Budget & Planning
780 Regent Street Suite 241
PO Box 8010
Madison, WI 53708-8010
608/262-1544 608/265-2090 Fax
e-mail: budget@uwsa.edu
website: http://www.uwsa.edu
February 14, 2014
To:
Auxiliary Budget Officers
Budget Officers
From:
Jake Miller
Budget & Policy Analyst, Office of Budget and Planning
Subject:
Updated 2014-15 Auxiliary Cost and Budget Building Factors
This is an update of the Auxiliary Cost and Budget Building factors document that was
sent to you on October 18, 2013. While most of the cost factors are the same, below is a
list of those factors that are new or have been updated.
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Updated pay plan information on increases for employees in collective
bargaining units. (Section 2)
The new System Network chargebacks for services that previously had been
provided by WiscNet. (Section 7).
A potential change in the assessment for System Administration Office of Risk
Management Services. (Section 9).
Updated information regarding premiums for Property, Liability, and Worker’s
Compensation insurance (Section 10).
Updated information regarding reserve levels (Section 13).
As you are aware, new policies are being developed regarding cash balances. Therefore,
please pay special attention to revenues, expenses and ending cash balances that are being
reported for both 2013-14 and 2014-15. It is possible that these amounts will be provided
to the Board of Regents in the 2014-15 Annual Budget Document and that variances
between what is budgeted and actual experience will be analyzed.
The 2013-15 Biennial Budget continues the requirement that the Board of Regents fund
UW institutions through block grants. The auxiliary operations fall into the state’s
Chapter 20.285 1(gb) appropriation defined as General Program Operations – Block Fund
121. Other funds that have been rolled into this appropriation include tuition revenue and
General Operations Receipts.
As part of implementing the block grant it was decided by the Chief Business Officers
(CBOs) that funds 123, 128, 136, and 228 continue to be maintained separately, while
funds 120, 129, 528, and 530 will roll into either 128 or 136, at the institution’s
discretion. It was further decided that funds 128 and 136 should be managed under
NACUBO Financial and Accounting Report Manual (FARM) Policies 703.111 and
703.113 (fund 128 –Auxiliary Enterprises) and 703.114 through 703.117 (fund 136 –
Operating Receipts). These policies can be found on the System Budget Office website
at http://www.uwsa.edu/budplan/annualOpBudget.htm.
General Guidelines:
Auxiliary budgets should not automatically increase by applying cost factors to every
budget category. Institutions should review their budget to actual expenditure experience
over the past several years and apply percentages that reflect those experiences wherever
possible.
Institutions should continue to place an emphasis on aligning budgets with actual
expenditures. Student affordability is a priority of the Board of Regents and total cost of
attendance (tuition, segregated fees, housing, and board costs) should be considered as
rates are developed. To accomplish this, budget only those positions and expenditures
anticipated for use in 2014-15, and consider using reserve balances for one time funding,
and phasing in rate increases.
Please contact either me or Renee Stephenson with any questions.
cc:
Chief Business Officers
Senior Student Affairs Officers
Renee Stephenson
Freda Harris
2014-15 University of Wisconsin System
Auxiliary Budget Building Cost Factors
1) Reporting Threshold
The Board of Regents decided at its December 9th, 2010 meeting that the detailed
reporting requirement for auxiliary rate increases should be the greater of 3.0%, or the
rolling average of the prior three years of Wisconsin Disposable Income Per Capita.
The most recent three-year rolling average is 2.2%, so please use 3.0% as the
reporting threshold for the 2014-15 submissions.
2) Pay Plan Increases
The 2013-15 Compensation Plan includes a pay plan increase of 1% in the 2014-15
fiscal year for all non-represented state employees, including the University’s
unclassified staff. This is in accordance with the agreement approved by the Joint
Committee on Employee Relations (JCOER) on June 26, 2013, and signed into law
by Governor Walker as part of the state budget bill on June 30, 2013.
Institutions that planned for a 2% pay plan increase in their 2013-14 budgets should
not require a significant increase in their salary budgets in 2014-15 as the 2013-14
pay plan was 1%.
Also included in the 2013-15 Compensation Plan were increases for information
technology (IT) staff and other departments in 2014-15. Please contact your Office of
Human Resources to discuss the impact of this provision.
