To:
University Council Steering Committee/Budget & Finance Committee
From: David Cummins, Vice President & Chief Financial Officer
Date:
April 16, 2012
Re:
University Ten Year Expenses
On March 20, 2012, the University Council Steering Committee requested that the University Council
Budget and Finance Committee be provided budget allocations and expenditures for each campus unit
for the past ten (10) years. Since actual expenses provide the best historical picture, that information is
being provided with this document, along with additional reports, narrative and context for the
consideration of the data. Wayne College revenue and expenses for the period are included in Chart #8.
Gathering this volume of data required extensive work and the results are provided in a spirit of
transparency and desire for dialogue that leads to a considered and comprehensive understanding of
the University’s financial strategies and decisions that are focused on achieving student success.
The primary framework for the University over this period of time was the Landscape for Living and the
Landscape for Learning. It was determined that without a physical transformation of the campus, there
may not be sufficient enrollment to assure the ability of the University to enhance its stature in the
state, nation and world.
Chart #1 – General Fund Revenues by Major Category
The key components of General Fund Revenues are Tuition & Fees; Other Student Fees; State
Appropriations; Gifts, Grants, Contracts and Indirect Cost Recovery; Investment Income and Other; and,
Sales & Non-credit Tuition (definitions below).
Tuition and Fee revenue more than doubled from FY 2002 to FY 2011. This is due to tuition increases as
well as enrollment growth of 22% over that period. While the State Appropriations column shows an
increase from FY 2002 ($93.4 million) to $104.7 million in FY 2011, the reality is that the amount of state
appropriation to the University of Akron on a per student basis, adjusted for inflation, has actually
decreased by 24%. This is in keeping with the overall declining trend in state funding for higher
education throughout the nation and especially in Ohio and it poses very difficult challenges for students
as well as for the University. To illustrate that impact: if the per student state appropriation had merely
been held constant at the FY 2002 level, the University would have received over $30 million more just
in FY 2011. Federal stimulus funds that flowed through the state were included in FY 2010 and FY 2011
revenues; those funds ($15 million per year) are no longer available as of this fiscal year (FY 2012).
1
CHART 1
The University of Akron
FY02-FY11 Unrestricted General Fund Revenues by Source
Campus Rev Type ($ in millions)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Akron
1. Tuition & Fees
$ 101.6 $ 115.1 $ 127.0 $ 136.7 $ 144.1 $ 172.0 $ 182.3 $ 191.9 $ 209.7 $ 228.8
2. Other Student Fees
9.8
14.8
17.5
18.3
18.3
18.8
19.6
20.7
22.7
24.3
3. State Appropriations
93.4
90.4
91.4
89.4
87.9
85.2
90.3
98.3
103.8
104.7
4. Gifts, Grants, Contracts, IDC
4.5
4.3
4.3
4.2
4.3
4.1
4.3
4.3
4.7
4.9
5. Inv Income and Other
2.9
2.8
1.9
3.0
5.0
7.5
6.5
6.2
4.2
3.3
6. Sales & Non-credit Tuition
7.0
8.5
9.7
9.6
11.5
11.3
12.8
12.9
14.2
15.4
Akron Total $ 219.2 $ 235.8 $ 251.6 $ 261.2 $ 271.2 $ 298.9 $ 315.8 $ 334.3 $ 359.2 $ 381.2
Definitions:
Tuition & Fees – This category includes instructional and general service fees and non-resident
surcharges for undergraduate, graduate and law students.
Other Student Fees – This category includes other fees assessed to students, primarily “dedicated fees”
which are allocated 100% to the assessing units. Major “dedicated fees” are the facility fee, tech fees,
and course fees.
State Appropriations – Includes the State Share of Instruction (SSI) allocation (determined by formula),
federal stimulus funds in later years, challenge funding (success and access), and miscellaneous other.
Gifts, Grants, Contracts, IDC – In addition to some unrestricted grants, this category recognizes the
Indirect Cost Recovery generated from federal grants, state, local grants. The reimbursement
percentage is negotiated, but it is not uniformly honored across all agencies, resulting in an underrecovery in the negotiated rate. Approximately 50% of the revenue generated is allocated by formula to
the principal investigator (PI), and related dean, and department, as well as to overhead activities
related to research administration, legal, and accounting. The remaining 50% is utilized to help defray
overall University operating expenses.
