For the period ending October 31, 2011, System wide Services operating results were $504 more than anticipated primarily the result of vacant position savings and reduced maintenance spending during the first period. System wide Services is still projecting to break even at year end. System Temporary Investment Income: ($5.5) Million Net Decrease The FY2012 temporary investment income budget is $2.0 million. Based on information available as of October 31, UMS has experienced a loss of $3.5 million for a total budget toactual negative variance of $5.5 million. System wide Employee Benefits: ($3.0) Million Net Decrease In FY2011, the System realized a $3.4 million surplus in the employee benefit pool primarily from lower than anticipated employee medical and workers compensation costs. When the FY2012 benefit budget was developed, the total amount that should be recovered from campuses to offset the estimated benefit costs was reduced by $3.0 million and resulted in a lower FY2012 benefit rate. Although reducing the FY2012 campus recovery results in an estimated $3.0 million deficit in FY2012, the deficit will be mitigated by the utilization of the FY2011 surplus. Page 12