Funding Streams Initiative – OP Assessment
March 5, 2012
Information Item – Budget Review Work Group
FUNDING STREAMS OVERVIEW
Funds Flow and Impact on Campus Budget Process
The Office of the President (OP)’s Funding Streams Initiative (FSI) changes how the University
allocates funds across the system (refer to President Yudof Letter - Appendix I). This initiative
realigns the way funds flow within the University and the way the OP and systemwide programs are
funded.
Historically, the OP central operations and systemwide programs1 budget was primarily funded with a
variety of funds retained from campus Core Funds2 and Common Fund assessments on Medical
Center, Auxiliary, & Health Sciences Compensation Plan (HSCP) expenditures. More specifically
under FSI:
•
•
The source campus retains all revenue it generates, and all former Common Fund assessments by
OP are eliminated. Thus funds will no longer flow to OP for subsequent redistribution among OP
and/or other campuses.
The OP central operations and various systemwide programs are now funded through a broadbased flat assessment charged to each campus, which began this 2011/12 fiscal year. This OP
Assessment is calculated as a percentage of over-all campus expenditures.
Although implementation of FSI was originally intended to be financially neutral in year one of its
implementation, it is not. The final Funding Streams calculations included a “non-neutrality”
provision to recognize that the funds returned to the campuses are less than the cost of the new
assessment. This non-neutrality effectively resulted in another budget cut for each campus, and in the
short term for 2011/12 only, will be largely offset by the additional funding available to the campus
from the newly retained revenues. The new OP Assessment, and potential upside from aggressive
pursuit of new revenues that the campus expects to generate, needs to be incorporated locally into the
campus budget planning process.
The OP Budget is to be Funded via a Broad-Based Assessment
With all funds now fully flowing to the campuses, instead of as previously partially retained by OP for
central and systemwide support, the campuses are instead recharged a broad-based flat assessment on
all campus funds. The assessment rate for the initial 2011/12 implementation is 1.6%. The assessment
is based on total net operating expenditures3 from all fund sources two years prior. Therefore, fiscal
year 2009/10 expenditures drive the 2011/12 campus assessment.
The university has provided campuses with broad discretion in funding the OP Assessment. While the
assessment liability is calculated based on total net expenditures, such an assessment would be an
unallowable direct charge on restricted funds such as contract and grant funds or restricted gifts.
1
The OP budget includes Administration, UC Programs, MRUs, ANR, and other UC wide initiatives such as UCPath. It excludes dir ectly recharged
services for Benefits Administration, Asset Management, Risk Management, etc.
2 Core Funds consist primarily of State General Funds, other State Appropriations, Indirect Cost Recovery / Overhead Funds, sys temwide
mandatory Student Fees, and other misc. UC General Funds.
3 As reporting in campus public detailed financial statements, and which is already net of plant and scholarship allowance funding.
Therefore, the campuses must use other funds to cover the assessment; President Yudof’s letter
explicitly states that the many fund sources that campuses may use to cover this liability include
student tuition & fees, research indirect cost recovery, auxiliary, sales & service revenues and other
sources.
UC SAN DIEGO – FUNDING STREAMS IMPLEMENTATION
OP Assessment Funding for 2011/12
The first year of the Funding Streams Initiative implementation is this fiscal year 2011/12. San
Diego’s OP Assessment this year is the equivalent to 1.6% of total 2009/10 current fund expenditures,
or $40.9 million. This equates to 14.7% of the total OP Assessment amount that is needed to fund their
$277 million budget. The campus also received $34.1 million in new funds – funds that had been
previously assessed and retained by OP.
