Transcript Document

UNIVERSITY OF MINNESOTA
Financial Overview
University of Minnesota
Financial Management Organization
UNIVERSITY OF MINNESOTA
BOARD OF REGENTS
ASSOC. VP & DIRECTOR OF AUDITS
Gail Klatt
UNIVERSITY PRESIDENT
Robert Bruininks
VICE PRESIDENT, CFO & TREASURER
Richard Pfutzenreuter
OFFICE OF THE CONTROLLER
Mike Volna
Accounting Services
Disbursements/External Sales
U of M Policy Development
Financial Systems Support
Purchasing
Sponsored Financial Reporting
Inventory Services
Risk Management & Insurance
Inventory Services
OFFICE OF BUDGET & FINANCE
Julie Tonneson
Assoc. VP & Controller
Director
Operating Budget Development
Capital Budget Development
Biennial Budget Development
Compact Process Support
OFFICE OF ASSET MANAGEMENT
Stuart Mason
Lincoln Kallsen
Director of Financial Planning & Analysis
Assoc. VP & Chief Investment Officer
Investment Management
Cash Management
Bursar Operations
UNIVERSITY TAX DEPARTMENT
Kelly Farmer
Carole Fleck
Director of Debt Managment
Director
OFFICE OF REAL ESTATE
Sue Weinberg
Director
r. 2004-Sept-10
OFFICE OF INSTITUTIONAL
RESEARCH & REPORTING
Fiscal Year 2007-08
Total Operating Budget
What is the amount of the University’s annual budget?
Current Non-Sponsored Expenditures
& Mandatory Transfers
Current Sponsored Expenditures
$2,515,519,819
Total Current Fund Operating Budget
$3,049,519,819
$ 534,000,000
All-Funds Budget Structure
Sponsored Funds
$534 Million
Non-Sponsored Funds
$2.5 Billion
Local Unit Generated Revenues
$1.053 Billion
Centrally Allocated & Attributed
$1.462 Billion
State O & M/Other Misc.
$258 Million
Auxiliary
Operations
$795 Million
Clinical Income
Restricted Income
Grants & Contracts
Business & Industry
Sales & Services
Fees
Endowment Income
State Specials
Tuition
University Fee
Indirect Cost Recovery
Central Reserves
University of Minnesota Revenue Sources
All Funds FY2007
Gifts: 4%
Educational Sales/
Contract Activity: 11%
Capital Grants/Gifts/
Appropriations: 3%
Tuition and Fees: 19%
Auxiliary
Enterprises: 11%
Federal/State/Other Grants
and Contracts: 26%
State
Appropriation: 26%
University of Minnesota Revenue Sources
All Funds FY 2007
Gifts: 4%
Educational Sales/
Contract Activity: 11%
Capital Grants/Gifts/
Appropriations: 3%
Tuition and Fees: 19%
Auxiliary
Enterprises: 11%
Federal/State/Other Grants
and Contracts: 26%
State
Appropriation: 26%
FY 2007–08 Revenues: $1.2 billion
1400
1200
1000
Student
Tuition
and
Fees
800
Why Are These Revenues
So Important?
• 70% of total spending on instruction
• 77% of total spending on student services
600
400
State
Appropriations
• 72% of total spending on faculty compensation
• 93% of the total budget of CLA
• 78% of the total budget of IT
• 75% of the total budget of CFANS
200
0
Two Budget Processes
• Biennial Budget Request to the State
- completed every two years
• Annual Budget Process
- conducted every year
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Where the Money Goes
State of Minnesota General Fund Budget / $34.58 Billion
2010-11 Biennium
Health &
Human
Services
28.1%
Property Tax
Aids
9.0%
77% of State Budget
• K-12 Education
• Property Tax Aids &
Credits
• Health & Human
Services
Public Safety
5.4%
Higher
Education
9.1%
All Other
8.5%
K-12
Education
39.9%
Legislative Outcome*
2007-08
2008-09
Request
$58,900,000
$64,500,000
Actual
$67,447,000
$14,310,000
Difference
$ 8,547,000
($50,190,000)
Biennial Math
=
Request
Actual
Difference
$182,300,000
$149,204,000
($ 33,096,000)
*Excludes $25,000,000 onetime U/Mayo Partnership
Current Non-Sponsored Funds
Fiscal Year 2006-07 Expenditures / $2.2 Billion
By Object of Expenditure
4%
By Function
Academic Support &
Student Services
Student Aid
12%
18%
All Other
Public
Service
5%
Research
Salaries &
Fringe
60%
11%
7%
2%
4%
Consultants/
Purchased Personnel
Institutional
11% Support
2%
12%
Supplies &
Services
Op. &
Maint.