Investment Income – The University has a comprehensive cash management program. All receipts are
invested when received. The income generated is used to help support the general fund budget. The
investment is relatively short in nature and invested in safe investment vehicles in compliance with
Board of Trustees-approved policy.
Chart 1 includes revenue collected and transferred to support Auxiliary Services as shown in Chart 5.
Chart # 2—Summary of General Fund Expenses – Academics, Academic Support and Continuing
Obligations
The University of Akron truly is one university focused on student success and we bring our respective
talents as faculty members and academic support staff to bear in fulfilling that mission. A lot of
discussion surrounds use of such terms as “academic” and “academic support” in the budget context. To
help advance the discussion, it is important to have a clear understanding of terminology and how the
financial details associated with those terms are used in the budget context. Chart #2 provides a
snapshot overview of ten years of expenses for the University, broken out by Academic (Colleges),
2
Academic Support (President, Provost and Vice Presidents) and Continuing Obligations (see definitions
that follow).
CHART 2
The University of Akron
FY02-FY11 Unrestricted General Fund Expenses by Location
($ in millions)
Location
ARTS & SCIENCES
BUSINESS ADMN
CPA
EDUCATION
ENGINEERING
FINE&APPL1
HONORS2
HSHS
LAW
LIBRARY
NURSING
SUMMIT
POLYMER
UNIVERSITY COLLEGE
1. ACADEMIC Total
2002
$ 29.7
11.1
8.9
8.9
14.8
6.0
6.7
5.0
8.0
7.2
3.4
$ 109.9
2003
$ 31.1
11.1
9.6
9.3
15.4
6.6
6.9
5.3
8.4
7.6
3.8
$ 115.1
2004
$ 30.3
10.2
9.3
9.1
15.1
6.7
6.8
5.5
8.6
7.6
3.9
$ 113.1
2005
$ 30.5
10.3
9.7
9.9
15.5
0.5
6.7
7.2
5.6
10.4
7.2
2.6
$ 116.2
2006
$ 32.2
10.7
9.8
10.3
16.1
0.6
7.2
7.4
6.3
12.0
7.5
2.7
$ 122.9
2007
$ 33.4
10.4
10.0
9.9
16.7
0.6
7.9
7.7
6.4
12.4
7.5
2.9
$ 125.8
2008
$ 36.0
10.9
11.0
11.7
17.6
0.7
8.7
8.5
7.1
13.3
8.0
3.4
$ 137.0
2009
$ 37.8
11.3
12.3
13.3
18.7
0.8
9.4
8.3
7.5
14.2
8.8
3.7
$ 146.1
2010
$ 37.9
11.6
13.4
12.9
14.4
0.0
0.8
5.8
9.7
8.4
7.6
15.1
9.2
3.8
$ 150.7
2011
$ 37.0
11.8
14.1
13.8
16.0
0.8
6.0
10.1
8.8
7.8
16.1
11.0
3.9
$ 157.3
$
1.5
4.3
9.9
19.9
12.3
15.2
1.2
4.3
24.4
$ 93.1
$
1.7
4.3
10.1
22.3
8.5
15.2
1.3
3.9
23.7
$ 91.0
$
2.0
4.0
9.7
20.3
10.3
16.1
1.2
4.2
24.6
$ 92.5
$
2.7
3.5
10.4
20.1
10.5
16.8
1.3
4.8
25.2
$ 95.2
$
2.3
3.4
10.4
21.4
10.8
17.7
1.3
4.9
26.4
$ 98.5
$
3.8
4.1
11.4
22.1
17.2
19.2
1.3
4.3
27.9
$ 111.2
$
4.1
5.4
11.8
23.2
18.1
20.3
1.5
5.1
29.6
$ 119.1
$
3.2
6.9
11.6
20.2
17.6
20.2
1.7
4.7
30.3
$ 116.5
$
$ 208.2
$ 204.0
$ 208.7
$ 218.2
$ 224.4
$ 248.3
$ 265.2
$ 267.2
$ 275.6
$ 22.0
$ 26.6
$ 46.7
$ 52.3
$ 52.2
$ 72.8
$ 66.6
$ 68.9
$ 90.8
$ 104.2
$ 219.3
$ 234.9
$ 250.8
$ 260.9
$ 270.4
$ 297.2
$ 314.8
$ 334.1
$ 358.0
$ 379.8
PRESIDENT3
$ 1.8
OAA
4.8
4
VP STUDENT
9.3
VP INFO TECH/CIO
19.0
VP FIN & ADMIN/CFO5
10.8
VP CP PLAN/FAC MGT
14.7
VP GENERAL COUNSEL
1.2
VP PUB AFF/DEV
4.0
VP RES/DEAN GRAD SCH 6
21.9
2. ACAD SUPPT Total $ 87.5
Subtotal $ 197.4
3. CONOB Total
Grand Total
3.2
7.3
12.0
19.3
18.9
20.4
1.6
4.7
31.0
$ 118.4
(See numbered footnotes on Page 4.)
