Finance and Budget Overview
Spring 2016 Provost’s Retreat
January 8, 2016
University of South Carolina
I. Financial Reporting & Analysis
– Fiscal Year 2015
II. Budget Execution – Fiscal Year 2016
III. Budget Development – Fiscal Year 2017
2
USC System Overview
Flagship Institution - USC Columbia
Comprehensive Campuses
USC Aiken
USC Beaufort
USC Upstate
Palmetto College
USC Lancaster
USC Salkehatchie
USC Sumter
USC Union
School of Medicine
Columbia
Greenville
3
USC Finance Information
Budget Document
http://finplan.admin.sc.edu/budget/doc_16/FY16_FINAL_BOT_BudgetHO
RIZONTAL.pdf
Capital Budget Document
http://finplan.admin.sc.edu/budget/doc_16/FY16_Capital_Budget_Docum
ent_FINAL_all_horizontal.pdf
Comprehensive Annual Financial Report
http://web.admin.sc.edu/fr/files/USCComprehensiveAnnualFinancia%20R
eport-FY1415.pdf
Transparency Initiative
http://spend.admin.sc.edu/
South Carolina State Budget
http://www.scstatehouse.gov/budget.php
4
USC Finance Information
Leslie Brunelli
Vice President for Finance & CFO
Osborne 208
lesliebrunelli@sc.edu
777-1967
5
University of South Carolina
I. Financial Reporting & Analysis
– Fiscal Year 2015
6
Statement of Net Position
In Millions
Reclassified*
FY2011
Assets
Current Assets
Capital Assets, net
Other Assets
Total Assets
Liabilities
Current Liabilities
Noncurrent Liabilities
Total Liabilities
Net Position
Net investment in capital assets
Restricted - nonexpendable
Restricted - expendable
Unrestricted
Total Net Position
$
573.6
1,075.1
116.2
1,764.9
FY2012
$
642.1
1,120.7
125.0
1,887.8
Restated**
FY2013
$
615.1
1,176.9
125.1
1,917.1
FY2014
$
595.1
1,261.2
117.0
1,973.3
106.6
496.6
603.2
118.6
566.0
684.6
117.1
586.0
703.1
140.5
582.9
723.4
592.9
66.5
140.7
361.6
$ 1,161.7
569.7
72.1
200.3
361.1
$ 1,203.2
663.7
73.8
125.0
351.5
$ 1,214.0
701.3
79.3
137.6
336.4
$ 1,254.6
FY2015
$
696.4
1,320.5
115.7
2,132.6
142.0
1,373.6
1,515.6
$
747.3
82.1
129.8
(333.5)
625.7
*Reclassified to conform to changes in accounting standards affecting net position classifications
** Unrestricted Net Position was restated to reflect GASB 68 (Pension Liability)
7
Financial Performance Highlights
GASB 68 – Pension Liability
USC Columbia
USC Aiken
USC Beaufort
USC Upstate
USC Lancaster
USC Salkehatchie
USC Sumter
USC Union
564,064,830
33,484,838
17,527,436
60,252,285
14,909,140
9,030,591
7,717,015
4,391,072
USC System Total
711,377,207
8
Financial Performance Highlights
Total
Unrestricted
Net Position
9
Operating Performance
In Millions
FY2011
Total Operating Revenues
Total Operating Expenses
Operating Loss
Nonoperating Revenues (Expenses)
State Appropriations
Federal Grants
Gifts
Investment, Endowment & Other
Interest on Capital Asset Related Debt
Nonoperating Revenues (Expenses)
$
FY2012
742.5 $
915.0
(172.5)
FY2013
FY2014
FY2015
779.3 $
801.2 $
839.3 $
904.2
960.6
1,017.2
1,072.1
1,125.6
(181.3)
(216.0)
(232.8)
(221.4)
124.6
94.1
38.0
10.0
(19.6)
247.1
118.3
53.3
38.4
14.0
(19.0)
205.0
136.4
52.6
43.9
5.9
(33.1)
205.7
144.3
52.1
46.4
20.1
(18.6)
244.3
147.5
52.5
45.5
35.1
(22.2)
258.4
Income before other revenues, expenses
& transfers
74.6
23.7
(10.3)
11.5
37.0
Other revenues, expenses and transfers
Increase in net assets
23.7
98.3
17.8
41.5
21.1
10.8
29.1
40.6
37.8
74.8
1,063.4
$ 1,161.7
1,161.7
$ 1,203.2
1,203.2
$ 1,214.0
1,214.0
$ 1,254.6
550.9
625.7
Net position, beginning of year *
Net position, end of year
$
*The FY2015 beginning Net Position was restated to reflect GASB 68 (Pension Liability)
10
Revenue Comparison
Fiscal Year 2011
