ACCOUNT CONVERSION PILOT OUTCOMES. November 15, 2017

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1 ACCOUNT CONVERSION PILOT OUTCOMES November 15, 2017

2 CONVERSION PROCESS Account simplification and conversion will be an iterative process Units will have three passes at mapping accounts before go-live First Iteration Oct/Nov 2017 Second Iteration January 2018 Third Iteration May 2018 Primary purposes of the first iteration are Initial identification of accounts that can be eliminated or consolidated Uncover issues not accounted for in design-to-date Produce data for more strategic analysis of account structure

3 CONVERSION PROCESS Instructions about consolidation Scholarships not addressed, pending additional conversations Some unrestricted funds consolidated Units asked to identify local consolidation opportunities Specific gift instructions are pending outcome of UDO meetings

4 PILOT DEPARTMENTS Dept # Dept Name FY18 Budgeted Revenue (excl SPS) PNW Chancellor $ (5,912,931) PNW Nursing $ (5,614,187) PFW Athletics $ (8,058,976) PFW Music $ (1,782,477) PWL Student Success $ (6,078,909) PWL Forestry $ (9,518,526) PWL Engineering Admin $ (24,104,618) PWL Political Science $ (3,824,431) PWL Chemistry $ (14,787,128) PWL Recreation and Wellness $ (15,812,954) PWL VP for HR $ (7,538,517) $ (103,033,653)

5 OVERALL CHANGE FIRST ITERATION % of cost strings were eliminated in the first pass Excluding sponsored programs Cost strings are combinations of objects that form accounts Fund-Cost Center Fund-Real Internal Order Fund-Cost Center-Statistical Internal Order Fund-WBS Element Because internal orders can be used across funds and cost centers, the number of valid strings is greater than the sum of objects E.g. Five orders can be used with five funds to form 25 strings Cost Strings Current Future

6 OVERALL CHANGE FIRST ITERATION Funds Cost Centers Current: 2862 objects = valid combos Internal Orders WBSE's Current Future

7 OVERALL METRICS FIRST ITERATION 16 Funds 10/11 units 5 funds 6/11 units 5 CC s 81 Cost Centers 764 for gifts/scholarships IO s WBSE s Faculty

8 OVERALL METRICS FIRST ITERATION Dept Name FY18 Budgeted Future Cost Future Cost Strings - Cost Strings- Headcount Revenue (excl SPS) Centers Funds Current* Future % Reduction PNW Chancellor $ (5,912,931) % PNW Nursing $ (5,614,187) % PFW Athletics $ (8,058,976) % PFW Music $ (1,782,477) % PWL Student Success $ (6,078,909) % PWL Forestry $ (9,518,526) % PWL Engineering Admin $ (24,104,618) % PWL Political Science $ (3,824,431) % PWL Chemistry $ (14,787,128) % PWL Recreation and Wellness $ (15,812,954) % PWL VP for HR $ (7,538,517) % $ (103,033,653) %

9 ACCOUNTS IN THE NEW STRUCTURE With Forestry Without Forestry Gifts/Scholarships Faculty All Other Gifts/Scholarships Faculty All Other

10 CONVERSION METRICS BY WBSE WBSE's by Node Group Dept Name Faculty Headcount Discretionary Startup Restricted Use Restr Use - Dept Act Fed Appr/ Matches Subtotal WBSE's PNW Chancellor 0 PNW Nursing 37 0 PFW Athletics 0 PFW Music PWL Student Success 0 PWL Forestry PWL Engineering Admin 7 0 PWL Political Science PWL Chemistry PWL Recreation and Wellness 0 PWL VP for HR

11 CONVERSION METRICS BY IO IO's by IO Type Operating- Dept Operations Operating- Designated Operating- Discretionary NonOperating- Reserves Faculty Commitments Total Avg per CC Non-Scholarship Scholarship Total Approved Reserve? N Endowment Principal or Debt Issuance? N Funding for Commitments to Faculty? N Use designated outside the dept to specific program/ project? N Funding not committed for operational needs? N Operating- Dept Operations Y Y Y Y Y NonOperating- Reserve NonOperating- Endow/Debt Faculty Commitments Operating- Designated Operating- Discretionary

