When Budgeting Decisions Giveth and Taketh Away

with

Robert C. McMurray David R. Connelly Ph.D

Higer Education Budgeting Processes & the Argument for Program Sustainability
Intent v. Outcome
The most successful approach to budgeting is to start with an EFFECTIVE PLAN one developed with EXTENSIVE INPUT from ALL STAKEHOLDERS and to develop the budget based on the decisions reected BUDGET BEFORE THE STUDENT OUTCOME in the plan.
OR STUDENT OUTCOME BEFORE THE BUDGET
- College and University Budgeting, NACUBO

Thoughts & Proposal Questions

- Why is it that some programs survive the budget process that maybe should not, and some do not survive this same process that really should - what is the rationality of these decisions and how they are made? - Is the road to hell truly paved with good intentions or is it simply a case of bad budgeting procedures? - Are all true stakeholders involved in the process and input or is it a selective and subjective group concerned with alterior objectives and outcomes? -How well do universities follow the stated belief that a budget is a map guiding the institution as opposed to the institutions needs driving the budget?

Utah Valley University

Original Budget Summary and History
2009-10 2010-11
$140,983,300 $157,900 $141,141,200

2011-12
$152,784,800 $157,200 $152,942,000

2012-13
$162,749,300 $158,400 $162,907,700

2013-14
$164,806,300 $160,300 $164,966,600

Change 2012-13 to 2013-14

1.26% 1.20% 1.26%

Appropriated
Education & General Ed Disadvantaged TOTAL Appropriated $124,925,600 $157,900 $125,083,500

2013-14 Appropriated Base Operating Budget

by Functional Classication
O&M Plant $16,179,059 Scholarship/Needbased Aid $777,419

Auxiliaries
Dining Services Bookstore Student Center Services $3,681,390 $10,814,803 $1,725,000 $3,771,447 $10,992,198 $1,850,000 $3,698,629 $13,532,718 $1,975,000 $3,698,629 $11,496,941 $1,950,000 $3,985,490 $10,327,250 $1,850,000 7.76% -10.17% -5.13%

Other Programs
Athletics Wellness Center Student Programs Community & Continuing Ed. TOTAL Auxiliaries $16,221,193 $16,613,645 $19,206,347 $4,572,806 $546,147 $3,147,414 $752,897 $26,164,834 $6,618,753 $490,000 $2,900,000 $757,502 $26,928,995 44.74% -10.28% -7.86% 0.61% 2.92%
Institutional Support $29,154,813 Instruction $83,845,272

Other Student Services $14,236,696 Athletics $2,631,245 Other Academic Support Library $3,188,192 $14,640,237 Public Service $153,367

Institutional Discretionary
Institutional Interest Income $1,263,427 NA $1,263,427 $1,141,100 $121,734 $1,262,834 $1,077,244 $107,221 $1,184,465 $1,051,325 $107,424 $1,158,749 $980,345 $118,474 $1,098,819 -6.75% 10.29% -5.17%

Approaches to Budgeting
INCREMENTAL BUDGETING

College & University Budgeting

Unrestricted Gifts TOTAL Institutional Discretionary

ZERO-BASED BUDGETING
DECREMENTAL BUDGETING

INITIATIVE-BASED BUDGETING

PERFORMANCE-BASED BUDGETING

PLANNING, PROGRAMMING AND BUDGETING SYSTEMS

FORMULA BUDGETING

A budget is a map guiding an institution on its journey in pursuit of its mission.

Appropriated Base Operating Budget

2013-14 Appropriated Operating Budget
by Natural Classication $164,806,300
Capital Equipment $593,535

by Natural Classication Comparison for 2012-13 and 2013-14

Faculty Salaries Faculty Hourly Executive Salaries Sta Salaries Sta Hourly Total Salaries & Wages Employee Benets Total Personnel Services Current Expense Travel Capital Equipment Fuel & Power 2012-13 $35,939,929 $13,820,807 $3,521,630 $37,645,016 $6,330,738 $97,258,120 $38,962,800 $136,220,920 $21,890,411 $767,185 $601,087 $3,269,697