Sales and
Service and
Other
16.2%
State
Appropriatio
ns
18.2%
In Millions
Student Tuition & Fees, net
Gifts, Grants & Contracts
State Appropriations
Sales and Service and Other
Total Revenues
Fiscal Year 2015
Student
Tuition &
Fees
32.1%
Sales and Service
and Other
16.2%
Student Tuition &
Fees
36.7%
State
Appropriations
14.2%
Gifts,
Grants &
Contracts
33.5%
Gifts, Grants &
Contracts
32.9%
FY2011
$ 331.7
390.6
126.7
185.6
$ 1,034.6
In Millions
Student Tuition & Fees, net
Gifts, Grants & Contracts
State Appropriations
Sales and Service and Other
Total Revenues
FY2015
$ 448.0
389.1
155.7
232.0
$ 1,224.8
11
Financial Performance Highlights
Net tuition and fee revenues have increased by
approximately 35% since 2011 due to enrollment growth,
an increase in non-resident enrollments, adjustments to
abatements, as well as annual tuition increases.
12
USC Columbia In-State Undergraduate
Tuition & Required Fees
13
Financial Performance Highlights
Total Operating Revenues
14
Expense Comparison
Fiscal Year 2011
5.5%
2.1%
0.0%
2.3%
Fiscal Year 2015
1.7%
32.8%
5.7%
1.7%
0.0%
33.1%
11.8%
11.1%
9.1%
9.5%
5.3%
5.6%
5.3%
12.3%
7.7%
6.0%
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and maintenance of plant
Auxiliary Enterprises
Scholarships and fellowships
Depreciation
Interest on Capital Related Asset Debt
Loss on Disposal of Capital Assets
In Millions
Instruction
Research
Public service
Academic support
Student services
Institutional support
Operation and maintenance of plant
Auxiliary enterprises
Scholarships and fellowships
Depreciation
Interest on capital related asset debt
Loss on disposal of capital assets
Total Expenses
6.9%
Instruction
Public Service
Student Services
Operation and maintenance of plant
Scholarships and fellowships
Interest on Capital Related Asset Debt
FY2011
$ 296.8
113.6
55.9
71.7
52.2
54.8
93.3
105.4
20.4
50.8
19.6
1.8
$ 936.3
8.5%
In Millions
Instruction
Research
Public service
Academic support
Student services
Institutional support
Operation and maintenance of plant
Auxiliary enterprises
Scholarships and fellowships
Depreciation
Interest on capital related asset debt
Loss on disposal of capital assets
Total Expenses
10.8%
5.0%
Research
Academic Support
Institutional Support
Auxiliary Enterprises
Depreciation
Loss on Disposal of Capital Assets
FY2015
372.0
121.9
64.5
96.0
72.6
71.0
104.4
138.6
18.2
66.4
22.2
2.2
$ 1,150.0
$
15
Financial Performance Highlights
Total Operating Expenditures
16
USC System Fundraising
200
180.7
180
160
140
117.6 122.2
120
106.2 107.5
96.5
100
82.4
80
66.2
55.2
60
40
116.6
67.0
56.3 57.4
46.4
55.0
52.3
40.4
26.8
20
0
19951996
19961997
19971998
19981999
19992000
20002001
20012002
20022003
20032004
20042005
20052006
20062007
20072008
20082009
20092010
20102011
20112012
20122013
20132014
20142015
M
i
l
l
i
o
n
s
146.9 149.1
Bicentennial
Campaign
July 1997 – June 2002
Carolina Promise
Campaign
July 2007 – June 2015
Exceeded $1Billion Goal
17
USC System - Grant Awards
250
$243
$238
240
230
M
i
l
l
i
o
n
s
$230
$227
$220
220
210
200
190
180
FY2011
FY2012
FY2013
FY2014
FY2015
7.0% Five Year Increase
18
USC System - Endowment Assets
700
$596
$625
600
$545
500
$494
$514
M
i 400
l
l
i
300
o
n
s
200
100
0
2011
2012
2013
2014
2015
19
University Component Units
Total
End of Year
Net Position
$
788,458
42,778,513
12,463,632
$
56,030,603
Non-Governmental Discretely Presented Component Units
University of South Carolina Development Foundation
University of South Carolina Educational Foundation
