FY 2015 Budget Planning
FY-15 Budget Planning
Context
•  BOT: Revenue must exceed expense-cannot balance
budget on “cash”
–  SB 6 Composite Score is falling – State of Ohio’s measure of
financial viability
•  More competitive world: recruiting students,
demographic shifts, global society, costs and
indebtedness, placement, value of the degree
•  Budget planning process
–  Develop
–  Consult
–  Adjust
2 FY 2015 E&G Budget Development
Process
•  Fiscal Analysis to Determine Starting Balance
•  Instructions to Academic and Support Units
–  Share divisional budgets with each VP and Dean in February
–  Fee requests due March
–  Budget submissions review in March/April
•  Adjust allocations if and as appropriate
•  Review Submissions
–  University Council Budget & Finance Committee
–  Council of Deans
–  Vice Presidents
•  Board Action on Tuition and Fees April
–  Briefing on budget development January through May
•  Board Approval June
3 FY 2015 Budget Development Context
FY 14 Revised Budget balanced to 6% enrollment decline; some
reductions one-time, some still being phased in
FY 2015 Starting Assumptions:
•  Assume continued enrollment decline (4%) for FY 15
• 
Reconciliation of SSI increased State Share of Instruction based
on FY 14 actual earnings
• 
Assume 2% tuition increase per State Biennial Budget cap
(subject to BOT decision)
• 
Earmark funds for increased scholarships and/or reduction in
tuition for access programs (Summit College)
• 
Address other priorities such as high-demand academic
programs, interdisciplinary research, salaries, student
recruitment, non-discretionary items
4 FY 2015 Budget Balancing
•  Need to reduce/reallocate roughly $15 million based on
enrollment decline and strategic priorities
–  Review academic administration budgets
–  Approved vacant positions
–  Organizational Analysis
•  Also evaluate revenue opportunities
–  Differential Tuition
–  Chargebacks/Fees for specific services
–  New market initiatives
•  Share divisional budgets with each VP and Dean in
February to develop balanced budgets for their divisions
by April, with consultations in between
5 FY-15 Starting Point
FY-­‐14 $ millions Explana2on Base Adjustments: Tui5on Shor:all Restore 1-­‐5me Reduc5ons Subtotal -­‐  9.0 -­‐ 5.0 -­‐ 14.0 Assume 4% Enrollment Decline for FY 15 Achieving Dis5nc5on, Refinancing, Wayne Addi5onal Assump5ons: Increase Scholarships/Access Other Strategic Adjustments Reconciled SSI distribu5on Subtotal -­‐  2.0 -­‐  4.4 + 1.5 -­‐ 4.9 Strategic Investments, Salary Adjustments, Bad Debt Allowance, Student Recruitment Total -­‐ 18.9 6 Balancing the FY-15 Budget
Approach $ millions Explana2on Star2ng balance -­‐ 18.9 See previous slide Tui5on increase + 4.3 2% per State Tui5on Cap (subject to BOT approval) Reduc5ons/Realloca5ons +14.6 In considera5on of priori5es and strategies Balance 0 7 Creating FY 2015 Unit-level Planning Budgets
FY-­‐15 General FY 15 Base Revised FY 15 Fund Budget pool Alloca2on Academic Share of GF Budget aMer Alloca2on $136.6 $127.5 36.3% Academic Support 67.6 63.4 18.0% GF Supported Auxiliaries 23.4 22.0 6.3% 138.5 138.5 39.4% CONOB Alloca5ons reflect the star5ng point for FY 15 budget development. Dollars (in millions) are the sum of proposed alloca5ons shared with units. 8 Relative Distribution of Academic General Fund
Allocation
Unit FY-­‐15 FY-­‐15 Difference base revised Arts & Sciences 34.7% 35.2% +0.5% CBA 8.6% 8.7% +0.1% CHP 10.5% 10.6% +0.1% Educa5on 6.2% 6.0% -­‐0.2% Engineering 12.5% 12.8% +0.3% Honors 0.5% 0.5% 0.0% Law 7.1% 6.6% -­‐0.5% Polymer 6.5% 6.6% 0.0% Summit 8.8% 8.6% -­‐0.2% Library 4.6% 4.6% 0.0% 9 Relative Distribution of Academic Support General
Fund Allocation
Unit FY-­‐15 base FY-­‐15 revised Difference President 5.7% 5.7% 0.0% OAA 8.5% 8.5% 0.0% Student Affairs 3.0% 2.9% -­‐0.1% Student Success 14.2% 14.2% 0.0% F&A 8.7% 8.6% -­‐0.1% IT 18.4% 18.5% +0.1% CPFM 26.3% 26.3% 0.0% Gen Counsel 2.4% 2.4% 0.0% Gov’t Rela5ons Public Affairs 6.0% 6.0% 0.0% Research Grad 3.3% 3.3% 0.0% TDHR 3.3% 3.5% +0.2% 10 Enrollment = retention + yield of new students
•  Returning students are 80% of equation
•  Applications are up over 40%-too early to
determine “yield”
•  Academic preparedness is also higher than the
recent past
11 In Conclusion…
•  Progress has been made, but budget reductions will
continue to be necessary as long as enrollment is
declining
–  New Reality of State Funding
–  Increasing Concerns about the Cost and Benefits of Higher
Education
–  Demographics of the Traditional College Student Population
•  UA Needs to be Entrepreneurial
–  Increase Revenue per FTE
–  Diversify our Revenue Sources
•  Going Forward
–  Decentralize Budget Control
•  Provide funding to the units and allow them to prioritize and allot
–  Stabilize Enrollment – Stabilize Funding
•  Provide flexibility to the units to address changing needs
12 FY-15 Budget Planning
Context
•  BOT: Revenue must exceed expense-cannot balance
budget on “cash”
–  SB 6 Composite Score is falling – State of Ohio’s measure of
financial viability
•  More competitive world: recruiting students,
demographic shifts, global society, costs and
indebtedness, placement, value of the degree
•  Budget planning process
–  Develop
–  Consult
–  Adjust
13 Questions?
14 FY 2014 Total Academic Unit Reductions
•  College Reductions of $12.2 million, or 8.8%
–  $9.3 million reduction in compensation
–  $2.9 million reduction in operating
•  Roughly 1/3 of second round reductions are one-time
savings resulting from funded vacancies
•  Minimal need for carry-over balances or reserves to
achieve budget reductions
•  Need to evaluate approved open positions as well as
visiting/temporary positions to identify ongoing
adjustments beyond FY 14
15 FY 2014 Total Academic Support Reductions
•  Support Unit Reductions of $12.8 million, or 14.1%
–  $7.7 million reduction in compensation
–  $5.1 million reduction in operating
•  Close to target, mostly ongoing reductions
•  Over 1/3 of total reduction will be supported by carryover balances until reductions can be fully implemented
16 FY 2014 Total Adjustments
•  Revenue Enhancements: $ 4.5 million
•  Unit Reductions:
$25.0 million
•  Central Reductions:
$12.3 million
•  To date, no draw on central reserves planned
–  Units will need to access carry-over balances because savings will
not be realized immediately
–  May be some exceptions where carry-over balances are inadequate
17