Travel $717,919 Current Expense $19,629,949

Fuel & Power $3,269,697

Employee Benets $42,369,999

Total Salaries & Wages $98,225,201

EDUCATION AND GENERAL 2013-14 $ Change $36,945,669 $1,005,740 $12,775,067 -$1,045,740 $3,834,613 $312,983 $38,429,538 $784,522 $6,240,314 -$90,424 $98,225,201 $967,081 $42,369,999 $140,595,200 $19,629,949 $717,919 $593,535 $3,269,697 $3,407,199 $4,374,280 -$2,260,462 -$49,266 -$7,552 $0

% Change 2.72% -8.19% 8.16% 2.04% -1.45% 0.98% 8.04% 3.11% -11.52% -6.86% -1.27% 0.00%

Total Expenditures

$162,749,300

$164,806,300

$2,057,000

1.25%

RESPONSIBILITY CENTER BUDGETING

Appropriated Base Operating Budget

Pro-Active v. Reactive
During 2012-13, central contingencies and savings resulting from a hiring chill were used to respond to the revenue decline. During Spring 2013, UVU leadership identied specic expenditure reductions and revenue strategies to address the entire $9.3 million revenue gap. Through a combination of the allocation of new tax funds and tuition revenues and the reduction of existing expenditure budgets, the 2013-14 operating budget fully recognizes the projected impact of these enrollment and revenue changes.

The focus of the campus budget process is PRIMARILY development and oversight of the Education & General operating budget. Operating budget requests are FORMULATED within each DIVISIONAL AREA OF RESPONSIBILITY on campus. These requests take into consideration programmatic and stafng needs, operational issues, and ECONOMIC REALITIES. The Budget Ofce then works with the Presidents Council to compile these INDIVIDUAL ITEMS into a SINGLE CAMPUS REQUEST. The Budget Ofce then begins the process of administering and reconciling the institutional budget, working IN CONJUNCTION with DEPARTMENTAL ADMINISTRATORS who MUST MONITOR THEIR OWN ACCOUNT BALANCES. When unfavorable variances occur, the Budget Ofce investigates the cause and recommends appropriate action. Education & General (E&G) accounts are funded from state appropriations and tuition, and are the PRIMARY OPERATING ACCOUNTS FOR THE CORE ACTIVITIES OF THE INSTITUTION.

by Functional Classication Comparison for 2012-13 and 2013-14

Instruction Public Service Academic Support Library Other Academic Support Student Services Athletics Other Student Services Institutional Support Scholarship/Need-based Aid O&M Plant Total Expenditures EDUCATION AND GENERAL 2012-13 2013-14 $ Change $82,753,359 $83,845,272 $1,091,913 $125,011 $153,367 $28,356 $3,029,355 $14,558,757 $2,545,989 $13,102,547 $30,351,523 $584,600 $15,698,159 $162,749,300 $3,188,192 $14,640,237 $2,631,245 $14,236,696 $29,154,813 $777,419 $16,179,059 $164,806,300 $158,837 $81,480 $85,256 $1,134,149 -$1,196,710 $192,819 $480,900 $2,057,000 %Change 1.30% 18.49% 4.98% 0.56% 3.24% 7.97% -4.10% 24.80% 2.97% 1.25%