University of South Carolina Business Partnership Foundation
Greater University of South Carolina Alumni Association
USC Upstate Foundation
USC Upstate Capital Development Foundation
Educational Foundation of the University of South Carolina Lancaster
Total
End of Year
Net Assets
$
37,386,459
432,534,450
65,341,293
13,170,722
10,033,756
6,704,957
13,301,254
$ 578,472,891
Governmental Discretely Presented Component Units
South Carolina Research Foundation
School of Medicine Educational Trust
Beaufort-Jasper Higher Education Commission
Net Position/Assets as of June 30, 2015
20
Financial Performance Highlights
Key financial actions in 2015:
 Implemented GASB 68
 Resolved GASB 61 – Component Units –
System Campus Commissions
 Implemented the Affordable Care Act
 Completed Lease Termination
Agreement for the Department of Justice
21
Bond Indebtedness by Campus
Amount Outstanding
Campus of Indebtedness
Columbia
State Institution Bonds - Columbia
State Institution Bonds - School of Medicine
Athletic Facilities Revenue Bonds
Revenue Bonds - Housing
Revenue Bonds - Parking
Revenue Bonds - Academic
$
Subtotal
Aiken Campus
State Institution Bonds
Revenue Bonds - Housing
131,150,000
3,650,000
154,750,000
145,000,000
12,180,000
61,945,000
508,675,000
$
7,975,000
24,610,000
32,585,000
$
14,705,000
31,925,609
4,404,391
51,035,000
Beaufort Campus
State Institution Bonds
$
2,304,000
Sumter Campus
State Institution Bonds
$
46,000
Total outstanding as of June 30, 2015
$
594,645,000
Subtotal
Upstate Campus
State Institution Bonds
Revenue Bonds - Housing
Revenue Bonds - Bookstore
Subtotal
22
Historical Indebtedness by Campus
Amount Outstanding as of June 30
2015
2006
2010
Campus
Columbia
$
Aiken
184,785,000
$
307,315,000
$
508,675,000
20,980,000
41,180,000
32,585,000
110,000
75,000
2,304,000
Upstate
4,285,000
46,390,000
51,035,000
Sumter
400,000
265,000
46,000
$210,560,000
$395,225,000
$ 594,645,000
Beaufort
Totals
T o t al F all Head co unt Enr o llment
T o t al F T E Enr o llment
T o t al C ur r ent F und s B ud g et
T o t al U nr est r ict ed N et Po sit io n
$
$
2005-2006
2009-2010
39,329
43,100
33,253
37,965
826,903,082 $ 1,063,815,892
180,353,688 $ 326,205,120
2014-2015
48,167
43,167
$ 1,338,209,368
$ 377,930,371
23
Scheduled Debt Service Payments
Fiscal Year 2016
Principal
State Institution Bonds (SIB)
Columbia
School of Medicine
Aiken
Upstate
Beaufort
Sumter
Interest
Total
Subtotal
9,730,000.00
325,000.00
675,000.00
945,000.00
119,000.00
46,000.00
11,840,000.00
5,410,126.65
160,750.00
354,300.43
633,781.26
104,731.26
2,300.00
6,665,989.60
15,140,126.65
485,750.00
1,029,300.43
1,578,781.26
223,731.26
48,300.00
18,505,989.60
Subtotal
4,550,000.00
580,000.00
1,945,000.00
1,300,000.00
1,220,214.38
109,785.62
9,705,000.00
6,825,431.26
529,968.76
3,017,550.00
1,143,781.26
1,467,638.54
204,311.46
13,188,681.28
11,375,431.26
1,109,968.76
4,962,550.00
2,443,781.26
2,687,852.92
314,097.08
22,893,681.28
3,480,000.00
6,949,306.78
10,429,306.78
25,025,000.00
26,803,977.66
51,828,977.66
Revenue Bonds
Columbia-Housing
Columbia-Parking
Columbia-Academic
Aiken-Housing
Upstate-Housing
Upstate-Bookstore
Athletics Revenue Bonds
Columbia
TOTAL
24
Financing Needs
State Institution Bonds
Columbia - Old Law School Replacement
subtotal
Revenue Bonds
Columbia - Parking Master Plan
Columbia - Housing Master Plan
Columbia - Athletics Master Plan
subtotal
Total Estimated Additional Debt
Amount
45,000,000
45,000,000
Amount
20,000,000
20,500,000
52,405,000
92,905,000
Planned
Issuance
FY 2018