JCOER also approved a 1% increase for the 2013-14 fiscal year for employees
represented by WSEU, WSAA, SEIU, Trades, and PERSA on December 19, 2013,
with the Legislature approving of the agreements in January 2014. This increase was
made retroactive to July 1, 2013. Please use the current base salary for these positions
as a starting point for your 2014-15 budget. These bargaining units will need to
recertify and request a separate increase for 2014-15. If they do so, their rate increases
will likely be similar to the 1% increase being given to non-represented workers.
3) Fringe Benefits
For 2014-15, it is estimated that UW System composite fringe benefit rates (all
institutions, all funds) will be 43.71% for permanent staff, up from 42.04% in 201314. Other rates include 41.75% for graduate assistants (vs. 38.76% in 2013-14),
30.90% for LTE (vs. 29.95% in 2013-14), and 2.50% for student help (vs. 2.50% in
2013-14). Institutions should also use their own experience in establishing fringe
benefit rates for employees.
 Health Insurance Cost Increases
As part of this fringe benefit rate, the Department of Employee Trust Funds
(ETF) estimates health insurance costs will increase 8.0% in calendar year
2014, and we currently estimate another increase of 8.0% in calendar year
2015.
 Retirement Cost Increases
Also included in the fringe benefit rate above is an estimate that employer
contributions to the Wisconsin Retirement System (WRS) and Sick Leave
Conversion will remain relatively consistent at 8.40% in calendar years 2014
and 2015 (up from 7.95% in calendar year 2013).
4) Enrollments
Institutions are asked to use actual enrollments from the prior year to budget for the
upcoming fiscal year. So for 2014-15, please use the actual 2013-14 enrollment
numbers for your institution.
5) Inflation
Indices provided by The Department of Revenue (DOR) project a 1.5% increase in
inflation for 2014-15. This is given as a guideline. Please limit inflation applications
to supplies and services. Also, historical expenditure data is preferred to using
inflation estimates whenever possible.
6) Interest Income
The State Investment Fund earning rates averaged 0.12% as of June 30, 2013. Please
use this rate when estimating interest earnings.
7) Chargebacks
There are a number of miscellaneous chargebacks to UW System institutions that can
be distributed by funding source to assess a fair share of the cost to auxiliaries. These
include charges for Common Systems, the System Network, Office of State
Employee Relations (OSER), Fund 128, and Wisconsin State Management
Accounting and Reporting Tool (WisMART). The most recent assessment amounts
are listed on the following pages.
2013-14 Common Systems Allocations
Madison
$11,474,164
Milwaukee
$4,347,306
Eau Claire
$1,563,391
Green Bay
$734,088
La Crosse
$1,415,514
Oshkosh
$1,572,866
Parkside
$659,873
Platteville
$1,088,258
River Falls
$885,438
Stevens Point
$1,299,085
Stout
$1,259,033
Superior
$459,517
Whitewater
$1,431,136
Colleges
$1,078,444
Extension
$1,067,571
SA/ SYS
$95,341
Total
$30,431,595
Systems Network Chargeback
Madison
Milwaukee
Eau Claire
Green Bay
La Crosse
Oshkosh
Parkside
Platteville
River Falls
Stevens Point
Stout
Superior
Whitewater
Colleges
Extension
SA/ SYS
Total
2013-14
$843,307
$338,055
$109,359
$66,707
$98,711
$109,539
$45,616
$89,580
$80,688
$95,493
$94,711
$33,570
$105,278
$107,454
$43,915
$8,957
$2,271,118
2014-15
$1,381,518
$505,320
$179,376
$83,447
$161,546
$179,376
$76,672
$124,101
$100,921
$148,351
$145,141
$53,849
$161,902
$117,682
$134,800
$12,125
$3,566,127
2012-13 OSER Assessments
Madison
$884,061
Milwaukee
$172,434
Eau Claire
$65,505
Green Bay
$33,847
La Crosse
$55,738
Oshkosh
$61,126
Parkside
$29,469
Platteville
$48,497
River Falls
$35,362
Stevens Point
$61,295
Stout
$61,968
Superior
$24,249
Whitewater
$60,621
Colleges
$35,699
Extension
$37,046
SA/ SYS
$17,008
Total
$1,683,925
2012-13 Fund 128 Assessments
Madison
$95,751
Milwaukee
$42,117
Eau Claire
$16,361
Green Bay
$9,569
La Crosse
$16,141
Oshkosh
$19,821
Parkside
$5,024
Platteville
$12,012
River Falls
$11,377
Stevens Point
$16,840
Stout
$13,329
Superior
$4,905
Whitewater
$18,513
Colleges
$4,129
Extension
$1,595
Total
$287,482
2012-13 WisMART Assessments
Madison
$135,541
Milwaukee
$55,191
Eau Claire
$29,494
Green Bay
$27,213
La Crosse
$33,463
Oshkosh
$30,223
Parkside
$20,567
Platteville
$28,059
River Falls
$24,826
Stevens Point
$38,318
Stout
$36,581
Superior
$22,029
Whitewater
$28,713
Colleges
$25,172
Extension
$27,686
System Admin
$14,590
Total
$577,665
8) Payments for Municipal Services
Prior experience for municipal services is the best indicator of future assessments. The
February 2013 billing amounts provided by the Department of Administration are listed
below.
