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The Ohio State University. Budgeting Basics . Presented by: John Kuhar, Financial Planning & Analysis Henry Zheng, Office of Academic Affairs. Table of Contents. Snapshot of The Ohio State University Enrollment Academic Structure Budget Source of Funds by College FY11-FY12

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slide1

The Ohio State University

BudgetingBasics

Presented by: John Kuhar, Financial Planning & Analysis

Henry Zheng, Office of Academic Affairs

slide2

Table of Contents

  • Snapshot of The Ohio State University
      • Enrollment
      • Academic Structure
      • Budget
      • Source of Funds by College FY11-FY12
  • Guiding Principles of the Budgeting Process
      • Principles
      • Competing Goals
  • The Budgeting Process
      • Key elements
      • Rebasing
      • Centrally Distributed Budget Allocations
      • Allocation of Annual Changes in Revenue
      • Allocation of Annual Changes in Expenses
      • Central Tax
      • Illustration – Net Revenue per Student

5. Monitoring and Oversight

      • Quality of Instruction
      • Role of Senate Fiscal
  • Glossary
slide3

Snapshot of The Ohio State University

Enrollment

(Autumn 2012 Headcount – Columbus)

  • Undergraduate 43,058
  • Graduate 10,034
  • Professional 3,295
  • Total 56,387
slide4

Snapshot of The Ohio State University

Academic Structure

(Autumn 2012)

  • Number of Colleges 14
  • Undergraduate Majors 175
  • Master’s Degree Programs 115
  • Doctoral Degree Programs 90
  • Professional Degree Programs 7
  • Courses 12,000
slide5

Snapshot of The Ohio State University Budget

Budgeted Resources – All Funds

Columbus Campus – FY 2013 (In Thousands)

Total Resources Including Health System

Total Resources Excluding Health System

slide6

Snapshot of The Ohio State University Budget

Instructional Fees 828,001

State Support 335,085

Other 186,915

TOTAL1,350,001

Budgeted Resources – General Funds

COLUMBUS CAMPUS – FY 2013 (IN THOUSANDS)

6

slide7

Snapshot of The Ohio State University Budget

Comparison of State Support* to Tuition** Income

Columbus Campus

* As used here, “State Support” includes State Share of Instruction and (through FY 2009) Success Challenge and Innovation Incentive funding.

** “Tuition Income” includes instructional, general, student activity, and recreation fees, non-resident surcharge, international student surcharge (starting FY 13) and student union facility fee

slide8

Snapshot of The Ohio State University

Source of Funds by College FY12

* The source of funding varies from one academic unit to another

slide9

Budgeting Process

Guiding Principles

  • General Fund allocation informed by Academic Plan
  • General Fund revenues are allocated to colleges based on hours taught and cost of instruction
  • A portion of General Fund revenues dedicated to the support of university-wide services
  • At colleges level, deans allocate resources based on college strategic priorities
  • Maintenance of a certain level of budget stability and predictability
  • Appropriate oversight and accountability
  • Continuous review and improvement
slide10

Budgeting Process

Competing Goals

  • Simple vs. Equitable
  • Stability and predictability vs. revenue following the generating units
slide11

Budgeting Process

Key Elements

  • Budget rebasing of colleges over time
  • Distribute annual change in revenue based on credit hours, market share and cost of instruction
  • Distribute annual changes in expenses
  • Central tax
  • Monitoring for unintended consequences
slide12

Budgeting Process

Rebasing

  • Revenues and expenses for each college were measured
  • Significant differences between revenues and expenses were identified
  • Colleges were placed into three groups in relationship to the goals of the Academic Plan
  • Goals were established to reallocate over $15.5 million among the colleges through the Provost’s Strategic Investment funds and reductions in some college base budgets
  • Base budgets continue to be adjusted annually based on each college’s unique situation and their participation in strategic objectives of the institution
slide14

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN REVENUE

  • Colleges receive all revenue generated for new credit hours from both instructional fees and state share of instruction (sometimes called state subsidy)
  • Colleges are also impacted by changes in revenue associated with existing credit hours of instruction, from both changes in instructional fees and the change in state subsidy (which could go up or down)

Allocation of Instructional Fees & State Share of Instruction

Does not apply to differential fees, program fees, technology fees, or general fees

slide15

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN REVENUE

INSTRUCTIONAL FEES

  • Fee rate per credit hour is established for each fee category
  • Colleges receive the full fee rate per credit hour for each additional credit hour they teach
  • Colleges also receive the inflationary growth in the fee per credit hour; this growth is distributed based on the total credit hours taught
  • The annual change in the instructional fee is shared based on the average of two prior years of credit hours
slide16

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN REVENUE

STATE SHARE OF INSTRUCTION

  • State Share of Instruction rate per credit hour is established for each SSI category
  • Colleges receive the full SSI rate per credit hour for each additional credit hour they teach
  • College also receives the change in the SSI rate per credit hour, whether it is positive or negative; this change is distributed based on the total credit hours taught
  • The annual change in SSI dollars is shared based on the average of two prior years of credit hours
slide17

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN REVENUE

INDIRECT COSTS

  • 100% of the annual changes in indirect cost recovery revenues are allocated directly to the generating college or vice-presidential area except for that portion associated with University Library costs. Annual changes in the portion associated with the Libraries will be allocated to the Libraries
  • Beginning in FY2013, rates have been locked in for the next four years: 2013=52.5%, 2014=53.5% and 2015/2016 are both 54.0%
slide19