Planned
Issuance
FY 2017
FY 2018
FY 2018
$ 137,905,000
25
University of South Carolina
II. Budget Execution – Fiscal Year 2016
26
USC System Total Current Funds
USC System Budget
FY 2015-2016 Revenues
Unrestricted Funds
Education & General $
Auxiliaries
$
Unrestricted Total
$
913,391,503
195,568,646
1,108,960,149
Restricted Funds
Education & General $
Auxiliaries
$
Restricted Total
$
333,880,603
0
333,880,603
Total Sources
$
1,442,840,752
27
Where the revenue comes from and what it covers
2015-16 Total Current Funds Revenue Budget – USC System - $1.4 Billion
Operating Budget - “A” Funds
($806,115,489)
Revenue comes from:
 State appropriations
 Tuition and Fees (education & general portion)
 Unrestricted Grants, Contracts & Gifts
 Sales & Services and Other Sources
Pays for:
 Instruction
 Academic Support
 Student Services
Restricted Funds ($333,880,603)
 Physical Plant
Revenue comes from:
 Administrative Support
 Research Grants and Contracts
 Scholarships
 Gifts
 Federal and State Student Financial Aid
Pays for:
 Research
 Public Service
 Scholarships
28
Where the revenue comes from and what it covers
2015-16 Total Current Funds Revenue Budget – USC System - $1.4 Billion
Auxiliaries ($195,568,646)
Revenue comes from:
 Athletics
 Housing
 Student Health Center
 Parking
 Dining & Bookstore commissions
Student Activities &
Departmental Accounts
($106,258,214)
Designated Funds & Unrestricted
Scholarships ($1,017,800)
Pays for:
 Self-supporting units that pay all
their expenses and receive no
taxpayer support
 Scholarships
 Designated Fund activities
Revenue comes from:
 Student board mandated fees
 Student technology fees
 Indirect cost recoveries from
grant activity
 Service charges
Revenue comes from:
 Vending commissions and similar
 Unrestricted gifts
 Portion of football ticket sales
Pays for:
 Scholarships
 Designated Fund activities
Pays for:
 Student Activities
 Technology support
 Research & Public Service
 Sponsored Award Management
 Contract & Grant Accounting
29
FY16 Conference Budget
RECURRING
FY2015 BASE
USC Columbia
USC SOM
TOTAL
USC Aiken
USC Beaufort
USC Upstate
USC Lancaster
USC Salkehatchie
USC Sumter
USC Union
USC SYSTEM
TOTAL
FY2016
FINAL
APPROPRIATIONS
BUDGET INCREASE
FY2016 BASE
ESTIMATED
NONSTATE
RECURRING APPROPRIATED
OPERATING PAY PACKAGE
FINAL
ADJUSTED
FY2016
99,070,671
13,793,878
112,864,549
2,000,000
208,409
2,208,409
101,070,671
14,002,287
115,072,958
930,000
0
930,000
0
0
0
102,000,671
14,002,287
116,002,958
6,876,100
2,851,368
9,560,247
1,654,369
1,392,257
2,708,684
658,186
399,840
166,407
560,743
254,525
93,915
77,580
46,990
7,275,940
3,017,775
10,120,990
1,908,894
1,486,172
2,786,264
705,176
0
0
0
0
0
0
0
0
0
0
0
0
0
0
7,275,940
3,017,775
10,120,990
1,908,894
1,486,172
2,786,264
705,176
$3,808,409 $142,374,169
$930,000
$138,565,760
$0 $143,304,169
State budget requires an $800 per employee one-time bonus for employees earning less than $100,000.
USC Columbia allocated non-recurring funds from the Capital Reserve Fund of $930,000 for the Honors
College for equipment. Capital Project funding totals $11,497,162 for the USC System. Higher Education
Efficiency, Effectiveness and Accountability non-recurring funds for FY14 were moved to deferred
maintenance as $1,136,760 of these funds. Many of the House adopted regulatory provisos were deleted.
30
What about the Lottery?
The South Carolina Education Lottery
provides funds to South Carolina
students based on merit for use at
public and private institutions in the
state.
