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University Budgeting and Financing Process Overview

The University Budgeting and Financing process involves external budgeting activities such as budget requests preparation and submission by state agencies, analysis by the Executive Budget Office and Governor's Office, Governor's Budget submission to General Assembly, budget deliberations by various committees, and final allocation decisions. Internal budgeting activities include reviewing initiative requests, developing budgets based on analysis and central guidance, conducting budget hearings, and updating budgets in line with revenue projections and trends.

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University Budgeting and Financing Process Overview

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  1. University Financing and University Financing and Budget Model Budget Model Faculty Budget Committee January 26, 2024

  2. External Budgeting External Budgeting

  3. EXTERNAL CALENDAR: BUDGET DEVELOPMENT Budget Requests Prepared & Submitted by State Agencies (October) Request Board of Economic Advisors Revised Estimate (February) Budget Request Guidelines Distributed to State Agencies (August/September) Analyzed by Executive Budget Office & Governor’s Office (Oct/Dec) Process Begins for the Next Fiscal Year Governor’s Budget & Appropriation Bill Submitted to General Assembly (January) House Ways & Means Committee Budget Deliberations (February) Board of Economic Advisers Initial Revenue Estimate (November) Budget & Appropriation Bill Prepared (January) House of Representatives Budget Deliberations (March) Conference Committee Deliberations (May) Senate Finance Committee Budget Deliberations (April) Governor Vetoes Line Items and/or Signs Appropriation Bill into Law (June/January) Initial Allocations to State Agencies by DOA-EBO (August) Senate Budget Deliberations (April/May) House gets “Second Bite” (May) Comptroller General Prepares Chart of Accounts for New Fiscal Year (June) 3

  4. External Budget Calendar Budget Development Activity (excerpt): Governor: Budget requests solicited USC: Governor’s Staff / Executive Budget Office presentation USC: Governor’s Executive Budget Impact Analysis House: USC: Ways and Means Higher Education Subcommittee presentation USC: House Budget Impact Analysis Senate: USC: Senate Finance Higher Education Subcommittee presentation USC: Senate Budget Impact Analysis Conference Committee: USC: Conference Budget Impact Analysis & merge into USC budget. Month / Period September October January January March February April May/June May/June Governor’s desk/ vetoes Board Meeting to approve USC budget June 4

  5. SYSTEM STATE APPROPRIATIONS 400,000,000 350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 - Includes recurring state appropriations only 5

  6. IN-STATE UNDERGRADUATE TUITION & REQUIRED FEES 13,000 12,688 12,688 12,688 12,688 12,688 12,616 12,500 12,262 12,000 11,854 11,482 11,500 11,158 11,000 10,500 3.44% 3.24% 3.16% 2.90% 2.89% 0.00% 0.57% 0.00% 0.00% 0.00% 10,000 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Actual Percentage 6

  7. SYSTEM TOTAL CURRENT FUNDS REVENUES USC System Budget FY 2023-2024 Revenues Unrestricted Funds E & G Auxiliaries Unrestricted Total 1,314,874,606 $ 220,916,399 1,535,791,005 Restricted Funds E & G Auxiliaries Restricted Total Addition to Fund Balance 398,125,394 398,125,394 (18,936,688) - TOTAL SOURCES 1,914,979,711 $ 7

  8. SYSTEM TOTAL CURRENT FUNDS EXPENDITURES USC System Budget FY2023-2024 Expenditures Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships Auxiliary Enterprises Transfers TOTAL EXPENDITURES 525,518,608 $ 207,045,978 87,975,916 123,514,187 96,688,365 118,379,364 101,794,378 420,737,482 212,879,586 20,445,847 1,914,979,711 $ 8

  9. Internal Budgeting Internal Budgeting Budget Model Budget Model

  10. INTERNAL CALENDAR: BUDGET MODEL Budget Development Activity: Month / Period Support Unit Allocation Committee (SUAC) reviews initiative requests from support units; SUAC submits recommendations to Budget Update Group (BUG); President reviews initiative requests from Support units. October - November Budget Update Group (BUG) reviews support unit budget requests December Budget Office forecasts general revenues (e.g., tuition, appropriations) and expenses (e.g., benefits) for budget development guidelines January Columbia Academic and Support units develop budgets based on latest analysis and central guidance January Conduct Academic budget hearings (i.e., blueprint meetings) March Campuses develop budgets based on latest analysis and central guidance March Academic Subvention and strategic initiative funding recommendations made and communicated April - May University budget updated and preliminary drafted based on current tuition/appropriation projections and trends April – May Budget reviewed/adopted by Board of Trustees May – June 10

