FUNDING STREAMS INITIATIVE SUMMARY REPORT January 24, 2011 Short Term Investment Pool Income (STIP) Income Report to the Funding Streams Budget & Tax Workgroup Summary  Current process and treatment:  STIP earnings on most funds are returned to the campuses that generate the earnings, except for State General Funds, ICR, Education Fees, and certain Plant funds, which are retained by OP.  Distribution: UCOP policy, UCSD policy, and award terms and conditions determine whether an individual fund's STIP is distributed to that fund, to the fund's related Vice Chancellor, or to the Chancellor (as in the case of PPM 410‐10 Funds).  Future (changes only) process and treatment:  Distribution: all funds returned to campuses.  Recorded as: STIP on GF recorded as 19900A in Permanent Budget; recording other STIP is a currently open question (see Known or Potential Problems Identified). Current Funds Flow  Attachment 1 reflects the recent historical distribution of STIP income.  FY 09/10 STIP income generated by UCSD was $27.3M.  Approximately 78% of STIP (5‐year average) is already retained by the campus.  The income distribution between individual funds and the Chancellor/Vice Chancellors is roughly 50/50. Future Funds Flow  Attachment 2 shows the remaining 22% (5‐year average) of STIP income earned on campus cash balances ‐‐ two years of actual OP‐held funds plus estimated income for FY 10/11.  The extreme variability of cash balances and earnings rates make future estimates difficult and unreliable.  Attachments 1 and 2 demonstrate a range of income from lower cash balances combined with higher STIP rates to higher cash balances combined with lower STIP rates. Local Resource Allocation Process Current allocation of revenue and budget:  STIP income is current year funding only; i.e., not permanently budgeted.  GAO has a program that automatically calculates and distributes STIP based on average daily balances. Questions to answer:  OP is requiring campuses to permanently budget the General Fund share of STIP earnings. How should the remaining earnings be treated, or will OP dictate that also?  Is it preferable to take a permanent GF reduction now and continue to treat all STIP income as one‐time?  Is the amount of “new” funding significant enough to distribute to multiple fund holders?  Would it be more efficient to hold the funding centrally and use it to pay the OP tax or to fund campuswide initiatives or other priorities?  Who will absorb the cost of decreases in revenue?  If funds are permanently budgeted, how will lost revenues be allocated as budget cuts?  Should allocations be based on prior year actual revenue or current year projections?  What measures are there, or should be formulated, to control the proliferation of negative STIP in multiple user funds and to compensate the campus for lost STIP interest income?  Should individual funds continue to receive STIP if those funds are not restricted by terms? STIP Income
Page 1 of 2
FUNDING STREAMS INITIATIVE SUMMARY REPORT January 24, 2011 Central Campus Processes Annual revenue estimates for budgeting purposes. Campuses are supposed to permanently budget projected increases in revenue for General Funds only (at least at this time).  Estimates on cash balances provide by General Accounting or CBO??  Estimated annual STIP rate provided by General Accounting or CBO??  If CBO not the owner of data, when should it be provided to the CBO ‐‐ by February 1 each year??  CBO is owner of permanent budget, thus responsible for recording permanent increases and decreases.  Who is responsible for reconciling permanent budget to actual receipts? Known or Potential Problems Identified  The decentralization of General Funds STIP is non‐neutral because campuses are responsible for covering any potential shortfalls.  The 2010/11 budget was signed in October (3 months into the current fiscal year) and it is possible the campus could receive negative STIP associated with the State Claim Deferral. FY 10/11 Information is pending from OP; however, the negative STIP impact from the prior two years has been $6.3M in FY 08/09 and $7.9M in FY 09/10 (UCSD shares would be ~$750k and ~$940k, respectively).  At this time, only STIP income on General Funds is to be swapped with State GF dollars. However, there is indication from UCOP that a reduction in State GF may be forthcoming in FY 11/12 corresponding to the balance of STIP income on other funds.  OP calculates STIP on the basis of monthly average balances, but UCSD calculates STIP on daily cash balances resulting in differences that must be reconciled. For the OP‐retained STIP, the variances have been posted against the Chancellor’s account.  Because the campus STIP distribution process is limited to the fund, negative STIP on multiple user funds, such as General Funds and ICR Funds, has been covered with central campus resources; thus, departments that overspend multiple user funds have done so without consequence.  Lack of automated programming for monitoring cash balances and distribution of negative STIP at the organization level for multiple user funds.  Open questions at UCOP: a) does all income retain source fund tag or can it be distributed per existing STIP fund practice (each VC has a designated discretionary fund #); b) will all funds be considered permanent or one‐
