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Budgeting & Finance

Budgeting & Finance. Senior Leadership Retreat August 14, 2011. Two Broad Financial Responsibilities. Financial Planning—insuring the effective deployment of a unit’s resources in support of its goals.

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Budgeting & Finance

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  1. Budgeting & Finance Senior Leadership Retreat August 14, 2011

  2. Two Broad Financial Responsibilities • Financial Planning—insuring the effective deployment of a unit’s resources in support of its goals. • Financial Oversight—insuring that expenditures meet institutional, state and federal regulations and guidelines. Beyond that, are public funds being spent wisely?

  3. $ University Structure Board of Trustees • Planning & Budgeting • OBFS: • Budget Office • Purchasing • Grants & Contracts • Accounting • AITS • Human Resources • University Audits University Administration UI at Springfield UI at Urbana-Champaign UI at Chicago • CITES • Management Information • Human Resources • Facilities and Services • Office of Sponsored Programs & Research Administration

  4. University Structure Board of Trustees President Vice Presidents Assistant Vice Presidents University Administration University Policy Council President Chancellors Vice Presidents AAMT Academic Affairs Vice Presidents Provosts Vice Chancellors Centralized Business Services Chancellors Provosts Vice Chancellors UI at Springfield UI at Urbana-Champaign UI at Chicago

  5. $ Campus Budget

  6. $ FY11 UIUC Budget (000s)

  7. $ Managing Your Slice

  8. $ Duties of an Administrator • To develop the academic unit strategically within the scope of mission and within resources accessible to the unit; • To provide accountability at the campus level concerning the unit’s fidelity to mission and values; and • To present the case (be an advocate) at the college/campus level concerning the unit’s relationship to strategic concerns of the campus.

  9. $ Duties of an Administrator • To assure that the academic unit has an effective process for planning and budgeting; • To manage the academic unit’s resources as required to adapt to changing opportunities and needs; • To assure that units, programs, and other subsidiary organizations are accountable on appropriate grounds.

  10. $ Duties of an Administrator • To be appropriately entrepreneurial—look to gifts, self-supporting activities, and partnerships with other units; • To work with the resources available to your unit (no deficits!); • To be responsive to the needs of the institution as a whole.

  11. $ Managing Unit Finances • Develop a summary plan for the year that involves all funds • Each month someone needs to reconcile your account statements. Sit down quarterly to review status • Know who owes you money; don’t forget to collect • Have at least two people review transactions • Have your staff attend training

  12. Fund Accounting • Universities track “funds” separately. For most departments: • State/tuition. The main operating account for most units • ICR. Overhead on grants & contracts • Gifts. Each separately tracked. Individual restrictions important • G&C. Each separately tracked. Individual purpose important

  13. Big Picture/Small Details • Know the full set of resources available to unit: • Unrestricted for unit use: State/tuition, ICR, unrestricted gifts • Restricted funds whose use coincides with unit need: some restricted gift funds, self-supporting • Each fund separately tracked • Each statement reconciled • Rules of fund use honored (particularly watch donor intent)

  14. $ Budget Process & Distribution of Funds

  15. Budgets are About Making Choices

  16. $ The Budget Process • Spring – Campus/U of I requests developed • July – BOT reviews preliminary budget request • September – BOT approves U of I budget request • Oct/Dec – IBHE/University interaction • December/Jan– IBHE recommendations submitted to the Gov. • February – Governor’s budget recommendations submitted to Legislature • May/June – Legislature acts • June/July – Governor signs appropriation • - Budget allocation to units

  17. College Level Planning • Nov./Dec. - Colleges develop annual report following campus planning guidelines • Feb./Mar. - Budget hearings (one per college) led by Provost with assistance of Campus Budget Oversight Committee (CBOC) • Late Spring – campus allocates funds to colleges • Summer – College leadership reconciles request with actual allocation

  18. State Planning Environment

  19. Improving Statewide Finances Some good news: • GRF before transfers and adjustments is up 17.5%, personal income tax is up >21%. • Before adjustments, GRF is up 17.5%, mostly based on the tax increase ($3.2 billion) • Unemployment ticked down to 8.7%. However: • The state still has a massive backlog of unpaid bills. Owes the U of I alone >$300m! • Unemployment is down because of “a sharp fall in labor force participation”

  20. Real Gross Domestic Product by State1997 – 2008(Millions of Chained 2000 Dollars) The decline of manufacturing has held back growth in Illinois compared to the nation *Average of top five performing states. Source: U.S. Bureau of Economic Analysis.

  21. State of Illinois Unfunded Public Pension Obligations(SERS, SURS, JRS, GARS, TRS) (Dollars in Billions)

  22. Planning Considerations • Revenue • State Funds—declining industrial base; significant unfunded retirement costs • Tuition—One of the highest cost publics; cost growing beyond capacity to pay • Expense • Personnel—80% of total costs • Utilities—significant cost growth in recent years. Facilities still require investment • Financial Aid—major investment required

  23. Planning Considerations (cont.) • Buildings/ Maintenance • State stopped supporting facilities in 2002 • Campus stepped up to cover desperately needed remodeling and facilities • Deferred maintenance of $550 million! • Below average $ per square foot to maintenance—and it shows!

  24. Campus Planning Efforts:Taking action so that Illinois can thrive • Protecting our ability to: • Hire & retain the best faculty—our reputation depends on it • Protect quality and access for our students • Ensure Illinois remains a leader in higher education Moving from a Defensive to Competitive Posture

  25. Strengthening our FoundationThrough interconnected efforts to: Ensure Financial Stability Reduce Central Costs Reduce College Costs Enhance Our Revenue Base

  26. Enhancing Financial Stability& Reducing Central Costs • Increased financial oversight • Reducing staff size to control costs and accelerate efficiencies (400+ FTE decline) • Implementing sunset provisions for centrally funded projects • Investing in energy conservation—$8m+ in annual savings

  27. Planning is More Important than Ever

  28. Unit Budget Planning • Unit’s planning should come from goals in its strategic plan—units should look for tie in with college and campus plans • Know how your unit is spending its resources. Does that spending match goals? • In challenging times, planning should not be dependant on growth. How can a unit best deploy existing resources? • Be creative—find ways to partner with others, find new funding sources, focus efforts on highest priorities

  29. Take Control! • Meet with those who have been successful • Attend leadership/training programs • Make choices—don’t do everything you have always done, but with less • Find ways to reduce “backroom” costs. Shared services are taking off • Start from the bottom up in redesigning your organization

  30. Resources • Accounting Customer Service—Ron Miner, Assoc. Director. 265-5315 • Budgets and Financial Analysis—Pat Hoey, Director. 244-0542 • University Audits—Darla Hill, Director. 265-5400

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