Definitions:
Academic (Colleges) – General Fund expenses for the colleges and the library.
Academic Support – General Fund expenses for the offices of the President, Provost and the Vice
Presidents. This includes the office of the Vice President of Research/Dean of the Graduate School and
3
the significant academically-oriented expenses associated with graduate assistant stipends and fee
remissions.
Continuing Obligations (CONOB) – University-wide costs that can’t easily be allocated to any particular
unit. These include institutional provided student scholarships/tuition remissions, utility costs, legal fees
and – as used in budget discussions – transfers.
Some observations:




Academic Colleges’ annual expenses increased by $47.4 million (43%) during the ten-year
period.
1. Starting in FY 2010, Fine and Applied Arts was dissolved and split into College of Creative
and Professional Arts (CPA) and Health Sciences and Human Services (HSHS)
2. Honors College was established in FY 2005
Academic Support annual expenses increased by $30.9 million (35%) during the ten-year period.
3. A significant portion of the FY 2006 increase in the office of the President was in support
of one-time marketing initiatives and/or special events. FY 2008’s increase resulted as
the marketing and communications department was shifted from the Vice President for
Public Affairs and Development.
4. Student Services ($12 million in FY 2011) are 10% of the Academic Support total.
5. The VP Finance growth from FY 2007 to FY 2008 is primarily in the sales operations (shift
of the Computer Solutions sales operation, $4.1 million from VP Information
Technology; opening of Quaker Square Inn, $0.8 million)
6. VP Research and Dean of Grad School expenses ($31 million in FY 2011 -- 26% of total
Academic Support) are primarily academic as they represent graduate assistant stipends
and fee remissions.
Excluding Continuing Obligations, Academic College expenses increased from 56% of expenses
in FY 2002 to 57% in FY 2011 while Academic Support expenses decreased from 44% of
expenses in FY 2002 to 43% in FY 2011.
Continuing Obligations (CONOB) is the area of the General Fund that grew the most. Most of
that growth was driven by increases in departmental Carry-over balances and institutional
scholarships and aid. Charts #3 and #4 delineate the major items that drove that growth.
4
Chart # 3 – Continuing Obligation Expenses
University-wide costs that can’t easily be allocated to any particular unit are recorded in Continuing
Obligations (CONOB). Growth in CONOB is largely due to auxiliary support and departmental Carryovers (described in Chart #4). FY 2007 growth is primarily an accounting change for the General Fee
support of Athletics. The largest portion of expenses is represented by Net Transfers from the General
Fund; those are further detailed in Chart 4. Other significant expenses in CONOB are Institutional
Scholarships – which increased 460% from FY 2002 to FY 2011 – and utilities, which increased 48% from
FY 2002 to FY 2011.
CHART 3
The University of Akron
FY02-FY11 Continuing Obligation (CONOB) Expenses by Type
($ in millions)
CONOB by Type ($ millions)
1. Schol & Central Remissions
2. General Institutional
3. Utilities
4. Net Transfers
Grand Total
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$3.7
4.6
6.2
7.5
$22.0
$4.3
8.3
6.9
7.3
$26.6
$6.4
9.4
6.4
24.5
$46.7
$10.1
6.7
6.5
28.9
$52.3
$11.4
9.0
7.4
24.5
$52.2
$12.7
7.7
9.0
43.4
$72.8
$13.8
7.9
9.6
35.2
$66.6
$18.1
8.7
9.9
32.3
$68.9
$19.1
6.4
8.4
56.9
$90.8
$20.7
6.4
9.2
67.9
$104.2
Definitions:
Scholarships and Central Remissions – This expense category includes institutionally-funded scholarships
that are awarded based on merit and/or need and miscellaneous fee remissions. (GA fee remissions are
expensed within the VP Research and Dean of Graduate School unit.)