of Plant
Utilities
Equip. &
Capital Assets
Instruction
36%
16%
All Other
State of Minnesota
Financial Context – FY2008/09 & FY2010/11
$500
$0
($500)
($1,000)
($1,500)
($2,000)
($2,500)
($3,000)
2008/09
2010/11
Projected Balance Feb. 2008 Forecast
Actual Balance May 2008 End Session
Projected Balance 2010/2011 @ 2.0% Inflation
Project Balance 2010/2011 @ 3.3% Inflation
Historical Annual Incremental Investment
Framework: $80.0 M
100%
Student aid = $5.0M or 6%
Safety and contractual obligations
= $3.0M or 3%
Infrastructure investments and support =
$7.0M or 9%
Facility operations = $12.0M or 15%
Programmatic investments =
$18.0M or 22%
Employee compensation =
$35.0M or 45%
0%
DRAFT FOR DISCUSSION ONLY
2010-2011 Biennial Budget
Conceptual Framework
State
Responsibility
University
Responsibility
[Tuition and Internal Funds]
Compensation
Compensation
75% State Share
25% U of M Share
Research
Enhancement
Program
Core Academic Support
Student Aid
(cost pools, etc.)
Educational &
Instructional Programs
Biennial Budget Request:
Increase over FY09
Increase over
FY10
2010-2011 Biennium
FY2010
FY2011
(Biennial Math)
State Request
Core Compensation
(State Share)
$36,500,000
$22,200,000
$95,200,000
$8,000,000
$0
$16,000,000
Research Enhancement
Fund
$10,000,000
$10,000,000
$30,000,000
New State Appropriation
$54,500,000
$32,200,000
$141,200,000
Middle Income
Scholarship
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Biennial Budget Timeline
DOF
Budget
Instructions
Finish
Principles,
Prel. Write Ups &
Financial Plan
For September
BOR Review
Establish
Conceptual
Framework
July
August
BOR Docket
Deadline 8-24-08
Preliminary
Cost
Estimates
Present
Biennial
Request to
Board of
Regents
Review
Sept.
BOR Docket
Deadline 9-28-08
UMD Meeting
Present
Biennial
Request to
Board of
Regents
Approval
Oct.
Complete
Entry of
Biennial
Budget
Information
into State
System
Nov.
Agency Plans
Due to MN
Legislature
Nov 30, 2008
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Three critical economic issues
The University’s biennial request funds:
1. Compensation for University faculty and staff.
2. Middle income scholarships for Minnesota students and their families.
3. Research enhancements to meet growing demand for capacity and
evolving statewide needs.
Compensation for faculty and staff
Request
3% annual compensation pool increase = $95.2M for biennium
Rationale
Higher education is people-intensive and highly competitive.
• Nearly two-thirds of the U’s annual operating budget is compensation.
• Minnesotans have seen prices rise by 5.6% since July 2007.
• Top faculty are highly sought-after — making them challenging to recruit
and retain.
Middle income scholarship program
Request
Middle-income scholarships to reduce tuition by 5% to 40%
depending on income = $16M for biennium ($8M recurring)
Rationale
Many middle-income students receive little scholarship support.
• Middle-class Minnesota families are struggling with rising costs.
• Low-income students already attend the U with free tuition.
• It’s time to provide ongoing scholarship support for middle-income
students.
Research enhancement program
Request
New investments to enhance research capacity = $30M for
biennium
Rationale
The U creates new knowledge that fuels the economy.
• Investment in research is critical to job creation and economic growth.
• The U competes to win $600M+ in research funding each year.
• Our research capacity is leveraged by the state, business and industry,
and other colleges and universities.
University-funded components
Funding sources
4.5% tuition increase per year
1% reallocation per year
University obligations
The U’s share of the compensation pool increase
Essential academic investment and support
Debt service, utilities, leases, new building operations, safety and
contractual obligations
FY2010 – 2011 Biennial budget request
Increase over
FY09
Increase over
FY10
2010-2011
Biennium
FY2010
FY2011
(Biennial Math)
State Request
Core Compensation
(State Share)
$36,500,000
$22,200,000
$95,200,000
$8,000,000
$0
$16,000,000
Research
Enhancement Fund
$10,000,000
$10,000,000
$30,000,000
New State
Appropriation
$54,500,000
$32,200,000
$141,200,000
Middle Income
Scholarship
Budget Development Activities
Pre IMG
IMG
“Infante” Phase
“Install” Phase
1992 ------1997
1998 ------1999
IMG
“Shared
Responsibility”
Or “Common Good”
Phase
“Earned Income
&
Full Cost Model”
Phase
2000 ------ 2005
2006 ------ ????