12 CHALLENGES REMAINING Federal Appropriations Federal Appropriations require the use of seven federal funds Appropriations require matching from other sources General funds, state line items, gifts Matches have to be allocated by mission Instruction, research, engagement/extension Significantly multiplies the number of accounts required E.g. a faculty member with a federal extension and a federal research project could have eight accounts for the two projects once matches from general, state line, and gifts is taken into account

13 CHALLENGES REMAINING Fringe Benefit Allocations A majority of major units/departments are still reimbursing fringe benefit expenses on general fund accounts within the units Units with this practice cannot consolidate general fund accounts with other unrestricted fund accounts (royalty income, residual income, study abroad, etc.) E.g. a faculty member may be given two discretionary accounts in the future one for discretionary funding from salary savings & research incentive programs, another for discretionary funding from grant residual transfers

14 CHALLENGES REMAINING Public/Available Fund consolidation allows the combination of accounts with the same purpose, but which come from sources that cross Public-NonPublic or Available-Unavailable classifications E.g. A department has a general fund account and a conference residual account Both are unrestricted, one is public, the other is nonpublic Need to determine governance for when these accounts should be consolidated or kept separate

15 CHALLENGES REMAINING Gifts & Scholarships 37% of converted accounts were gifts or scholarships Gifts Proposal for consolidation of gift accounts to be discussed 11/20 Scholarships Need better clarity on direction of current scholarship management discussions happening apart from the project Significant changes to the scholarship structure on 7/1/18 could be problematic due to awarding process starting in Jan 2018

16 CHALLENGES REMAINING Internal Grant Programs PROMISE, ASPIRE, Travel Grant programs in Liberal Arts Dean/Provost programs Small internal grants to CLA faculty Restrictions about use of funds and timing Potential management options Opt 1 As is, individual transfers to unique accounts for each faculty member Opt 2 Setup unique accounts to track expenses, but use CO Plans and alternate budget addresses to eliminate transfers (option used in pilot) Opt 3 Honors system, don t track expenses per faculty member, have everyone spend out of one central account

17 CHALLENGES REMAINING IO s for segregating travel, professional development, etc. Athletics Purdue Fort Wayne Separate IO s needed to track operations, recruiting, travel and gifts for each team (at least 14 teams) Potential solutions to simplify Modify Concur to derive GL from travel purpose field Selecting reason would replace choosing from multiple IO s per team

18 CHALLENGES REMAINING Low Level Tracking Of the converted accounts, 372 (18%) had a 6/30/17 management balance of $0 and Revenues, Expenses, and Transfers of less than $1000 Some may be new accounts in FY are department accounts 178 are faculty accounts

19 SUPPLEMENTAL SLIDES

20 EXAMPLES OF SIMPLIFICATIONS Recreation and Wellness IO s are used today to track different levels of student positions Eliminated practice, rely on student wages G/L IO s are used today to maintain multiple accounts for each sport club IO s will only be used for clubs with larger revenues Investigating combining club gift IO s with BOSO accounts

21 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Student Success Current State Uses three cost string combos Fund (8 digits) Cost Center (10 digits) Fund (8 digits) Real IO (10 digits) Fund (8 digits) Cost Center (10 digits) Statistical IO (10 digits) All objects have to be entered for transactions If an order is forgotten, transaction will post, but incorrectly

22 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Student Success Current State 260 valid combinations In FY17, used 39 Funds 15 Cost Centers 149 RIO s & 40 SIO s Accounts not linked to the responsible units within the department Responsible units only identified in text descriptions Not even a basic income statement for each unit is available without manual intervention

23 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Student Success Current State Tracking and reporting is often very granular One account is subdivided by 30+ internal orders Reporting requires manual spreadsheet update

24 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Student Success Future State One cost object needed for transactions Real IO (10 digits) Fund/cost center derived, incorrect combinations eliminated 47 total accounts Average of about five (non-scholarship) accounts per unit Use three shared funds Have eliminated objects used for granular tracking Will rely on G/L accounts for reporting Eliminated Converted Cost Strings

25 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Student Success Future State Each unit within the department is represented by a cost center Unit cost centers roll up to main department cost center