  11. RCM: Budget Model Governance Operational Support Teams Advisory Committees Executive Groups Support Unit Allocation Committee meetings planned to begin in October and will meet as required throughout budget process. Other committees to meet as needed. Groups to meet as needed, at least twice per fiscal year. BUG meets monthly. President and Board Briefings take place regularly throughout the year. Charged with advising decision makers on policy/practice matters related to format, construction and general philosophy of the budget model. Group responsible for financial oversight and coordination and for deploying the strategic plan on behalf of the President and Board of Trustees. Model Budget Model Governance Advisory Committee Budget Update Group (BUG) Develop budget calendar and guidelines. Development Team Group charged with gathering information to provide recommendation to decision makers regarding support unit allocations. Support Unit Allocation Committee Develop model reports for users at various levels and analyze mode results. Model Analysis/ Reporting Team Ultimate decision maker related to institutional proposals to the Board of Trustees. President Identify policies impacted by new budget model and recommend modifications and/or development of new policies In addition to current roles, expands charge to consider proposals for new courses to avoid unnecessary course duplication or “gaming.” Policy Review/ Development Team Courses & Curricula Committee (Existing) Board of Trustees In addition to current roles, expands role to ensure that timely and accurate space utilization data is available for users of the budget model. Respond to budget model training requests to enhance budget model understanding across various groups. Final decisions related to the budget. Space Needs and Planning Committee (Existing) Training Team 11

  12. BUDGET MODEL UNIT STRUCTURE Support Units Auxiliary Units Academic Units Central administration Information technology Research office Provost office Admissions Facilities Law enforcement & safety SC Honors College University Libraries Others Athletics Housing Parking services Student health center Schools Colleges (excludes Medicine) Auxiliary units are primarily self-supporting through ticket sales/fees. Each pay central support units for central services used. Academic units perform teaching, research and service. Support units assist with infrastructure. 12

  13. BUDGET MODEL BUDGET MODEL 13

  14. REVENUES REVENUES REVENUES: All academic, research, and state appropriation revenues are allocated or distributed directly to the Academic Colleges. Colleges collect tuition, state appropriations, grant, and other revenue. Summer Tuition Program & Other Fees Indirect Cost Recovery (IDC) Grant, Contract & Gift Revenue Sales, Services & Other Revenues DIRECT SOURCES DIRECT SOURCES/ MODEL Fall & Spring Tuition (Undergrad & Graduate) State Appropriations 14

  15. REVENUES TUITION Revenue pools – Fall and Spring tuition: Resident 70%/30% of crhr divided by college of instruction/record. Non-Resident 70%/30% of crhr divided by college of instruction/record. Direct tuition – Summer and Graduate tuition: Graduate Budget set by prior year actual and distributed by actual to college of record. When actuals coming are more than budget, the additional tuition is distributed to Academic Units using the same % crhr hours from FY2022. 15

  16. REVENUES STATE APPROPRIATIONS Resident student credit hours: 70% or $136M was distributed by proportion of Undergraduate and Graduate credit hours of resident students. Contract and grant revenue: 30% or $58M was distributed by proportion total direct grant and contract revenue. Portion of state appropriation is provided to research because F&A/IDC negotiated rates do not fully fund the indirect costs of research. 16

  17. REVENUES INDIRECT COST RECOVERY (direct) FY2024 IDC Budget of $26M was allocated according to prior year research activity. Actual IDC receipts are distributed to the units as earned in the current year. 17

  18. DIRECT COSTS/USES DIRECT COSTS/USES DIRECT USES: Direct costs are personnel costs of the college as well as non-personnel expenditures. Sponsored award direct charges are found here. - Less - Essential element - Workforce planning. - Impacted by state mandates on salary & fringe. Personnel & Non-Personnel Expenses DIRECT USES Grant Expenses 18