2013-14 Appropriated Revenue Budget

$164,806,300

$67,694,800 41.08%

$97,111,500 58.92%

Tuition & Fees State Tax Fund

Weber State University

Condensed Statement of Revenues, Expenses, and Changes in Net Assets
Year Ended June 30, 2011 Amount Operating Revenues Tuition and Fees Grants and Contracts Auxiliary Enterprises Other Total Operating Revenues $ 50,271,742 845,945 15,908,857 4,390,964 71,417,508 84,359,610 31,010,686 35,111,425 11,820,725 43,033,416 205,335,862 (133,918,354) 61,197,800 77,867,847 19,561,518 158,627,165 24,708,811 3,019,621 1,661,241 1,053,916 5,734,778 30,443,589 329,928,265 $ 360,371,854 $ 63,958,542 $ (13,686,800) 681,055 15,918,296 4,202,975 84,760,868 82,763,048 31,459,053 14,505,463 11,748,040 38,072,571 178,548,175 (93,787,307) 59,860,100 37,520,196 14,031,979 111,412,275 17,624,968 1,489,900 5,575,509 2,664,750 9,730,159 27,355,127 302,573,138 $ 329,928,265 164,890 (9,439) 187,989 (13,343,360) 1,596,562 (448,367) 20,605,962 72,685 4,960,845 26,787,687 (40,131,047) 1,337,700 40,347,651 5,529,539 47,214,890 7,083,843 1,529,721 (3,914,268) (1,610,834) (3,995,381) 3,088,462 27,355,127 $ 30,443,589 -21.40% 24.21% -0.06% 4.47% -15.74% 1.93% -1.43% 142.06% 0.62% 13.03% 15.00% -42.79% 2.23% 107.54% 39.41% 42.38% 40.19% 102.67% -70.20% -60.45% -41.06% 11.29% 9.04% 9.23% Year Ended June 30, 2010 Amount Amount of Increase (Decrease) Percent Increase (Decrease)

Headcount Enrollment
Revenue Impact of Enrollment Change 2012-13 Actual -$4,766,000 2013-14 Projected -$4,534,000 Combined Total -$9,300,000
(Summer2012-Spring 2014) Summer 2012 Proj. Summer Fall 2012 Spring 2013 2013 Proj. Fall Proj. Spring 2013 2014

As of the 22nd class day of Fall Semester 2013 the data below shows the true change of enrollment

0.0% -2.0% -4.0% -6.0% -8.0% -10.0%

-2.8%

-5.0% -4.3%

-4.2% -6.6%

-9.0%

-UVU utilizes a Planning, Budgeting, and Assessment (PBA) process which guides UVU in its strategic planning, resource allocations, and assessment-

Operating Expenses Salaries and Wages Employee Benefits Scholarships & Fellowships Depreciation Other Operating Expenses Total Operating Expenses Operating Income/(loss) Nonoperating Revenues/(expenses) State Appropriations Grants and Contracts Other Nonoperating Revenues/(Expenses)

This was not the typical response from other comparable universities some chose the WAIT AND SEE approach which is showing positive returns

Rationalized Budgeting
According to those involved...

What are the burdens & complications of a tuition driven budget?

UVUS PLANNING, BUDGETING & ASSESSMENT CYCLE

Net Nonoperating Revenues/(Expenses) Income (loss) Before Other Revenue Other Revenues Capital Appropriations

State of the University Campus Conversations

Dec Jan Feb Mar

Capital Grants and Gifts Additions to Permanent Endowments

Nov

Legislative Outcomes and Tuition Setting President and Cabinet Decision Making PBA Outcomes with President Holland

Total Other Revenue Increase in Net Assets Net Assets - Beginning of Year Net Assets - End of Year

Division/Departmental Conversations and Divisional Prioritization

Oct

PBA

Apr

Sept Aug Jun

May

22%

Expenses by Natural Classification

Jul

Trustees Approve Operating Budget

71%

3%

Institutional & Divisional Planning and Assessment

41%

Other Operating Expenses 21% Employee Benefits 15% 15% Depreciation 6% Scholarships & Fellowships 17% 17% Salaries & Wages 41%

3% 1%

21% 6%

Budgeting is ESSENTIALLY a decision-making process. A nancial plan, with constrained resources, that: -Reects priorities -Fiscally responsible -Flexible to respond to unanticpated circumstances -Applies effect of decisions made through the planning process

Where Do We Go From Here?

-Inclusivity and Diversity of ALL stakeholders must truly be representative on a continual basis. -There must be a way to validate the effectiveness of continual programs allowing for the sustainablility, modication or termination of such programs. -Transparency and a pattern of forward thinking concerning the student body as opposed to institutional recognition is vital - a successful and world changing graduate class brings this institutional recognigtion better than money.
Operating Revenues
22% 71%

Auxillary Enterprises 22% Other Operating Revenues 3% Sales & Services 3% 3% Grants & Contracts 1% Tuition & Fees 71%

AND FINALLY It is the essential process of saying NO

3% 1%