Reforming Resource Allocation
Models for Revenue Distribution
Previous Model
State
Appropriations
Indirect Cost
Recovery
Current Model
Tuition
Revenue
State
Appropriations
Indirect Cost
Recovery
Tuition
Revenue
50.5%
Central
Funds
Central
Funds
49.5%
Allocations to
Academic & Support Units
Allocations to
Support Units
100%
Allocations to
Academic Units
Reforming Resource Allocation
Why Institutional Revenue Sharing?
The challenge of
funding institutional
common goods and
academic priorities
Local Unit
Generated
Revenues
IRS – recognition that all units
should share in providing
resources for meeting institutional
needs & budgetary responsibilities.
Centrally
Distributed
Revenues
Institutional Revenue Sharing
Fiscal Year 2004-05 Approved Budget
Academic Institutional Revenue Sharing =
Total Revenues X 8.5%
Part 1
Calculate revenue
yield @ 3.75% of
“Sales & Services”
Revenue*
* [Includes Central
Support Units]
Estimated FY05 Yield = $11.9 m
Part 2
Subtract “3.75%
Sales & Services”
Assessment from
8.5% IRS and collect
remaining
assessment from
collegiate/campus
units
Estimated FY05 Yield = $87.3 m
Why Build Upon the IMG Model?
IMG Largely A Success - However
NEED MORE
NEED LESS
Transparency
Simplicity/Fewer Levers
All-Funds/All Costs Analysis
Accountability – Units & Leadership
Internal Assessment
Base + / - Methodology
Minnesota’s Budget Development Story
Earned Income-Full Cost
Earned Revenues
Tuition
ICR
Fees
Gifts
Sales
Etc.
Allocated State
Appropriation
Allocated Costs
Academic
Units
Utilities
Facilities Ops
Debt
Leases
Libraries
Research
Technology
Student Serv.
Classrooms
Administration
9 Cost Allocation Pools
• Facilities – Operations & Maintenance
(ASF/Space Data Base/Twin Cities/Standard Service Levels)
• Utilities - (Consumption by Building/Buildings Metered/Monthly Bill)
• Debt & Leases - (Occupancy/General Purpose Classrooms)
• Office of Information Technology
(Centrally Allocated/Unweighted Headcount/Tiered)
• Administrative Service Units - (Total Expenditures/Tiered)
• Research
(Sponsored Services/3 Yr. Rolling Avg. Sponsored Expenditures)
• Libraries - (Weighted Student & Faculty Headcount/Law Library Nuance)
• Student Services
(3 “buckets”/Primarily Student Headcounts/Aid Programs Included)
• General Purpose Classrooms
(Student Course Registrations/Future Incentive Refinements)
Summary of Cost Allocation Recommendations
X = Primary “type” assignment
Utilities
Consumption
Based Cost
Allocation
Cost-Driver
Based Cost
Allocation
Common
Good Based
Cost
Allocation
Facilities
O&M
X
Debt &
Leases
Tech
Admn
Serv
Libraries
Research
Student
Serv
Gen.
Purpose
Classrooms
X
X
X
X
X
X
X
X
Medical School
College of Biological Sciences
Utilities
15%
Admin. Serv.
11%
Admin. Serv.
28%
Utilities
18%
Classrooms
3%
Facilities
15%
Classrooms
1%
Student Serv.
17%
Facilities
16%
Student Serv.
3%
Technology
9%
Research Admin
10%
Debt/Leases
9%
Research Admin
3%
Libraries
10%
College of Liberal Arts
Admin. Serv.
10%
Utilities
5%
Libraries
10%
Debt/Leases
12%
Carlson School of Management
Admin. Serv.
18%
Facilities
10%
Classrooms
5%
Technology
10%
Debt/Leases
4%
Utilities
3%
Facilities
9%
Debt/Leases
0%
Classrooms
6%
Libraries
22%
Libraries
16%
Student Serv.
32%
Research Admin
1%
Technology
17%
Student Serv.
23%
Research Admin
0%
Technology
19%
6-Year Capital Improvement Plan
Board of Regents Policy directs the administration to develop a
capital budget with a “6 year time horizon, updated annually”
6-Year Capital Improvement Plan
Part One: May/June
Capital Improvement Budget
Year 1
Part Two: Oct./Nov.
Capital Improvement Plan
Years 2 - 6
Operating & Capital Budget Development
Board of Regents
 Review/Action/Discussion
 Policy
 Background/context
 Oversight
 Strategic positioning
Work sessions
Committees
Board Meetings
Key Tools
State Biennial Request – even years
Annual Operating Budget – every year
State Capital Request – odd years
Six Year Capital Plan – every year
Annual Capital Budget – every year
Oversight &
Approval
Contacts for Budget and Financial
Information
Budget Office Web Site: www.budget.umn.edu
Budget Office Phone #: 612-626-4517
Controller’s Org Phone #:
612-624-0874
Institutional Research & Reporting Web Site:
www.irr.umn.edu
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