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School Financial Management Daniel Flaherty Director Financial Services. What Would You Like To Know?. Topics. How the University Earns Revenue How that Revenue is Shared Managing a School Budget Day to Day Financial Management Issues. 1. How the University Earns Revenue.

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topics
Topics
  • How the University Earns Revenue
  • How that Revenue is Shared
  • Managing a School Budget
  • Day to Day Financial Management Issues
university budget defined
University Budget - Defined
  • Recurrent Budget
    • Student revenue – Commonwealth & Students
    • DEEWR/DIISR Research revenue
    • Investments
    • Other
  • Total Budget
    • Research grants
    • Consulting/Commercial
    • Other Grants
    • Other
1 how the university earns revenue1
1. How the University Earns Revenue
  • DEEWR/DIISR Funding
    • Commonwealth Grants Scheme
    • Research Block Grants
    • Indexation
    • Student Fees
commonwealth grants scheme cgs
Commonwealth Grants Scheme (CGS)
  • 8 clusters with fixed $$ rates for each cluster
  • Varying Commonwealth funding for each cluster
  • Funding profile to be agreed with DEEWR
  • Full Funding for up to 110% of agreed profile
  • Can over enrol past 110% of agreed profile
    • but only receive HECS payments
  • Lose funding if below profile
    • retain CGS for load between 99% and 100%
    • cap at 95%
diisr funding
DIISR Funding

Research Block Grant Funding

  • Research Training Scheme
  • Joint Research Engagement
  • Research Infrastructure Block Grant
  • Sustainable Research Excellence

All subject to rules in how the funds can be used.

diisr funding1
DIISR Funding

Research Block Funding

  • All performance based averaged over last two years
  • Fixed funding pool
  • Various indicators with differing weights
diisr funding2
DIISR Funding
  • Sustainable Research Excellence
  • 20% - Category 1 Research Income
  • If ERA compliant and Transparent Costing undertaken
    • 13% - Category 1 Research Income up to $2.5m
    • 67% - Category 1 Research Income >$2.5m, moderated by staff FTE, weighted publications & SRE survey outcomes
deewr diisr funding
DEEWR/DIISR Funding
  • Indexation
    • applies to all DEEWR/DIISR funding
    • assumes that costs are split:

75% salaries 25% non salaries

    • non salary indexed by CPI
    • salary indexed by
      • 2011 Safety Net Adjustment (SNA) + teaching by PSTS index
      • 2012 PSTS wage index
student fees
Student Fees
  • ISP Onshore
  • Offshore Students
  • Fee Paying Postgraduate Student Fees

Total approx. 15% of University revenue

how funds are earned
How Funds Are Earned

Any questions???

how the revenue is shared
How the Revenue is Shared

Daniel (with Council OK)

Major Cost Centre Head

why the revenue is shared
Why the Revenue is Shared
  • Teaching & Research
  • Buildings development
  • Building operating costs – power, water etc
  • Library
  • ICT
  • Student Services
  • Academic Support
  • Marketing
  • Research Administration
  • General Admin eg payroll
allocation models
Allocation Models

General

Allocation shares have been developed over time and reflect:

  • A Performance basis – student load and research
  • Cost control
  • Historical influences
running a school budget
Running a School Budget

The University Dilemma

  • The revenue earned per student is fixed by the Commonwealth
  • Commonwealth indexation has averaged around 2% to 2010. From 2012 indexation will increase to 3% to 3.3% pa.
  • Costs increase by up to 5% pa
  • So either student load has to grow / prices for student fees increased / costs are reduced
running a school budget1
Running a School Budget

Cost Increases

  • Salaries increase by around 4% pa due to Enterprise Bargaining pay rises
  • Salaries further increase by around 1% pa due to promotions, increments, reclassifications
  • Non salary expenses expected to grow 2% - 3% pa
  • Overall cost growth in a school is around 4.75% pa.
  • Therefore revenue needs to grow by at least 4.75% plus the cost of servicing increased load, just to “stand still”
running a school budget2
Running a School Budget

Revenue Generation Options

  • Indexation - around 3% to 3.3% pa.
  • Increased Commonwealth Student load
  • Increased International Student load/price
  • Improved Research performance
running a school budget3
Running a School Budget

Cost Management Options - Not many!