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN EXPENSES

The budget model includes five categories of expenses, each of which is allocated to the colleges based on unique measures:

  • Student Services(applies to colleges & any support units generating credit hours)
  • Physical Plant(applies to colleges & support units)
  • Research Administration(applies to colleges & any support units having research activities)
  • Central Tax(applies to colleges and any support units generating credit hours)
  • Assessment to Support Development(applies to colleges & support units, auxiliaries and regional campuses)
slide20

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN EXPENSES

STUDENT SERVICES ASSESSMENT

There are Three Separate Student Service Cost Pools:

  • Cost Pool 1 (Undergraduate): 89% of this cost pool is Undergraduate Financial Aid. This is the largest pool. Also includes operating budgets for Financial Aid, Undergraduate Admissions and First Year Experience. Expense is allocated by average undergraduate credit hours.
  • Cost Pool 2 (Graduate): 82% of this cost pool is Non-Resident Fee Authorizations. Also includes operating budget of the Graduate School and Graduate and Professional Admissions. Expense is allocated by average graduate credit hours.
  • Cost Pool 3 (All Students): this is the smallest cost pool and includes portions of operating budgets for Registrars Office, Enrollment Services, Student Life and for new Library acquisitions. Expense is allocated by an average of ALL credit hours.
slide21

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN EXPENSES

PLANT OPERATION AND MAINTENANCE

  • Annual changes in expenses are allocated to the units based on the assigned square footage recorded in the university’s space inventory
  • The square footage is multiplied by a flat rate per square foot for four categories of costs: utilities, custodial service, maintenance, and renewal & replacement, which cover expenses related to heat, power, water/sewer, utilities debt service, FOD operating costs, campus repair and renovation and deferred maintenance
slide22

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN EXPENSES

RESEARCH ASSESSMENT

  • The cost allocation covers the budgets of units that support sponsored research (e.g. OSP formerly OSURF), guidelines and research service improvements and mandated expenditures
  • Individual colleges are allocated a research cost proportional to their Modified Total Direct Cost expenditures
  • The Central Tax funds the administrative components of the Office of Research that have university-wide responsibilities (e.g. Office of Responsible Research Practices)

DEVELOPMENT ASSESSMENT

  • Expenses are allocated among the units proportionally, taking in to account the development expenses on behalf of each unit and designated funds raised for each unit
slide23

Budgeting Process

ALLOCATION OF ANNUAL CHANGES IN EXPENSES

CENTRAL TAX

TAX RATE = 24%

  • Supports units such as the President’s Office, OAA, Business & Finance, Public Safety, OCIO, Gov’t Affairs, Legal Affairs are funded by a 19% Central Tax
  • An additional 5% tax funds Strategic Investments
  • These taxes apply to:
    • Instructional Fees
    • State Share of Instruction
  • These taxes do not apply to:
    • Indirect Cost Recoveries, Differential, Program and Technology Fees
slide24

Budgeting Process

CENTRALLY DISTRIBUTED BUDGET ALLOCATIONS

(Thousands)

*Includes Central Distributions from OAA and Research

slide25

Monitoring and Oversight

QUALITY OF INSTRUCTION

Council of Academic Affairs ensures continued quality of instruction through:

  • A comprehensive review of existing courses before a new course is approved
  • Monitoring course and program quality through a number of indicators, such as class size, level of instructor, and course GPA
  • Monitoring college honors course offerings, enrollment, and quality of instruction
slide26

Monitoring and Oversight

ROLE OF SENATE FISCAL

Senate Fiscal Committee:

  • Provides the Provost and CFO with data and tools to assist in the Provost’s review of the College base budgets
  • Recommends to the Provost modified allocation models when unintended consequences or changes in the financial environment suggest revisions are appropriate. Allocation methodologies implemented in FY08 as a result of these review include:
    • Combining the undergraduate subsidy and fee revenue and allocating 60% of the revenue on a credit hour basis and 40% on a basis weighted to reflect the cost of delivering instruction
  • Additional recommendations made to the Provost and implemented
    • Fee reconciliation distribution to the colleges
    • New taxonomy for the distribution of weighted share of SSI
    • Support Units participated with colleges in the State subsidy reduction
slide29

Glossary

  • Base Budget – Continuing funds also referred to as annual rate and PBA
  • Fiscal Year (FY) – University accounting/budgeting system works on a standard fiscal year as opposed to calendar or academic years. The fiscal year begins July 1st and ends June 31st Ex: FY13 = July 1, 2012 – June 30, 2013
  • General Funds Spending Authority (GFSA) – General funds cash available for your unit to spend. Includes cash carry forward
  • Indirect Cost Recovery (IDC) – Revenues received from sponsored projects to offset costs already absorbed by the University
slide30

Glossary

  • State Share of Instruction – Sometimes referred to as instructional subsidy
  • Net Marginal Resources (NMR) – Increase in your budget from one year to the next
  • Plant Operations and Maintenance Funds (POM) – Includes: Utilities, custodial services, maintenance, and renewal and replacement
  • Present Budget Allocation (PBA) – Present budget that generates your cash/GFSA. Also referred to as annual rate
slide31

Glossary

  • Financial Planning and Analysis (FP&A) – Responsible for University Budgeting
  • Annual Rate – Present budget that generates cash/GFSA. Also referred to as PBA
slide32

Questions & Answers

ANY QUESTIONS?

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