As previously agreed, the campus is taking an interim, centralized approach to addressing its Funding
Streams liability for 2011/12. For the current year only, the $34.1 million of the OP Assessment will
be funded by the funds returned and now retained by the campus. The remaining $6.8 million of the
liability – the non-neutrality portion of the assessment – is being funded largely by the additional
revenues available to the campus. This approach is outlined below:
UCSD’s share of the OP Assessment
2009/10 Current Fund Expenditures of $2.553 billion x 1.6%
Funding UCSD’s 2011/12 OP Assessment
Funds returned to the campus by OP (previously retained by OP)
Common Fund tax on Med Center, Aux, HSCP (based on 2009/10 data)
Campus Funds (UCSD’s share of $51.4 OP non-neutral shortfall)
$40.9 million
$32.0 million
2.1 million
6.8 million
$40.9 million
Distributing the OP Assessment Beginning in 2012/13
For 2012/13, the OP Assessment is still unknown. However, for planning purposes, we use an
estimate of ~$43.7 million, based on 1.6% of San Diego’s $2.73 billion in 2010/11 operating
expenditures. The actual assessment rate charged by OP will vary from year-to-year dependent on the
total OP budgetary need and the level of total expenditure base of all 10 UC campuses. OP budget is
now being reviewed by a UC wide Executive Budget Committee prior to it going before Regents for
formal approval.
The flat percentage “pass-thru” distribution of this broad-based assessment to campus expenditures is
typically described as 1.6%. However, as a campus, we will make several adjustments to the
expenditure totals used by OP that result in a slightly higher assessment recharge rate of 1.62%. These
adjustments include the standard exclusions for non-VC operating expenditures related to student
financial aid and purchased utilities.
VC Units will be responsible for covering their share of the OP Assessment liability as generated by
their expenditures. Units will have wide discretion on the funding sources they ultimately use to cover
their share of these expenditures. Table 1a and 1b on the following page shows the calculations for the
estimated 2012/13 OP Assessment that will be recharged to each VC Unit. To assist with your internal
management of this assessment, the supporting detailed 2010/11 expenditures for each VC Units by
division are shown in Appendix II.
2
Table 1a
2010/11 Current Fund Expenditures
Expenditure Base for 2012/13 OP Assessment to Campus
CORE INSTRUCTION & RESEARCH EXPENDITURES
($ in thousands)
General & 4
Tuition Funds
$279,070
Contract & 5
Grant Funds
$227,990
Other Core 6
Funds
$16,883
Health Sciences
52,151
413,833
Marine Sciences
23,633
101,885
Medical Center
6,208
Student Affairs
Non-Core
Funds
$70,092
Total
$594,036
15,196
367,806
848,986
524
19,626
145,669
-
-
786,846
793,053
12,553
9,143
20,835
42,441
84,971
External & Business Affairs
27,254
20,028
2,395
80,971
130,648
Resource Mgt & Planning
40,098
11,711
633
43,664
96,105
Academic Senate
723
193
-
9
925
Chancellor's Orgs
4,631
1,988
275
6,895
$446,321
$786,771
$1,411,730
$2,701,288
Unit
Academic Affairs
OP Assessment Recharge Base
$56,465
Eliminated Expenditures
Student Financial Aid
$212,144
Purchased Utilities
23,656
Campuswide / Year-End Adjustments
(206,114)
UCSD Expenditures per 2010/11 Campus Financial Schedule B 7
$2,730,973
Table 1b
2012/13 Campus Distribution of OP Assessment Recharge
1.618% of 2010/11 Current Fund Expenditures
($ in thousands)
ASSESSMENT ON CORE INSTRUCTION & RESEARCH
General &
Tuition Funds
$4,515
Contract &
Grant Funds
$3,688
Other Core
Funds
$273
Health Sciences
844
6,695
246
5,950
13,734
Marine Sciences
382
1,648
8
318
2,357
Medical Center
100
-
-
12,729
12,830
Student Affairs
203
148
337
687
1,375
External & Business Affairs
441
324
39
1,310
2,114
Resource Mgt & Planning
649
189
10
706
1,555
Academic Senate
12
3
-
Chancellor's Orgs
75
32
$7,220
$12,728
Unit
Academic Affairs
OP Assessment Recharge
$913
State General Fund expenditures, plus Tuition (Ed Fee) and other UCGF funds spent as 19900 General Funds
Contract & Grant (C&G) direct expenditures, and spending of ICR funds generated from C&G overhead recovery
6 State Appropriations, other systemwide mandatory Student Fees, and other Overhead Funds
7 http://www.ucop.edu/corpacct/finschd/1011/sd-combined.pdf
4
5
3
Non-Core
Funds
$1,134
Total
$9,610
15
4
112
$22,838
$43,700
While VC Units are fully responsible for covering their share of the annual OP Assessment, for the
2012/13 base distribution year they will also receive additional funding, from the funds returned by OP
to the campus. The distribution of these funds will be based on one of the following options (Models
are attached in Appendix III):
1. PERMANENT: Allocate the entire $32 million in returned General and Research ICR funds to VC
Units in accordance with existing allocation methodologies. The specific OP Common Fund
assessments on Medical Center, Auxiliary, & Health Sciences Compensation Plan are eliminated
and replaced by their campus share of annual liability as calculated in Tables 1a & 1b on prior
page.
