Finance and Budget Overview Spring 2016 Provost’s Retreat January 8, 2016 University of South Carolina I. Financial Reporting & Analysis – Fiscal Year 2015 II. Budget Execution – Fiscal Year 2016 III. Budget Development – Fiscal Year 2017 2 USC System Overview Flagship Institution - USC Columbia Comprehensive Campuses USC Aiken USC Beaufort USC Upstate Palmetto College USC Lancaster USC Salkehatchie USC Sumter USC Union School of Medicine Columbia Greenville 3 USC Finance Information Budget Document http://finplan.admin.sc.edu/budget/doc_16/FY16_FINAL_BOT_BudgetHO RIZONTAL.pdf Capital Budget Document http://finplan.admin.sc.edu/budget/doc_16/FY16_Capital_Budget_Docum ent_FINAL_all_horizontal.pdf Comprehensive Annual Financial Report http://web.admin.sc.edu/fr/files/USCComprehensiveAnnualFinancia%20R eport-FY1415.pdf Transparency Initiative http://spend.admin.sc.edu/ South Carolina State Budget http://www.scstatehouse.gov/budget.php 4 USC Finance Information Leslie Brunelli Vice President for Finance & CFO Osborne 208 lesliebrunelli@sc.edu 777-1967 5 University of South Carolina I. Financial Reporting & Analysis – Fiscal Year 2015 6 Statement of Net Position In Millions Reclassified* FY2011 Assets Current Assets Capital Assets, net Other Assets Total Assets Liabilities Current Liabilities Noncurrent Liabilities Total Liabilities Net Position Net investment in capital assets Restricted - nonexpendable Restricted - expendable Unrestricted Total Net Position $ 573.6 1,075.1 116.2 1,764.9 FY2012 $ 642.1 1,120.7 125.0 1,887.8 Restated** FY2013 $ 615.1 1,176.9 125.1 1,917.1 FY2014 $ 595.1 1,261.2 117.0 1,973.3 106.6 496.6 603.2 118.6 566.0 684.6 117.1 586.0 703.1 140.5 582.9 723.4 592.9 66.5 140.7 361.6 $ 1,161.7 569.7 72.1 200.3 361.1 $ 1,203.2 663.7 73.8 125.0 351.5 $ 1,214.0 701.3 79.3 137.6 336.4 $ 1,254.6 FY2015 $ 696.4 1,320.5 115.7 2,132.6 142.0 1,373.6 1,515.6 $ 747.3 82.1 129.8 (333.5) 625.7 *Reclassified to conform to changes in accounting standards affecting net position classifications ** Unrestricted Net Position was restated to reflect GASB 68 (Pension Liability) 7 Financial Performance Highlights GASB 68 – Pension Liability USC Columbia USC Aiken USC Beaufort USC Upstate USC Lancaster USC Salkehatchie USC Sumter USC Union 564,064,830 33,484,838 17,527,436 60,252,285 14,909,140 9,030,591 7,717,015 4,391,072 USC System Total 711,377,207 8 Financial Performance Highlights Total Unrestricted Net Position 9 Operating Performance In Millions FY2011 Total Operating Revenues Total Operating Expenses Operating Loss Nonoperating Revenues (Expenses) State Appropriations Federal Grants Gifts Investment, Endowment & Other Interest on Capital Asset Related Debt Nonoperating Revenues (Expenses) $ FY2012 742.5 $ 915.0 (172.5) FY2013 FY2014 FY2015 779.3 $ 801.2 $ 839.3 $ 904.2 960.6 1,017.2 1,072.1 1,125.6 (181.3) (216.0) (232.8) (221.4) 124.6 94.1 38.0 10.0 (19.6) 247.1 118.3 53.3 38.4 14.0 (19.0) 205.0 136.4 52.6 43.9 5.9 (33.1) 205.7 144.3 52.1 46.4 20.1 (18.6) 244.3 147.5 52.5 45.5 35.1 (22.2) 258.4 Income before other revenues, expenses & transfers 74.6 23.7 (10.3) 11.5 37.0 Other revenues, expenses and transfers Increase in net assets 23.7 98.3 17.8 41.5 21.1 10.8 29.1 40.6 37.8 74.8 1,063.4 $ 1,161.7 1,161.7 $ 1,203.2 1,203.2 $ 1,214.0 1,214.0 $ 1,254.6 550.9 625.7 Net position, beginning of year * Net position, end of year $ *The FY2015 beginning Net Position was restated to reflect GASB 68 (Pension Liability) 10 Revenue Comparison Fiscal Year 2011 Sales and Service and Other 16.2% State Appropriatio ns 18.2% In Millions Student Tuition & Fees, net Gifts, Grants & Contracts State Appropriations Sales and Service and Other Total Revenues Fiscal Year 2015 Student Tuition & Fees 32.1% Sales and Service and Other 16.2% Student Tuition & Fees 36.7% State Appropriations 14.2% Gifts, Grants & Contracts 33.5% Gifts, Grants & Contracts 32.9% FY2011 $ 331.7 390.6 126.7 185.6 $ 1,034.6 In Millions Student Tuition & Fees, net Gifts, Grants & Contracts State Appropriations Sales and Service and Other Total Revenues FY2015 $ 448.0 389.1 155.7 232.0 $ 1,224.8 11 Financial Performance Highlights Net tuition and fee revenues have increased by approximately 35% since 2011 due to enrollment growth, an increase in non-resident enrollments, adjustments to abatements, as well as annual tuition increases. 