2012-13 Payments for Municipal Services
Assessments
Madison
$4,571,275
Milwaukee
$603,256
Eau Claire
$161,496
Green Bay
$77,977
La Crosse
$210,201
Oshkosh
$189,777
Parkside
$61,730
Platteville
$142,428
River Falls
$96,193
Stevens Point
$156,835
Stout
$161,751
Superior
$45,398
Whitewater
$167,790
Colleges
$133,803
Extension
$273,565
SA/SYS
$14,935
Total
$7,075,064
9) Assessments for Office of Risk Management
Below are the 2013-14 assessment amounts for System Administration’s Office of Risk
Management services. 2014-15 funding for these services are being reviewed, and may
result in an increase of approximately 10% from the figures seen in this table.
2013-14 Risk Management Assessments
Madison
$44,125
Milwaukee
$25,750
Eau Claire
$23,125
Green Bay
$22,750
La Crosse
$23,125
Oshkosh
$23,125
Parkside
$22,375
Platteville
$22,750
River Falls
$23,125
Stevens Point
$23,125
Stout
$23,125
Superior
$22,375
Whitewater
$23,125
Colleges
$22,750
Extension
$22,750
System Admin
$364,157
Total
$731,657
10) Property, Liability, and Worker’s Compensation Program Cost Adjustments
Overall premium changes realized by the UW System for the 2013-14 fiscal year were
26.0% for Property, -14.4% for Liability, and 2.8% for Worker’s Compensation.
Individual institutions will see larger or smaller changes based on actual experiences.
Please contact your institution’s risk manager for the actual loss experience.
11) Central Utility Systems
The UW System has discontinued annual billings to fund the Program Revenue portion
of the Central Utilities Pool. Institutions should be funding the Program Revenue portion
of campus utility projects through bonding, internal borrowing, or cash payments.
12) WIAC
The WIAC assessments were increased in 2013-14 to $30,000 per institution. The
committee will meet with the chancellors in the spring of 2014 to develop the 2014-15
assessments, but no 2014-15 estimates are available at this time.
13) Reserve Levels
In October 2013, the Board of Regents approved a plan recommending that institutions
maintain at least a 10% balance in auxiliary operations, with institutions below 10%
being required to develop a plan to reach the 10% balance level. In addition, if auxiliary
balances exceed 15% of total fiscal year expenses those amounts will need to be justified
along with a multi-year spending plan to the Board of Regents. Balances will be calculated
starting with the prior year’s ending cash balance, adding revenues received and deducting
expenditures made during the fiscal year. Balances will not reflect accruals for advance
deposits received for future academic terms, accounts payable, or accounts receivable. This
policy has been submitted to the State Legislature and is pending approval.
Please continue to use the Reserve Accumulation Policy (Attachment 3) to Financial
Policy 43 – Financial Management of Auxiliary Operations – as a guide on reserve
balances.
The capital reserve should be held in fund 228 with specific project codes or departments
set up for each planned renovation, acquisition or building project. Specific projects
codes or departments should not accumulate funds earlier than four years prior to the
commencement of the project in the absence of documented extenuating circumstances.
Please note that the Board of Regents Reserve Policy does not supersede statutory
provision 36.27 (6) which states segregated fees may be used only for the purposes for
which they were generated and 36.46 (1) which requires the Board of Regents to request
approval to accumulate auxiliary reserve funds from student fees that exceed 15% of the
previous fiscal years total revenues.