2. PERMANENT: Allocate ~$21 million in returned General and Research ICR funds to VC Units,
enough to fully offset their actual 2012/13 share of liability stemming from Core Instruction &
Research Expenditures. As with option #1 above, the $2 million Common Fund assessment is
eliminated and replaced by their campus share of annual liability as calculated in Tables 1a & 1b
on prior page.
a. Allocate the remaining $11 million to VC unit based on the permanent Core Base Budget as net
new funds to be used by VCs to mitigate cuts, fund priorities or new initiatives.
b. Allocate the remaining $11 million at campus level to offset anticipated 2012/13 budget gap.
c. Allocate the remaining $11 million centrally, and use strategically:
i. Permanent needs such as: RCI, Deferred Maintenance, OMP…
ii. One-time temporary uses such as: Transition/Bridge impact of OP Assessment on SelfSupporting Activity – for example, $1M Auxiliaries and $5M for Medical Center/Medical
Group Capital/Facility reserve, etc.
Moving forward, VC Units are expected to manage their overall share of OP Assessment as
determined each year in the overall budget process. As previously noted, the OP Assessment to the
campus and the subsequent shares to VC Units will shift with changes in annual expenditures across
units. Because the assessment methodology is simple and transparent in its use of public financial
statement expenditures from two years prior to assessment, units will be able to estimate their share of
liability in advance of each year and thus facilitate their own internal budget planning.
4
Appendix I
President Yudof’s Letter Approving the Implementation of the Funding Streams Model.
5
Appendix I
President Yudof’s Letter (continued)
6
Appendix I
President Yudof’s Letter (continued)
7
Appendix I
President Yudof’s Letter (continued)
8
Appendix II
2010/11 Current Fund Expenditures - by VC Division
Expenditure Base for 2012/13 OP Assessment to Campus
($ in thousands)
Unit & Division
General
& Tuition
Funds
Contract
& Grant
Funds
Other
Core
Funds
Academic Affairs
$279,070
$227,990
$16,883
$70,092
$594,036
$9,610
ACADEMIC COMPUTING SVS
ASSOC VC EXT STUDIES & PUB
DEAN INTL RELATIONS AND PA
DEAN MANAGEMENT SCHOOL
DEAN OF GRAD STUDIES & RES
DEANS OF DIVISION
DIRECTOR OF MEDIA CENTER
MATH DIAGNOSTIC TESTING PROJ
PROVOSTS
THE PREUSS SCHOOL
UNIVERSITY LIBRARIAN
VC-EQUITY DIVERSITY INCL
VICE CHAN ACADEMIC AFFAIRS
VICE CHANCELLOR-RESEARCH
WHITE MTN RESEARCH STATION
3,581
47
6,468
4,310
8,167
194,714
1,293
3
11,387
980
28,223
1,176
8,124
10,597
16
1,591
1,146
426
2,207
129,551
4
404
95
905
2,087
1,198
6,383
1
321
32,294
3,727
9,617
456
12,316
(21)
70
550
198
266
195
5,548
21
117
5,827
4,005
65
502
82,534
238
1,144
4,357
489
(104)
1,238
6
1,196
8,557
2
4,322
34,026
12,247
16,440
12,028
342,964
1,276
3
12,231
6,702
33,537
1,247
10,965
106,045
2
Health Sciences
$52,151
$413,833
$15,196