31
Where is the Money Spent?
Pre and Post Great Recession
South Carolina - General Funds
FY 2007-2008
Transportation
(DOT)
0%
Correctional &
Public Safety
9%
FY 2015-2016
Correctional &
Public Safety
9%
Transportation
(DOT)
2% +$112M
+$49M
Higher
Education
8%
Higher
Education
13%
K-12 Education
36%
($315M)
K-12 Education
38%
+$254M
All Other+$59
17%
All Other
17%
Health and
Social
25%
Total: $6.743 Billion
+$143M
Health and
Social
26%
Total: $7.045 Billion
Source: Executive Budget Office and Senate Finance
32
University of South Carolina
III. Budget Development – Fiscal Year 2017
33
FY2017 Budget Development
July 2015:
August:
USC Year End closeout process
Preliminary University revenue & expenditure estimates for FY2015
Certification of state non-recurring funds and lottery funding available for
August:
FY2016
August/Sept: Development of Legislative agenda
September 10: President’s State of the University
September:
Agency Accountability Report due to State
September:
Distribution of University Carryforward, pay package/fringe and BOT initiatives
October 1:
University financial statement draft due to State Comptroller General
October TBD: FY2017 Governor’s Budget request and state line-item due
Board of Trustees - receipt of FY2015 financial statements and presentation of
October 16:
year-end budget variance and financial performance
November:
Legislative pre-filing period begins
Financial Reporting Dates
BOT Quarterly Reports – 7/1-9/30; 1/31-3/31
Mid Year Review – All University Funds – 12/31/2015
Year End Review – All University Funds - 6/30/2016
Fall Review – Columbia “A” Funds – 10/31/2015
Spring Review – Columbia “A” Funds – 2/28/2016
34
FY2017 Budget Development
January 2016:Call for Academic Unit Blueprint development
January 4:
Preliminary revenue & expenditure estimates and full mid-year review for BOT
January 12: General Assembly convenes
January 20: President presents budget request to House Ways & Means
February:
House Ways & Means budget development
March:
House budget final
March:
President presents budget request to Senate Finance
March:
Call for Service Unit Blueprint development
April:
Provost meets with all academic units
April:
President meets with all direct reports
April-May:
Senate Finance Budget development
May:
USC internal budget development
May:
Senate budget final
Late May:
Committee/Consensus Budget approved by the General Assembly
May/June:
General Assembly addresses vetoes
June 2:
Sine Die
Early June: BOT reviews budget proposal
June 24:
Executive Committee and Full Board considers recommended University budget
July 1:
FY2017 Budget becomes effective
35
Internal Budget Process
36
External Budget Development
& Execution
Budget Development
Commission
on Higher Education
Governor
General
Assembly
Budget Execution
Budget
State
& Control Board
Treasurer
Comptroller
General
37
External Budget Process
38
External Budget Process
Governor’s Executive Budget
House Ways & Means Budget
House Budget
Senate Finance Budget
Senate Budget
Conference Committee Budget
39
State Budget Outlook
Recurring Non-Recurring
Funds
Funds
FY 2015-16
Capital Reserve Fund
Contingency Reserve Fund
BEA Revenue Estimate Adjustment
Total Projected Non-Recurring Funds
FY 2016-17
General Fund Revenue Available for Appropriation*
(Incremental Increase Over Appropriation Base)
Projected New EIA Revenue
Projected New Lottery Funds
(Total Available FY2016-17 Lottery Funds - $341,300,000)
Total Projected Recurring Funds
Total Unobligated Funds Available in FY 2016-17
(Includes recurring and non-recurring funding sources)
131,047,797
86,750,797
239,798,000
457,596,594
766,547,158
54,986,750
20,375,000
841,908,908
$1,299,505,502
40
Challenges for 2016 and beyond:
 Stabilizing OneCarolina and
Implementing the remaining modules
 Balancing Enrollment and Net Tuition
Revenue
 Controlling Costs
 Identifying Alternative Revenues
 Managing System Campus Enrollment
 Evaluating ongoing and new Operating
and Capital Needs
41
FY2016 Tuition and Required Fee Comparison
Public SEC Schools
43
Tuition and State Appropriation per Student
SEC Comparison
Peer & Peer Aspirant Comparison
Source: Integrated Postsecondary Education Data System – IPEDS Finance Reports FY2013
44