Draft 4.3.06 University of Missouri-Kansas City Preliminary Report of Resource Reallocations Effective July1, 2005 and July 1, 2006 Allocation of Marginal Revenues During the period July 1, 2006 through July 1 2007, UMKC projected an increase in operating revenues of approximately $12.9 million. Of this amount, $10.7 million, or 83%, of the marginal revenues budgeted were allocated to the core missions of instruction (teaching), research, and service. In FY06 new revenues allocated to the core missions totaled $6.4 million, while in FY07 the amount was $4.4 million. The vast majority of the total increase ($9.4 million) in funding for the core missions was directed to cover mandatory increases in salary and benefits approved by the Board of Curators. Approximately $1.3 million was allocated to enhance academic programs in dentistry, law, and the conservatory. The balance of total new revenues, approximately $2.2 million was allocated to cover mandatory cost increases related to physical facilities (i.e., utilities and redevelopment expenses). All other cost increases to enhance the academic mission, cover salary and benefit adjustments for staff employees, pay for the escalation in facility costs, and fund other mandatory cost increases were covered through internal reallocations from administrative functions. Table 1 provides a macro view of the distribution of new revenues and reallocated resources to specific planned purposes noted above. Resource Reallocations Required to Fund Operations UMKC will have reallocated approximately $9.2 million during the period of July 1, 2006 through July 1, 2007. During the current fiscal year (FY06), reallocations totaled approximately $4.6 million. Of that amount approximately $2.0 was allocated to the core missions of instruction (teaching), research, and service, and to academic support units directly serving the core missions (i.e., library and research office). The balance of the reallocation ($2.6 million) was allocated to cover the salary and benefit cost increase ($1.2 million) for staff employees, to pay for the marginal increase ($0.7 million) in information technology related to PeopleSoft, and to fund a $0.7 million increase in utilities and insurance. For the current fiscal year 16 FTE administrative/support positions have been eliminated. As planned for fiscal year 2007, reallocations total another $4.6 million. Of this amount, approximately $1.1 million is being reallocated to pay for the mandatory increase in salary and benefits for staff employees. Other reallocations include: $1.4 million for facilities M&R, debt service, and insurance; $0.7 million for institutional financial aid; $0.5 million for student fee write-off of uncollectible assessments; $0.5 million for information technology related to PeopleSoft implementation of the student module; and $0.4 million for contingency reserve to buffer potential shortfall in project revenues or to cover unanticipated costs or unusual increases in planned expenses. Currently planned for FY07 is the elimination of 6 FTE administrative/support positions. Beyond the reallocations previously noted, an additional $760,000 is anticipated to be reallocated from administrative activities in the academic 1 Draft 4.3.6 schools/college to the core missions of teaching, research, and service. The specific details of these reallocations will be finalized by April 15. A detailed breakdown of the reallocations effective July 1, 2006 and July 1, 2007 are shown in Table 2. The schedule displays the organizational units affected by the reallocations and the units, programs, or purposes for which the reallocated dollars were used. Reallocations shown for FY06 have been fully executed and those planned for FY07 will be executed effective July 1, 2006, pending Board approval of the University of Missouri System’s consolidated operating budget for fiscal year 2007. Table 3 and Table 4 present a high-level summary of the incremental increases in revenues and expenditures for FY06 and FY07. Increases in operating expenditures