26 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Student Success Future State Each unit within the department is represented by a cost center Unit cost centers roll up to main department cost center All accounts identified with responsible unit Four accounts Two for operations One for gifts One for study abroad

27 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Student Success Future State All accounts will be categorized into a standard set of types Types can assist with analyzing revenue, expense and balance activity By Sub-Cost Center, Cost Center, or even Business Area

28 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Chemistry Current State Same issues with cost string combos 508 valid combinations Some sub-units tracked on unique funds, others on cost centers 51 faculty Can t identify which accounts are related to faculty, let alone to which faculty member the accounts are attributable No ability to report or analyze faculty financial activity Can t answer basic questions: How much funding was allocated to faculty?

29 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Chemistry Future State Eliminated 55% of current accounts Eliminated Faculty Scholarship Restricted Dept Operations

30 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Chemistry Future State Can separate faculty activity from other department activities Faculty accounts WBS Element (13 digits) Non-faculty accounts Real IO (10 digits)

31 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Chemistry Future State Easily analyze impacts of major drivers Category 1 Category 2 Professorship Startup Income-Producing Restricted Revenue Recurring Allocations $ (40,000) $ (6,734) $ (1,054,306) Tuition & Fees $ (134,358) $ (19,478) Appropriations $ - Sales & Services $ - $ (488,245) $ (46,180) Gifts $ (814,562) Investment Income & Distributions $ (302,317) $ - $ (4,439,822) Other Operating Revenue $ - Other Non Operating Revenue $ (122,111) Recovery $ (367,591) $ (1,981) Revenue Total $ (342,317) $ - $ (1,119,038) $ (6,376,327) Expenses S&W $ 258,814 $ 572,171 $ 953,119 $ 3,134,432 Fringes $ 82,226 $ 169,462 $ 269,303 $ 781,829 Supplies & Services $ 182,598 $ 881,137 $ 507,789 $ 907,000 Overhead $ 128,426 Capital $ 5,420 $ 328,955 $ 99,338 $ 151,249 Scholarships, Fellowships & Awards $ 1,800 $ 15,969 $ 839,578 Contingency $ - $ - $ - $ - Expenses Total $ 530,858 $ 1,967,695 $ 1,829,549 $ 5,942,515 Transfers Transfers-Major Renovations $ - Transfers-R&R $ (1,862) $ 606,393 $ (101,521) Transfers-Other $ (597,027) $ (921,384) $ (2,359,024) $ 1,511,213 Transfers Total $ (598,889) $ (921,384) $ (1,752,631) $ 1,409,692 (Surplus)/Deficit $ (410,347) $ 1,046,311 $ (1,042,120) $ 975,880 Mgmt Balance $ 1,100,056 $ 4,610,234 $ 4,428,277 $ 9,616,454

32 EXAMPLES OF SIMPLIFICATIONS/ENHANCEMENTS Chemistry Future State Transparency into faculty activities Faculty ID Discretionary Startup Restricted Use Total $ 348 $ 1,019,483 $ 238,038 $ 1,257,868 $ 666,497 $ 420,364 $ 7,000 $ 1,093,860 $ 835,688 $ 89,312 $ 925,000 $ 729,455 $ 44,887 $ 774,342 $ 715,157 $ 715,157 $ 316,147 $ 316,147 $ 311,520 $ 311,520 $ 3,734 $ 233,432 $ 237,167 $ 2,073 $ 206,695 $ 208,768 $ 21,955 $ 125,914 $ 147,870 $ 196 $ 133,856 $ 134,053 $ 1,704 $ 128,075 $ 129,778 $ 120,450 $ 8,000 $ 128,450 $ 439 $ 112,315 $ 112,753 $ 107,021 $ 107,021 $ 106,006 $ 106,006 $ 105,580 $ 105,580 $ 4,963 $ 92,444 $ 97,407

33 NEXT STEPS All units on all campuses are currently converting accounts Almost 80,000 accounts have to be manually reviewed and classified First iteration due from all units by next week Identify and address remaining barriers to additional simplification Will use first mapping to assist in identifying specific issues Gift and scholarship restrictions will be a primary focus Refinements to future account structures to be made in January and May Begin development of reporting to leverage new structures