$367,806
$848,986
$13,734
2,661
35,936
8,193
218
1,879
10,345
719
248
900
3,400
95
37,072
288,734
18,690
1
43,163
1,946
10,497
13,034
695
715
234,144
16,978
89,108
13,458
7,741
208
4,145
1,309
40,666
560,693
54,206
89,108
57,934
9,937
11,605
22,739
2,099
658
9,071
877
1,442
937
161
188
368
34
$23,633
$101,885
$524
$19,626
$145,669
$2,357
4,399
5,990
1,575
264
8,842
2,570
(8)
2,961
175
29,011
23,443
21,339
9,947
14,817
193
15
79
60
159
95
116
11,337
1,189
1,190
1,904
2,400
926
680
1
18,697
7,369
31,855
25,671
32,740
13,537
15,605
194
302
119
515
415
530
219
252
3
$786,846
$793,053
$12,830
18,232
489,294
64,290
215,030
18,232
495,501
64,290
215,030
295
8,016
1,040
3,479
BASIC SCIENCE DEPARTMENTS
CLINICAL DEPARTMENTS
DEAN SCHOOL OF MEDICINE
EXECUTIVE DIRECTOR MSCCP
ORGANIZED RESEARCH UNITS
OTHER MED SCHOOL PROGRAMS
PARTICIPATING-DEPARTMENTS
SCHOOL OF PHARMACY
VICE CHAN-HEALTH SCIENCE
Marine Sciences
DIRECTOR SCRIPPS INSTIT OF OCE
INSTR DEPT-THE SIO DEPT
LABORATORIES
SHIPS OPS AND TECHNICAL SUPP
SIO RESEARCH DIVISIONS
SPECIAL RESEARCH UNITS
UC INSTITUTES-SIO
VCMS-RESEARCH SECTIONS
Medical Center
ASSOC DIR HOSPITAL AND CLIN
ASSOCIATE DIR OF MED CENTER
DIRECTOR'S OFFICE
THORNTON HOSPITAL
$6,208
6,208
9
71
593
1
2,159
Non-Core
Total
Share of OP
Assessment
@ 1.62%
198
108
543
20
177
1,716
Appendix II
2010/11 Current Fund Expenditures - by VC Division
Expenditure Base for 2012/13 OP Assessment to Campus
(Continued)
($ in thousands)
Unit & Division
General
& Tuition
Funds
Contract
& Grant
Funds
$12,553
$9,143
$20,835
$42,441
$84,971
$1,375
8,251
42
86
896
5
48
7,695
97
1,028
2,345
4,233
1,104
475
5
2,968
1,486
7,685
991
9,816
3,983
7,813
7,178
5,456
9,546
14,530
1
24,006
2,642
159
64
126
116
88
154
235
266
7
495
1,552
1,729
6,069
4,860
201
11,322
2
16,054
158
$27,254
$20,028
$2,395
$80,971
$130,648
$2,114
9,922
9,546
12
1,019
1,317
5,920
1,853
5,763
6,629
6,275
602
633
125
19
40
(1,996)
2,885
11,351
71,073
557
(2,900)
14,709
20,377
17,639
71,675
7,129
(881)
238
330
285
1,160
115
(14)
$40,098
$11,711
$633
$43,664
$96,105
$1,555
27,164
3,419
63
1,096
4,326
633
39,635
723
3,091
(8)
825
(603)
70,850
63
4,698
10,062
(8)
825
8,351
244
1,018
1,146
1
76
163
Other
Core
Funds
Non-Core
Total
Share of OP
Assessment
@ 1.62%
2010/11 Current Fund Expenditures - continued
Student Affairs
ADMISSIONS & ENROLL SVCS
COLLEGE DEANS
EXPERIENTIAL LEARNING
INTERCOLLEGIATE ATHLETICS
SPORTS FACILITIES & PROGRAMS
STUDENT EDUC ADVANCEMENT
STUDENT LIFE
STDT POLICIES & JUDICIAL AFFAIRS
STUDENT WELLNESS
VC STUDENT AFFAIRS
External & Business Affairs
ASST VC-ADMIN COMP & TELECOM
CONTROLLER/AVC BFS
EXTERNAL RELATIONS
HOUSING AND DINING SERVICES
HUMAN RESOURCES
VICE CHAN BUSINESS AFFAIRS
Resource Mgt & Planning
AUXILIARY & PLANT SERVICES
CAMPUS PLANNING MGT
COMMUNITY SAFETY
ENVIR, HEALTH & SAFETY
FACIL DESIGN & CONSTR MGT
REAL ESTATE MANAGEMENT
VC-RESOURCE MGT & PLANNING