  19. INDIRECT COSTS/USES INDIRECT COSTS/USES INDIRECT USES/MODEL: The colleges fund support units (Central, President, Provost, Facilities, etc.) through indirect charges based on proportional use (concept of Cost Pools and Drivers). Fixed budgets for the support units are adjusted through annual Support Unit Allocation Committee prioritizing Initiatives submitted by Support Units. - Less INDIRECT USES/MODEL Support Unit Allocations (-) Then the President and key administrators (Provost, CFO) budget requests under advisement, along with revenue estimates to create a Budget Proposal for the Trustees. 19

  20. SUPPORT UNITS COST POOL DETAIL SUPPORT UNITS COST POOL DETAIL Cost Pool Support Units Included Allocation Metric Central Services & Administration Admin & Finance, Business Affairs, HR, Development, Communications, etc. Total Employee FTE Facilities Facility Services, Utilities, Facilities Projects Net Assignable Square Footage Enrollment & Scholarships Enrollment Management and Scholarships Undergraduate Student FTE Information Technology University Technology Services (DoIT), OneCarolina Total Headcount Libraries University Libraries Student FTE + Faculty FTE (less Law) Academic Affairs Student FTE + Tenure-Track FTE Provost, Faculty Senate, Graduate School, International Programs Research Office of Research/ Research Administration Contract & Grant Revenue Academic Access & Degree Completion On Your Time, Palmetto College Administration, Distributed Learning Student FTE Executive Affairs Board of Trustees, President, Legal, Economic Engagement Total Direct Expenses Academic Support & Student Services University 101, Residential Learning Centers, Student Affairs – Admin, Academic Support Services UG Student FTE Honors College Honors College UG Student FTE Strategic Excellence/Efficiency Support unit portion of excellence & efficiency initiatives Total Direct Expenses 20

  21. FROM SUPPORT UNIT ALLOCATION COMMITTEE TO BOT FROM SUPPORT UNIT ALLOCATION COMMITTEE TO BOT – – FY24 FY24 FY24 Budget Development SUAC Initiative Requests Recurring One-Time Total 57,744,841 $ 38,857,804 $ 96,602,645 $ Preferred initatives as prioritized by SUAC Presented by President to BOT $000's Recurring 4,903 $ 17,934 $ One-time $ 13,415 $ Recurring 13,640 $ 3,285 1,731 4,676 23,332 $ One-time $ $ Required cost increases High Score SUAC BUG Meeting addition Prioritized by President Total support unit increases - 169 860 5,886 4,283 2,862 9,873 278 3,264 1,460 3,654 6,143 21

  22. SUPPORT UNIT INCREASES SUPPORT MISSION SUPPORT UNIT INCREASES SUPPORT MISSION – – FY24 FY24 By Priority $000's Recurring 13,640 $ 23,232 $ One-time $ $ Required cost increases Increase research Student experience Operational excellence Total support unit increases 169 3,000 1,395 1,579 6,143 1,700 2,508 5,384 22

  23. MODEL ALLOCATIONS MODEL ALLOCATIONS + Plus – Less (Net Impact) Remaining net income or loss to colleges are distributed back to colleges via Model Allocations (Participation Fee is collected and distributed as either Subvention or Strategic Initiative Funding). Participation Fee/Tax (-) Subvention (+) Strategic Initiative Funding (+) MODEL ALLOC. = Equals Change in Balance/Margin RESERVES 23

  24. BUDGET MODEL TIMELINE Budget Development Activity: Date Budget Model is presented to Trustees as proposed by Budget Model Steering Committee. Incremental budgeting continues with a parallel year of Budget Model. June 2019 FY2019-20 Budget Model 1st, 2nd, 3rdyears of implementation: COVID. Changes in upper administration. Strong enrollments in Undergraduate in Fall 2022. Graduate school enrollments decline with employee-market economy. FY2020-21 FY2021-22 FY2022-23 Budget Model 4thand 5th years: growth in student body; discussions begin for Budget Model 2.0. Budget Model 2.0 1styear of implementation proposed for approval by Board of Trustees. New subvention; new metrics. FY2023-24 FY2024-25 June 2025 for FY2025-26 24

  25. DISCUSSION DISCUSSION 25

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