  • Staff reductions
    • Typically 80% to 90% of costs
  • Non salary cost reductions

Overall can help for a time but you can’t reduce costs every year

So need to grow revenue and manage costs

running a school budget4
Running a School Budget

Traditional University Cost Saving Options

  • Reduction in topics
  • Increased student staff ratios
  • Workforce Planning
    • Transition to retirement options
    • Replacement of retiring staff with lower level staff
  • Increased use of casual staff
  • Review of non salary expenditure
running a school budget5
Running a School Budget

Practical Tools

  • Development of 5 year financial projections
  • Talent 2 HR system - for salary information
    • Salary projections by person by year
  • Finance system for tracking financial transactions and budget position
    • Monthly emailed project manager reports
  • Regular Review and Forecasting
operational issues
Operational Issues

University Policies – you are the front line

Authorisations

Insurance

Independent contractors

Purchasing and Credit cards

Travel & Taxes

Leave management

operational matters
Operational Matters

Authorisations

  • To approve expenditure
    • Comply with Uni policies & grant conditions
    • Must be for bona fide University purposes
    • Can’t approve own expenses
    • BasWare (electronic invoices system) will ensure delegation limits are adhered to
operational matters1
Operational Matters

Insurance

  • Disclosure
  • Travel
  • Deductibles/excess - $5k
  • Risks
    • Remote sites + valuable equipment
    • Theft
    • Contracts - indemnities
operational matters2
Operational Matters

Independent Contractor

  • Government laws extend the definition of employee to capture contracts with individuals where the labour component is >= 50%
  • If a contract with an individual is planned – need to comply with the University policy http://www.flinders.edu.au/ppmanual/staff/IndependentContractors.html
  • Must have a contract in place
  • Risk for University/school – liability for payroll tax, super guarantee charge, workers compensation if we get this wrong
operational matters3
Operational Matters

Purchasing

  • Purchasing policy
    • Value for money and fair trading principles
    • Tender required > $100k
    • Compliance with quotation requirements
    • Plan to mandate Purchase Orders for expenditure > $20k
    • Preferred suppliers
    • Procurement web site https://www.flinders.edu.au/finance/procurement/
    • Contact Procurement Manager for assistance
operational matters4
Operational Matters

Credit Cards

  • Benefits
  • Risks
    • Fraud
    • Use on insecure/dodgy internet sites
    • Avoid staff sharing
operational matters5
Operational Matters

Travel

Preferred suppliers

    • Phil Hoffmann Travel
    • STA Travel
  • On-line booking tool
  • OHS&W for travellers
  • Policy on travel, particularly international
  • DFAT warnings
  • Credit cards, travel advances, per diems
operational matters6
Operational Matters

Taxes

  • GST
    • Normally charged on contracts
    • All contracts should have a GST clause
    • Normally not a cost to business /government
  • Fringe Benefits Tax (FBT)
    • Adds approx 100% to benefit cost
    • Private & business travel
    • Travel diaries
    • Entertainment
    • Other staff benefits
operational matters7
Operational Matters

Management of Annual Leave

operational matters8
Operational Matters

Management of Annual Leave

  • Need to plan usage
  • Increases with each pay rise
  • Can cause sudden budget problems on staff cessation
  • New EB agreement reinstates a form of deeming
operational matters9
Operational Matters

Management of LSL

  • Emerging cost – not provided for at the time it is earned.
  • Need to plan usage / set funds aside
  • Increases with each pay rise
  • Can cause sudden budget problems when staff leave unexpectedly and are paid out LSL in lieu
useful web sites
Useful Web Sites

Financial policies and procedures http://www.flinders.edu.au/ppmanual/finance.html

Financial Services Division Homepage

http://www.flinders.edu.au/finance/