VCRMP - UNALLOCATED
VCRMP SPECIAL PROJECTS
Academic Senate
ACADEMIC SENATE OFFICE
ACADEMIC SENATE/COR/TRAV/GC
ACADEMIC SENATE/COR/TRAV/HS
ACADEMIC SENATE/COR/TRAV/MS
Chancellor's Orgs
AFFIRMATIVE ACTION PROGRAM
CHANCELLOR'S OFFICE
COMM, PUBL, SPEC EVENTS
Grand Total
956
73
1,645
142
(1)
2,878
2,645
388
43
13
135
4
16
7,411
1,543
244
1,018
$723
$193
$9
$925
$15
647
51
11
13
99
66
20
9
9
755
117
30
23
12
2
$4,631
$1,988
$275
$6,895
$112
4
2,854
1,773
11
145
1,833
267
8
15
3,267
3,613
53
58
$446,321
$786,771
$56,465 $1,411,730 $2,701,288
$43,700
10
Funding Streams Initiative – OP Assessment
SUMMARY: Net Impact of OP Assessment & Distribution of New Funding
(amounts in thousands)
2012/13 OP Assessment of $43.7M
OP
Funds (1) Non-Core
Assessmen Assessment Assessment
Unit
Academic Affairs
Health Sciences
Marine Sciences
Medical Center
Student Affairs
External & Business Affairs
Resource Mgt & Planning
Academic Senate
Chancellor's Orgs
Campus Reserve/Priorities
Total
(8,476)
(7,784)
(2,039)
(100)
(688)
(804)
(848)
(15)
(107)
(20,862)
(1,134)
(5,950)
(318)
(12,729)
(687)
(1,310)
(706)
()
(4)
(22,838)
(9,610)
(13,734)
(2,357)
(12,830)
(1,375)
(2,114)
(1,555)
(15)
(112)
(43,700)
March 5, 2011
Funding Option 1
Funding Net Impact
Allocation Incr/(Decr)
15,886
5,602
2,092
2,239
540
2,738
3,773
239
584
357
34,051
Funding Option 2a
Funding Net Impact
Allocation Incr/(Decr)
6,276
(8,132)
(265)
(10,590)
(834)
625
2,218
224
473
357
(9,649)
14,530
9,467
2,701
2,128
1,327
1,702
1,869
64
263
34,051
4,920
(4,268)
345
(10,701)
(47)
(411)
314
49
151
(9,649)
Funding Option 2b/c
Funding Net Impact
Allocation Incr/(Decr)
8,476
7,806
2,041
1,990
689
945
914
15
107
11,068
34,051
(1,134)
(5,929)
(316)
(10,839)
(686)
(1,168)
(641)
()
(4)
11,068
(9,649)
OP Assessment:
Proposed: Consistent with OP methodology, all annual VC operating expenditures (adjusted for non-VC operating costs like SFA and Utilities)
share in OP assessment liability. The % of expenditures will fluctuate annually. Est. for 2012/13 = 1.62% of 2010/11 or 2-prior year expenditures.
Funding Scenarios: (see next page for detail calculations)
Option 1
The ~$32 million of General Funds & ICR funds returned by OP July 1, 2011 is allocated in accordance with existing methodologies.
The specific OP Common Fund taxes on Self-Supporting Units are eliminated, returning ~$2 million to the Medical Center,
Health Sciences Compensation Plan, and Auxiliary units.
Option 2 - all
A portion (~$21 million) of General Funds & ICR funds returned by OP is allocated to fully fund the initial OP Assessment levied on
Core Funds. The specific OP Common Fund tax on Self-Supporting Units is eliminated, returning ~$2 million to the Medical Center,
Health Sciences Compensation Plan, and Auxiliary units.
2a
The remaining ~$11 million of Returned Funds is allocated to VCs per the Permanent Core Base Budget, net of standard exclusions.
