Defining New
Standards for
Financial Management
University of Missouri – Kansas City
Presentation to the Faculty Senate
January 15, 2002
Future Budget Picture
at UMKC
Year 1
Year 2
Year 3
Year 4
Year 5
2001 - 2002 2002 - 2003 2003 - 2004 2004 - 2005 2005 - 2006
Financial
Understanding
Financial
Viability
Financial
Freedom
2
Reality
 Recession - Serious cuts in
public higher education in 44
States
 Missouri tax structure
 Change in the way we are
handling financial management
 Items remain as cost funded
centrally without a permanent
(rate) revenue source
3
“The true test of
leadership is the
capacity to tell the
hard truths”
Jeff Bezos
4
“People are always blaming their
circumstances for what they are.
I don’t believe in circumstances.
The people who get on in this world are
the people who get up and look for the
circumstances they want, and if they
can’t find them, make them.”
George Bernard Shaw
5
This is Us
&
We Are the
LEADERS
6
The Facts:
Ending Cash Balance Requirement:
 Curators require a minimum of a 5%
cash balance at the end of the year
(FY 2002 Budget - $8.4 million)
Our Goal is to have an ending cash
balance of at least 6.0% of our annual
revenues or $10.0 million
7
The Facts:
Current Budget Constraints
 Original Budget was based on only
97% of the approved State
Appropriation of monies
 Added Revenue Cuts - $5.12 million
o July 2001 - $3.5 million (5.0% withholding)
o January 2002 - $1.65 million loss in state
appropriation which now requires added
reallocations
8
The Facts:
Unfunded Commitments & Requests
 FY 2002 Budget included a centrally
held reserve of $8.7 million to fund
various “known” program commitments
– YTD tallying of these off-budgeted
items totals over $14.6 million
 As a result, there are $8.64 million in
program commitments do not have
current permanent revenues to cover
expenses – Need for Reallocation
9
The Facts:
“Some” Good News
 Estimated $2.0 million growth in
budget revenues in Education Fees
from what was originally projected
 Centrally budgeted contingency
reserve has a balance of $2.94
million
10
The Facts:
Recap Mid- Year Budget:
+ $ 2.00 million
+ $ 2.94 million
- $ (8.64) million
- $ (1.65) million
- $ (2.26) million
Education fees
Central reserve
Unfunded program
commitments
Mid-year withholding
Shortfall in ending cash
balance target
_______________
Total $ (7.61) million Reallocations or
reductions needed11
The Facts:
Looking at FY 2003 Budget :

Additional 5.0% cut in State funding
which means $4.3 million in less
revenues

Probable increase of 8.0% in
Education Fees or $5.6 million in
added revenues

More than $8.0 million in new and
added department program
spending requests and initiatives
12
UMKC TOTAL
ANNUAL BUDGET ALL FUNDS
REVISED 2002 BUDGET
$239,238,866
Total FY 2002 Revenues
All Funds - $239,238,866
Restricted $45.6 million
19%
Designated $21.7 million
9%
General Operating Fund Revenues
$168,821,365
Operating $168.8 million
72%
State $81.4
million
48%
Fees - $77.2
million
46%
Other - $10.2
6%
13
The Opportunity:
Lead as Defining New
Standards
 Say what is so out loud
(integrity and candidness)
 Collaborate
 Stick with the values
 Support each other
14
The Opportunity:
Lead as Defining New
Standards
• We are campus leaders
• Encourage your colleagues to participate
–
– Campus meetings
– Unit meetings
• Be constructive
• Think creatively
• Remember UMKC’s vision and values
15
The Opportunity:
Lead as Defining New
Standards

Great leadership because we dealt
with the circumstances, not
because we got the circumstances
we wanted.

Great leadership because we
created the future we wanted in our
vision- we did not go into survival
and move to mediocrity
16
Looking Back 3 Months from
Now – What is Possible?
• We did not lose sight of our values in the face
of adversity
• We stuck with our vision in the face of
adversity
• We collaborated to find solutions
• The organization will emerge stronger
• The predictable (turf and “hunkering down”)
did not happen
• We engaged the collective wisdom effectively
• We reallocated the $7.6 million and we see
more opportunities for the future
17
Next Steps:
Budget Planning:
o We need to ask ourselves:
• What options are available for short
and long term budget efficiencies?
• What options are available for revenue
enhancements?
• What options available to save money?
18
Next Steps:
Budget Planning:

Gain a better understanding of our budgets –
Budget staff committed to meet with each of
us to gain a better understand the issues
facing each of our units

Questions we need to think about:
1. What revenue sources do you have available
beyond the general operating budget?
2. How do your expenditures year-to-date
compare with the original budget
projections
19
Next Steps:
Budget Planning:
oWe need to engage ourselves in
owning the issue and the
solutions
oNeed for other meetings and
faculty involvement?
20
Design of Collaborative
Process
Four Guiding Principal
A. Stick with the vision and values (these came
from the grassroots of this organization)
B.
Avoid "silo only" conversing which often leads to
entrenchment and a set up for failure
C. Executive Cabinet places high value on
unit level Authority and Responsibility
D. Take a Five Year Perspective – We need to
strategically realign our priorities within the
availability of funds
21
Defining New
Standards for
Financial Management
University of Missouri – Kansas City
Presentation to the Faculty Senate
January 15, 2002