General Institutional – Major expenses include legal fees (including patent maintenance), external
auditor fees, real estate tax assessments, bad debt write-off, advertising, etc.
Utilities – The expense number indicated is the net after charging the auxiliary units for usage.
5
Chart #4 – General Fund Net Transfers
CHART 4
The University of Akron
FY02-FY11 General Fund Transfers In and Out
($ in millions)
Transfers by Type
($millions)
1. Tr-in
2. Dept CO
1
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$ (15.4) $ (15.7) $ (15.9) $ (31.8) $ (40.6) $ (45.2) $ (48.3) $ (53.8) $ (46.8) $ (63.1)
13.5
10.9
19.9
30.9
36.1
46.3
49.8
46.1
63.0
68.0
3. Aux Support
4. Debt Service
5. Other
6. To Reserves
7. Plant Funds
Total Net Transfers $
3.8
4.4
0.2
1.0
7.5 $
6.0
10.0
11.2
11.5
25.9
27.8
29.4
30.7
35.3
4.7
7.1
10.7
11.1
9.4
5.5
8.4
6.7
7.3
0.3
(0.3)
0.1
0.1
0.7
(0.7)
1.0
1.3
1.0
2.1
4.1
4.8
0.5
0.0
0.0
0.0
18.0
1.0
1.7
3.8
1.4
5.7
1.1
1.2
2.0
1.4
7.3 $ 24.5 $ 28.9 $ 24.5 $ 43.4 $ 35.2 $ 32.3 $ 56.9 $ 67.9
(See footnote 1 below in bullet on Page 7.)
Definitions:
Transfer-In – resources moved into the General Fund from prior periods, and other funds.
Department Carry-overs – represents year end balances that are transferred into the subsequent fiscal
year. These balances are currently over-stated because they are not adjusted for the Early Retirement
Incentive Program payments that will be deducted over the next five years.
Auxiliary Support – movement of resources out of the General Fund and into specific auxiliaries in
support of related operations.
Debt Service – mandatory payments to retire the bonded obligations; funds cannot be used for any
other purpose.
Other – miscellaneous payments
To Reserves – movement of resources from General Fund to identified funds for specific purposes.
Plant Funds – movement of resources from General Fund to Plant Fund in support of identified capital
projects.
6
Some observations:



The significant majority of transfers-in are to fund carryovers. At each year-end the available
carry-over balances are reserved. In the subsequent fiscal year the carry-over balances are
distributed to the appropriate units as the Departmental Carry-over.
Significant fee revenues are collected within the General Fund to support Auxiliaries. (Chart #5.)
The General Services fee supports Athletics; the facility fee supports the Student Union and
Student Recreation and Wellness Center.
1. The Facilities Fee that supports the Student Union and Recreation and Wellness Center
was phased in from FY 2001 to 2004. FY 2007 was the first year that the general service
fees passed through the General Fund to the Athletics auxiliary. Prior to FY 2007, the
fees were booked directly to Athletics.
The FY 2011 transfers to reserves included the initial funding of the Budget Stabilization Fund, as
well as reserves for the Facilities Fee and self-funded group insurance.