in both periods out stripped marginal revenues leaving a recurring fund gap of about $4.6 million each year. To achieve budget equilibrium and close the funding gap required significant reallocations principally from central campus administration. Draft 4.3.06 Table 1: Summary of Allocation of Funds for the Period July 1, 2005 through July 1, 2006 To Sources of Funds ($millions) New Revenues $12.9 Reallocations $9.2 Total $22.1 Total Uses of Funds Faculty Salaries & Benefits Academic Programs Physical Facilities Staff Salaries & Benefits PeopleSoft Financial Aid Bad Debt Write-off Contingency Reserve Insurance Total 9.4 1.3 2.2 _____ $12.9 2 2.0 1.7 2.3 1.2 .7 .6 .4 .3 $9.2 9.4 3.3 3.9 2.3 1.2 .7 .6 .4 .3 $22.1 Draft 4.3.06 Table 2: Reallocation of Resources Effective July 1, 2005 through July 1, 2006 Effective July 1, 2005 Reallocation From Amount Provost’s Office $2,272,000 Chancellor’s Office 511,941 VC Student Affairs 52,573 VC University Advancement 21,222 VC Admin. & Finance 115,033 Administrative Recurring Reserves 1,582,931 Total _________ $4,555,700 Reallocation To Amount School of Law Conservatory Arts & Sciences Library Graduate School Research Office Provost – Salary & Benefit Required Increase IT-PeopleSoft Admin. Support Salary & Benefit Required Increase Insurance Utilities Total $1,000,000 70,000 530,000 228,868 90,000 50,000 88,371 699,148 1,134,790 178,479 486,044 $4,555,700 Effective July 1, 2006 Reallocation From Amount Reallocation To Chancellor’s Office $ 237,596 Provost’s Office 1,109,556 VC Student Affairs 637,210 Communications 47,450 VC University Advancement 106,192 VC Admin. & Finance 1,202,706 Administrative Reserves 550,000 School-based Financial Aid 660,400 Total Amount Admin. Support Salary & Benefit Required Increase $1,083,286 IT-PeopleSoft Student System 488,000 Debt Service 378,200 Facilities M&R 795,200 Insurance 153,400 Student Fee Bad Debt 550,000 Institutional Financial Aid 660,400 Contingency Reserve 442,624 Total $4,551,110 $4,551,110 3 Draft 4.3.06 Table 3: FY06 Summary Budget Plan of Marginal Revenues and Expenditures Marginal Revenues Tuition State Appropriations F&A Recovery Total Marginal Revenues $4,847,319 1,747,835 143,282 $6,738,436 Marginal Expenditures Expenditures Funded by Marginal Revenues: Core Missions (Teaching, Research, Service) Student Affairs Contingency Reserve Total Funded by Marginal Revenues $6,310,601 350,000 77,835 $6,738,436 Expenditures Funded by Reallocations: School of Law Conservatory Arts & Sciences Library Graduate School Research Office Administrative Support Salary & Benefit Increase IT –PeopleSoft Insurance Utilities Total Funded by Reallocations Sources of Reallocations: Provost’s Office Chancellor’s Office VC Student Affairs VC University Advancement VC Admin. & Finance Administrative Recurring Reserves Total Reallocations $1,000,000 70,000 530,000 228,868 90,000 50,000 1,223,161 699,148 178,479 486,004 $4,555,700 $2,272,000 511,941 52,573 21,222 115,033 1,582,931 $4,555,700 4 Draft 4.3.06 Table 4: FY07 Summary Budget Plan of Marginal Revenues and Expenditures Marginal Revenues Tuition State Appropriations Total Marginal Revenues $4,585,668 1,491,132 $6,076,800 Marginal Expenditures Expenditures Funded by Marginal Revenues: Core Missions (Teaching, Research, Service) Campus Facilities (Utilities) Contingency Reserve Total Funded by Marginal Revenues $4,411,574 1,600,000 65,226 $6,076,800 Expenditures Funded by Reallocations: Administrative Support Salary & Benefit Increase IT-PeopleSoft Student System Debt Service Facilities M&R Insurance Student Fee Bad Debt Write-Off Institutional Financial Aid Contingency Reserve Total Funded by Reallocations Sources of Reallocations: Chancellor’s Office Provost’s Office VC Student Affairs Communications VC University Advancement VC Admin. & Finance Administrative Reserves (One-time) School-based Financial Aid Total Reallocations $1,083,286 488,000 378,200 795,200 153,400 550,000 660,400 442,624 $4,551,110 $ 237,596 1,109,556 637,210 47,450 106,192 1,202,706 550,000 660,400 $4,551,110 5