2b
The remaining ~$11 million of Returned Funds is held centrally & used to offset the 2012/13 permanent budget gap.
2c
The remaining ~$11 million of Returned Funds is held centrally & used to fund strategic needs, priorities, new initiatives as determined annually.
(1) Core Funds Assessment is charged on all Core Instructional & Research expenditures - includes spending of State Funds; Mandatory Student Fee funds; all Contract,
APPENDIX III
CBO / BRWG
Funding Streams Initiative – OP Assessment
FUNDING OPTIONS - Distribution of New Funding
March 5, 2011
(amounts in thousands)
Distribution Option 1
Allocate Returned
General Funds (1)
Academic Affairs
Health Sciences
Marine Sciences
Medical Center
Student Affairs
External & Bus Affairs
Resource Mgt & Planning
Academic Senate
Chancellor's Orgs
Campus Reserve
63.8%
11.0%
6.3%
1.7%
2.6%
5.0%
8.3%
0.2%
1.3%
13,246
2,278
1,304
350
540
1,034
1,721
38
262
New Funds Distribution
100%
20,771
Allocate Returned
ICR Funds (2)
23.7%
29.6%
7.0%
0.0%
0.0%
14.0%
17.8%
1.8%
2.9%
3.2%
100%
2,640
3,303
786
1,563
1,986
201
323
357
11,159
Elim Comm
Fund Tax
22
2
1,890
1
142
66
2,121
Total New
Funds
15,886
5,602
2,092
2,239
540
2,738
3,773
239
584
357
34,051
(1) Allocate General Funds per % of June 2011 State Funds Permanent Core Budget Base. FSI effective July 1, 2011. *
(2) Allocate ICR per 2011/12 ICR Model which distributes 2010/11 Recovery. FSI effective July 1, 2011.
Distribution Option 2a
Cover OP Assessment
(1)
on Core Funds
Academic Affairs
Health Sciences
Marine Sciences
Medical Center
Student Affairs
External & Bus Affairs
Resource Mgt & Planning
Academic Senate
Chancellor's Orgs
40.6%
New Funds Distribution
Balance of
Returned Funds (2)
0.5%
8,476
7,784
2,039
100
688
804
848
15
107
54.7%
15.0%
6.0%
1.2%
5.8%
6.8%
8.6%
0.4%
1.4%
6,054
1,661
661
138
639
757
955
49
156
100%
20,862
100%
11,068
37.3%
9.8%
0.5%
3.3%
3.9%
4.1%
0.1%
Elim Comm
Fund Tax
22
2
1,890
1
142
66
2,121
Total New
Funds
14,530
9,467
2,701
2,128
1,327
1,702
1,869
64
263
34,051
(1) Allocate enough returned funds to cover OP Assessment on Core Expenditures
(2) Allocate remaining returned funds as a % of June 2011 Permanent Core Budget Base *
Distribution Option 2b/c
Cover OP Assessment
(1)
on Core Funds
Academic Affairs
Health Sciences
Marine Sciences
Medical Center
Student Affairs
External & Bus Affairs
Resource Mgt & Planning
Academic Senate
Chancellor's Orgs
Campus Priorities
40.6%
0.5%
8,476
7,784
2,039
100
688
804
848
15
107
New Funds Distribution
100%
20,862
37.3%
9.8%
0.5%
3.3%
3.9%
4.1%
0.1%
Balance of
Returned Funds (2)
100%
100%
Elim Comm
Fund Tax
22
2
1,890
1
142
66
11,068
11,068
2,121
Total New
Funds
8,476
7,806
2,041
1,990
689
945
914
15
107
11,068
34,051
(1) Allocate enough returned funds to cover OP Assessment on Core Expenditures
(2) (a) Retain remaining returned funds centrally to partially offset 2012/13 Perm Budget cuts
(2) (b) Retain remaining returned funds centrally to use for Campus Priorities
* Core Perm Budget Base includes:
- State Funds : 19XXX (except for 19933A & 19942A), Other State Funds: 18XXX
- Tuition & Fee Funds : 20000A, 20095A, 20290A, 2022XA & 19942A
- ICR Funds : 05397A, 07427A, 19933A & 69750A
APPENDIX III
CBO / BRWG