Chart #5 – General Fund Support of Auxiliary Operations
CHART 5
The University of Akron
FY02-FY11 Unrestricted General Fund Support of Auxiliary Operations
($ in millions)
Auxiliary
2002
Athletic Facilities
$ 0.2
Athletics
EJ Thomas Hall
0.7
Parking
Quaker Square Inn
Residence Life & Housing
0.5
Student Rec. & Wellness Svcs
0.8
Student Union
1.6
Total Tr to Auxiliaries $ 3.8
2003
0.3
0.7
1.5
3.5
$ 6.0
2004
0.4
0.7
0.7
4.0
4.2
$ 10.0
2005
0.4
0.9
0.7
0.6
4.2
4.4
$ 11.2
2006
0.4
1.2
0.7
0.6
4.3
4.4
$ 11.5
2007
0.6
14.4
1.8
0.0
0.6
4.1
4.4
$ 25.9
Less:
General Service Fee (athletics) $
Facility Fee (SRWC & St Union)
$
$
(2.2)
(2.2) $
$
(4.6)
(4.6) $
$
(7.2)
(7.2) $
$
(8.0)
(8.0) $
$ (12.9) $ (13.6) $ (14.3) $ (15.6) $ (17.1)
(7.9)
(8.2)
(8.6)
(9.0)
(10.1)
(10.6)
(7.9) $ (21.2) $ (22.2) $ (23.3) $ (25.8) $ (27.7)
GF Support of Auxiliaries
1.6
1.4
2.8
3.2
3.6
$
$
$
4.8
$
5.6
$
6.1
$
2011
3.8
19.3
2.1
0.6
0.6
4.4
4.5
$ 35.3
$
$
$
2010
2.1
18.0
1.7
0.0
0.3
4.1
4.5
$ 30.7
$
$
$
2009
0.5
16.8
1.7
1.2
0.6
4.1
4.5
$ 29.4
$
$
$
2008
0.9
15.1
1.5
0.9
0.3
0.6
4.1
4.5
$ 27.8
$
$
5.0
$
$
7.6
7
Chart #6 – Investment in Campus
A significant portion of the annual debt service included in General Fund Net Transfers results directly
from the strategic course established by the Board of Trustees more than 12 years ago to address the
difficulties resulting from declining enrollments.
CHART 6
The University of Akron
FY02-FY11 Debt Service
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Academic
$ 1,096,759 $ 1,212,386 $ 1,331,341 $ 1,280,638 $ 1,258,372 $ 1,623,401 $ 1,094,181 $ 1,318,815 $ 1,224,348 $ 1,448,939
Academic Support
1,813,148
2,004,300
2,411,028
2,319,206
2,112,719
2,725,578
3,386,779
4,082,081
3,789,681
4,484,847
Auxiliary
7,503,006
8,294,017
9,505,633
9,143,618
10,371,583
13,380,178
14,995,821
18,074,448
16,779,773
19,857,795
Athletics
973,647
936,567
853,181
1,100,672
4,284,086
5,163,605
4,793,735
5,673,081
Total
$ 10,412,913 $ 11,510,703 $ 14,221,649 $ 13,680,028 $ 14,595,855 $ 18,829,829 $ 23,760,867 $ 28,638,949 $ 26,587,537 $ 31,464,662
•In 1998 – in the face of a troubling enrollment decline and with the benefit of a Master Campus Guide
Plan to provide direction – the Board of Trustees determined that the University needed to dramatically
enhance its physical facilities (no new building had been constructed in the prior ten years). The trustees
believed that if the University was successful in achieving those goals, the enrollment decline could be
reversed, thus generating additional revenue for the University to fulfill its mission.
•The resulting “New Landscape for Learning” was the implementation of that strategic direction and the
initial $200 million campaign focused on adding facilities and campus green space to serve student
needs. That phase was completed ahead of schedule in just four years (1999 – 2003) instead of the
planned five years.
•Subsequently, additional physical facility needs were identified -- including the goal of enhancing oncampus living as well as improving conditions near campus – all with the objective of making the campus
more attractive to prospective students and their families to increase enrollment. Other projects
included the College of Arts & Sciences Building, the Polymer Engineering Academic Center, a multi-use
sports and academic facility, including InfoCision Stadium, and the Medina County University Center,
among others, as well as the establishment of the University Park Alliance.
•In total, approximately $630 million was invested in 21 new buildings, 18 major additions, acquisitions
and renovations, and 34 acres of new green space. Although annual debt service has grown significantly
over the past 10 years, most of the University’s debt expense – roughly 80% -- is related to Auxiliaries.
The Auxiliaries debt supports investments in residence halls, Student Union, recreation center, parking
facilities and athletic facilities. Of the total, more than $218 million in investments in academic and
support spaces were made with State of Ohio capital and local plant funds rather than debt.