time funding; and c) what is the estimated negative STIP on State GF in FY 10/11? STIP Income
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ATTACHMENT 1
STIP INCOME DISTRIBUTION TO UCSD FROM UCOP
FY 05/06 THRU FY 09/10 ‐‐ BY VC UNIT ORGANIZATION
SUMMARY OF STIP TOTAL INCOME AND VICE CHANCELLOR DISCRETIONARY SHARE
FY 2005/06
VC UNIT ORGANIZATION
VC
TOTAL
FY 2006/07
% of Total
FY 2007/08
% of Total
VC
TOTAL
2,502,814
2,504,896
6.3%
TOTAL
3,195,707
3,197,804
7.8%
VC (3‐yr avg ) TOTAL
(1),(2)
% of Total
2,823,094
2,825,366
8.4%
12.6%
‐
3,547,499
5,541,708
13.5%
2,021,255
1,194,525
1,541,890
3.8%
2.4%
367,157
1,072,428
4,119,912
10.4%
3,979,513
1,073,282
3,023,907
7.7%
1,206,304
3,956,482
556,391
‐
15,327,100 29,788,904
75.4%
FY 2009/10
VC (3‐yr avg ) TOTAL
(1),(2)
% of Total
4,727,943
4,731,747
17.3%
10.5%
‐
4,348,368
15.9%
2,058,195
6.1%
‐
‐
0.0%
1,495,284
1,970,426
5.9%
1,041,810
1,372,856
5.0%
2.6%
222,966
669,976
2.0%
581,838
1,748,326
6.4%
4,726,850
11.5%
2,903,334
3,477,606
10.3%
1,724,485
2,065,583
7.6%
1,101,581
2,776,107
6.8%
2,549,588
6,885,259
20.5%
1,566,840
4,231,310
15.5%
10.0%
1,427,579
4,341,563
10.6%
1,079,995
3,413,157
10.1%
644,331
2,036,307
7.5%
640,601
1.6%
631,907
658,538
1.6%
501,225
555,687
1.7%
226,937
251,596
0.9%
3,170,955
8.0%
‐
3,298,786
8.0%
‐
1,912,395
5.7%
‐
1,358,027
5.0%
17,342,313 32,346,428
78.7%
13,596,742 27,315,566
81.2%
10,514,183 22,144,120
81.0%
2,168,759 2,170,911
MEDICAL CENTER ‐
3,555,027
10.5%
‐
4,678,926
11.8%
‐
5,190,755
EXTERNAL RELATIONS 3,486,091 3,566,167
10.6%
5,238,627
5,320,133
13.5%
5,444,344
STUDENT AFFAIRS 963,838 1,274,533
3.8%
1,047,279
1,407,845
3.6%
RESOURCE MGMT & PLNG 263,794 778,943
2.3%
306,410
965,246
ACADEMIC AFFAIRS 2,965,309 3,539,438
10.5%
3,395,993
EXT & BUSINESS AFFAIRS 950,269 2,639,521
7.8%
HEALTH SCIENCE 1,211,978 3,856,204
11.4%
MARINE SCIENCE 500,437 573,091
1.7%
CW AND PLANT ‐
3,243,207
9.6%
12,510,475 25,197,043
74.7%
ACTUAL REVENUE XFERRED TO UCSD
% of Total
VC
CHANCELLOR 6.4%
FY 2008/09
(3)
OFFICE OF THE PRESIDENT ‐
% of Funds Retained by OP
TOTAL STIP
Annualized STIP Rate (OP)
8,530,890
‐
25.3%
12,510,475 33,727,933
3.80%
9,728,596
‐
24.6%
100.0%
15,327,100 39,517,500
4.18%
100.0%
8,755,941
6,337,104
5,180,232
21.3%
18.8%
19.0%
17,342,313 41,102,370
4.35%
100.0%
13,596,742 33,652,670
3.33%
100.0%
10,514,183 27,324,352
2.40%
Notes (blue type indicates derived data)
(1) The VC Share of FY 08/09‐FY 09/10 STIP income is extrapolated based upon actual totals (reports from GAO) and average VC share for the 3‐year period FY 05/06‐FY 07/08 (0506‐0708 data taken from IFIS ledger)
For example, the VCMS retained ~90% of STIP income during the 3‐year period, so that % share is applied to 07/08 and 08/09. The remainder is allocated to individual funds
(2) FY 08/09 & FY 09/10 STIP are reported before adjustments for the STIP Loan in order to have a reasonable basis for comparison
(3) There is a discrepancy in OP retained STIP (FY 08/09 & FY 09/10) between UCOP reports and UCSD's GAO reports. This table uses UCOP numbers ‐‐ the difference is taken from
the Chancellor, which is the current practice in accounting for adjustments
FSI Summary STIP Income
1/24/11
CBO
100.0%
ATTACHMENT 2
OP‐RETAINED STIP INCOME
FUND
GENERAL FUNDS ED FEE FUND
ICR FUNDS
OTHER FUNDS
PLANT FUNDS
TOTAL OP RETAINED STIP
Annualized STIP Rate (OP)
Actuals
FY 2008‐09 3,399,367
645,695
1,086,370
12,636
1,193,035
6,337,104
3.33%
Actuals
FY 2009‐10
2,669,324
303,067
1,306,459
11,652
889,731
5,180,232
Estimates
FY 2010‐11 2,793,485
452,786
1,234,178
10,865
934,562
5,425,876
2.40%
2.54%
Notes (blue type indicates derived data)
FY 2010‐11 estimates based on the following assumptions:
‐ Q 1 actuals for GF, Ed Fee, & ICR (total $899k; STIP rate of 2.67%)
‐ Qs 2‐4 based on average cash balances from two prior years of same quarter
multiplied by assumed 2.5% STIP rate for remainder of year. Other Funds
and Plant Funds have not been received yet, so are also estimated this way,
including Q1.
FSI Summary STIP Income
1/24/11
CBO