Budget Reform Update Paul Ellinger, Associate Chancellor & Vice Provost Budget and Resource Planning February 2018
Outline Brief budget model overview Communication plan Principles Major components Timeline Panel discussion: Preparing for Change Impacts and impediments Concerns Communication strategies Internal budget preparations
Communication Plans White Paper provost.illinois.edu/budget Developing FAQ Feedback form Provost Senate Discussions Today Academic Leadership Town Halls February 26 March 13 Provost Coffee March 26 April 5 3
Change Incentives Improve Transparency Unit Actions Budget Outcomes Comprehensive and Interconnected Campus Why and Why Now? 4
Integrated and Value Centered Budgeting Integrated Value Centered Across disciplines Across mission areas With focus on strategic priorities With the strategic plan Allow flexibility and capacity for units to shape their future around unit values Commitment to university-wide investments consistent with values, strategic priorities, and university-wide excellence Invest in excellence across mission areas Research ---- Teaching ---- Outreach 5
FY18 All Budget Sources Auxiliary Enterprises & Departmental Activities $430M Direct State Appropriations $221M 20% 10% Gifts & Endowment Income $139M 6% 36% Income Fund $781M Sponsored Research & Fed Appropriations $449M 21% 7% Institutional Funds $165M Total = $2,185M 6
Budget Model Allocations Auxiliary Enterprises & Departmental Activities $430M Direct State Appropriations $221M Planning: How will these change over 20% time? 10% Gifts & Endowment Income $139M Magnitude of changes may impact colleges more directly? Positive or Negative 6% Fiscal management changes? 36% Income Fund $781M Sponsored Research & Fed Appropriations $449M 21% 7% Institutional Funds $165M Total = $1,167M 7
Costs & Investments: How to allocate? Technology Services, Facilities and Utilities $135M Other Centrally Budgeted Academic & Admin Units $147M 13% Centrally Awarded Financial Aid $86M 7% 12% 46% Tuition Units $534M 19% Campus-Wide Support, Initiatives & Risk Management Reserve $221M 4% Campus Level Research Units $44M 8
Budget Flows 9
Goals and Principles Transparency Transparency Balance Effective Stewardship Transparency Resilience Responsive Trust & Confidence Accountability Comprehensive vision 10
Goals and Principles Balance Transparency Balance University Unit flexibility and capacity to invest in interdisciplinary priorities and campus goods flexibility, capacity and predictability Resilience Responsive 11
Goals and Principles Responsive Transparency Balance Economic and Political Conditions Emerging Demands Resilience Responsive Strategic Plan Budget Model Technology 12
Goals and Principles Resiliency Transparency Balance Effective Planning Risk Resiliency Responsive Resiliency 13
Two Primary Thrusts Budget Modeling Attribute and allocate revenue Tuition ICR Direct and indirect costs allocations for space, utilities and technology College investments for administration, campus goods and central initiatives University-wide investments based on campus and unit priorities Financial Management Reporting Survey units on needs and wants Investigate best practices Improve historical financial management reporting Develop training sessions for decision makers Longer term: developing and implementing forecasting tools 14
Cautions Campus Leadership Sets the strategic and investment priorities Assess the levels of investments across academic and admin units Increases attention on accountability Budget System Tool to inform decision makers Establishes transparent processes Provides the appropriate incentives Results in accountability and transparency Levels Weights 15
DETAILS & ISSUES 17
College Budgeting Framework Revenue: Tuition + Revenue: ICR - Direct Costs: Facilities, Utilities & Technology - Investment in Campus Goods and Administration = Net Revenue +/- Campus Investment to College = Existing Budget Baseline Under Existing Model 22
College Budgeting Framework Revenue: Tuition Undergraduate Base Tuition Nonresident International Differentials - Financial Aid Tuition Waivers + Graduate Professional Online General Instructional Units Majors Specific Differentials General Instructional Units Majors Specific College assigned waivers Majors 23
College Budgeting Framework Revenue: Tuition + Revenue: ICR 45% College Distribution (no change) College Managed 55% Campus Distribution Allocated to Colleges Existing Distribution Or College Managing Grant IRU Managed 45% College Distribution (no change) IRU Portion - (no change) Campus Portion - Cost offset for IRU 24
College Budgeting Framework Revenue: Tuition + Revenue: ICR - Direct Costs: Facilities, Utilities & Technology Facilities and Space Utilities direct allocation By Space Type Office (DMI) Lab Classroom Study Special General Support Health Care Residential Campus Technology Services Student Weight FTE Weight By FTE type 25
College Budgeting Framework Revenue: Tuition + Research Admin and Revenue: ICR Campus IRUS - Direct Costs: Facilities, Utilities & Technology - Investment in Campus Goods and Administration Administration and Other Campus Units Investment for Growth University-Wide Investments and Initiatives All Expenditures Research Expenditures All Expenditures Risk Management 26
College Budgeting Framework Revenue: Tuition + Revenue: ICR - Direct Costs: Facilities, Utilities & Technology - Investment in Campus Goods and Administration = Net Revenue +/- Campus Investment to College = Existing Budget Baseline Under Existing Model 27
28
29
College Budgeting Framework Phase 1: FY19 Revenue: Tuition + ICR - Direct Costs: Facilities, Utilities & Technology - Investment in Campus Goods and Administration = Net Revenue +/- Campus Investment to College = Existing Budget Baseline Under Existing Model Based on Value Principles Phase 2: FY20-23 New Investments in Deferred Maintenance Transition to Target Campus Investment Ongoing Reviews: System and Non-tuition Units 30
Budget Reform Timeline Milestones Budget Reform Working Groups charged 12/20/2016 Final budget parameters identified and baseline allocations determined 7/1/2018 COD retreat focused on budget 1/29/2016 Hiring of Vice Provost for Budget and Resource Planning (VPBRP) 3/23/2016 Budget website launched 4/15/2016 Budget Reform Steering Committee charged 9/7/2016 Budget Reform Steering Committee reconvened 9/22/2017 Budget Reform Implementation Team charged 10/8/2017 Revisions and refinements based on feedback from Chancellor, Provost, deans, CBOC, faculty, senate, etc. 4/15/2018 2015 2015 2016 2017 2018 2019 2019 7/1/2019 7/1/2015 CBATF charged 4/4/2016 Hiring of Associate Director for Budget and Resource Planning 2/19/2016 CBATF mid-year report submitted 5/6/2016 CBATF final report submitted Today 10/1/2017 12/22/2017 Campus white paper on key budget reform issues OVPBRP conducts additional analysis on building, space, IT, and cost of "campus goods" Change in budget allocations determined under budget reform parameters 7/15/2017 Preliminary revenue flow modeling done by OVPBRP 5/15/2017 Feedback received from Working Groups 3/1/2018 Recommendation on key elements provided to campus leadership 31
Panel Discussion Preparing for Change Impacts and impediments Concerns Communication strategies Internal budget preparations 32