•The beneficial enrollment impact of those investments began to be fully realized in 2006 and 2007, as
more and more students selected the University of Akron. Fall 2011 enrollment reached 29,699, an
increase of 29.8% since 2000 (22,878 students).
Without making and maintaining that strategic investment, it is clear that the University would have
continued its downward trajectory.
8
Even though the University began seeing increased revenues from the increasing enrollment sparked by
the campus investment, the State of Ohio began systematically cutting the per student financial support
it had been providing to the University. As previously described, the impact to the University of Akron on
per student, inflation adjusted basis is a drop of 24%.
Chart #7 – Unrestricted Auxiliary Expenses
Most auxiliaries are intended to be self-supporting. This chart reflects total expenses, most of which are
supported by revenues generated by each auxiliary function. However, funds are transferred from the
General Fund to support certain auxiliaries; those items are included in Chart #4, the Auxiliary Support
line.
CHART 7
The University of Akron
FY02-FY11 Auxiliary Expenses
AFAC - Athletic Facilities
ATHL - Athletics
DIN - Dining Services
PAH - EJ Thomas Hall
PRKG - Parking Services
REC - Student Rec & Wellness Ctr
RES - Residence Life & Housing
STCTR - Student Union
TELE - Telecommunications
Grand Total
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
354,053 $ 537,697 $ 614,645 $ 955,259 $ 1,059,273 $ 1,328,178 $ 1,738,287 $ 1,360,460 $ 3,815,586 $ 5,355,955
9,315,524
10,474,807
11,980,211
13,096,255
14,539,195
16,070,703
17,352,153
18,767,807
22,994,889
23,922,940
7,278,029
7,532,949
8,088,805
9,050,355
9,265,214
12,320,856
13,733,696
14,127,173
15,173,295
16,723,688
4,529,272
4,665,143
4,782,088
4,656,850
3,935,033
3,718,782
3,018,312
3,222,522
2,980,589
3,035,871
4,099,375
4,299,494
5,598,291
5,018,395
5,089,718
5,475,152
6,356,597
6,922,777
7,151,118
10,823,945
1,871,752
3,640,463
3,071,645
2,936,881
2,769,499
3,022,367
3,096,441
4,869,222
6,528,334
7,119,194
8,603,759
11,693,202
12,077,339
11,786,078
15,780,917
17,588,949
16,632,986
20,307,781
1,614,048
2,021,154
2,220,332
2,854,687
2,985,605
3,358,142
3,176,010
3,137,717
3,099,980
6,322,679
2,840,894
3,263,089
3,312,197
2,696,938
3,336,993
2,805,822
3,265,951
4,374,326
4,699,908
3,690,888
$ 36,559,527 $ 39,913,526 $ 47,072,082 $ 53,662,403 $ 55,360,016 $ 59,800,594 $ 67,191,421 $ 72,524,098 $ 79,644,792 $ 95,052,968
$
Some observations:


The net direct budget impact of Athletics is substantially less than the expenses shown in this
chart. For example, in FY 2011, Athletics generated $4.6 million in revenue; $6.5 million of the
expenses listed represent scholarships for student athletes and $1.1 million was for on-campus
spending (physical facilities, dining services, computer solutions, telecom, etc.) Thus the direct
budget impact is $11.7 million rather than the $23.9 million shown above.
Roughly 80% of the University’s debt service is attributed to auxiliary functions – mainly
residence halls, the Student Union and recreation center, and parking – and is backed by
designated fees.
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Chart #8 – Wayne College -- Wayne College revenues and expenses are separate from a budget
standpoint. The requested data for Wayne College is below.
CHART 8
The University of Akron
FY02-FY11 Wayne Campus Revenues and Expenses
($ in millions)
FY02
Revenues
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
$
9.8 $
11.3 $
12.0 $
12.0 $
12.2 $
14.1 $
13.0 $
13.6 $
16.4 $
17.7
Net $
8.9
0.9 $
9.9
1.4 $
10.4
1.6 $
10.9
1.2 $
11.0
1.1 $
11.4
2.7 $
11.9
1.0 $
12.5
1.2 $
13.6
2.8 $
14.5
3.2
Expenses (net of
transfers in/out)
10