12 USC Columbia In-State Undergraduate Tuition & Required Fees 13 Financial Performance Highlights Total Operating Revenues 14 Expense Comparison Fiscal Year 2011 5.5% 2.1% 0.0% 2.3% Fiscal Year 2015 1.7% 32.8% 5.7% 1.7% 0.0% 33.1% 11.8% 11.1% 9.1% 9.5% 5.3% 5.6% 5.3% 12.3% 7.7% 6.0% Instruction Research Public Service Academic Support Student Services Institutional Support Operation and maintenance of plant Auxiliary Enterprises Scholarships and fellowships Depreciation Interest on Capital Related Asset Debt Loss on Disposal of Capital Assets In Millions Instruction Research Public service Academic support Student services Institutional support Operation and maintenance of plant Auxiliary enterprises Scholarships and fellowships Depreciation Interest on capital related asset debt Loss on disposal of capital assets Total Expenses 6.9% Instruction Public Service Student Services Operation and maintenance of plant Scholarships and fellowships Interest on Capital Related Asset Debt FY2011 $ 296.8 113.6 55.9 71.7 52.2 54.8 93.3 105.4 20.4 50.8 19.6 1.8 $ 936.3 8.5% In Millions Instruction Research Public service Academic support Student services Institutional support Operation and maintenance of plant Auxiliary enterprises Scholarships and fellowships Depreciation Interest on capital related asset debt Loss on disposal of capital assets Total Expenses 10.8% 5.0% Research Academic Support Institutional Support Auxiliary Enterprises Depreciation Loss on Disposal of Capital Assets FY2015 372.0 121.9 64.5 96.0 72.6 71.0 104.4 138.6 18.2 66.4 22.2 2.2 $ 1,150.0 $ 15 Financial Performance Highlights Total Operating Expenditures 16 USC System Fundraising 200 180.7 180 160 140 117.6 122.2 120 106.2 107.5 96.5 100 82.4 80 66.2 55.2 60 40 116.6 67.0 56.3 57.4 46.4 55.0 52.3 40.4 26.8 20 0 19951996 19961997 19971998 19981999 19992000 20002001 20012002 20022003 20032004 20042005 20052006 20062007 20072008 20082009 20092010 20102011 20112012 20122013 20132014 20142015 M i l l i o n s 146.9 149.1 Bicentennial Campaign July 1997 – June 2002 Carolina Promise Campaign July 2007 – June 2015 Exceeded $1Billion Goal 17 USC System - Grant Awards 250 $243 $238 240 230 M i l l i o n s $230 $227 $220 220 210 200 190 180 FY2011 FY2012 FY2013 FY2014 FY2015 7.0% Five Year Increase 18 USC System - Endowment Assets 700 $596 $625 600 $545 500 $494 $514 M i 400 l l i 300 o n s 200 100 0 2011 2012 2013 2014 2015 19 University Component Units Total End of Year Net Position $ 788,458 42,778,513 12,463,632 $ 56,030,603 Non-Governmental Discretely Presented Component Units University of South Carolina Development Foundation University of South Carolina Educational Foundation University of South Carolina Business Partnership Foundation Greater University of South Carolina Alumni Association USC Upstate Foundation USC Upstate Capital Development Foundation Educational Foundation of the University of South Carolina Lancaster Total End of Year Net Assets $ 37,386,459 432,534,450 65,341,293 13,170,722 10,033,756 6,704,957 13,301,254 $ 578,472,891 Governmental Discretely Presented Component Units South Carolina Research Foundation School of Medicine Educational Trust Beaufort-Jasper Higher Education Commission Net Position/Assets as of June 30, 2015 20 Financial Performance Highlights Key financial actions in 2015: Implemented GASB 68 Resolved GASB 61 – Component Units – System Campus Commissions Implemented the Affordable Care Act Completed Lease Termination Agreement for the Department of Justice 21 Bond Indebtedness by Campus Amount Outstanding Campus of Indebtedness Columbia State Institution Bonds - Columbia State Institution Bonds - School of Medicine Athletic Facilities Revenue Bonds Revenue Bonds - Housing Revenue Bonds - Parking Revenue Bonds - Academic $ Subtotal Aiken Campus State Institution Bonds Revenue Bonds - Housing 131,150,000 3,650,000 154,750,000 145,000,000 12,180,000 61,945,000 508,675,000 $ 7,975,000 24,610,000 32,585,000 $ 14,705,000 31,925,609 4,404,391 51,035,000 Beaufort Campus State Institution Bonds $ 2,304,000 Sumter Campus State Institution Bonds $ 46,000 Total outstanding as of June 30, 2015 $ 594,645,000 Subtotal Upstate Campus State Institution Bonds Revenue Bonds - Housing Revenue Bonds - Bookstore Subtotal 22 Historical Indebtedness by Campus Amount Outstanding as of June 30 2015 2006 2010 Campus Columbia $ Aiken 184,785,000 $ 307,315,000 $ 508,675,000 20,980,000 41,180,000 32,585,000 110,000 75,000 2,304,000 Upstate 4,285,000 46,390,000 51,035,000 Sumter 400,000 265,000 46,000 $210,560,000 $395,225,000 $ 594,645,000 Beaufort Totals T o t al F all Head co unt Enr o llment T o t al F T E Enr o llment T o t al C ur r ent F und s B ud g et T o t al U nr est r ict ed N et Po sit io n $ $ 2005-2006 2009-2010 39,329 43,100 33,253 37,965 826,903,082 $ 1,063,815,892 180,353,688 $ 326,205,120 2014-2015 48,167 43,167 $ 1,338,209,368 $ 377,930,371 23 Scheduled Debt Service Payments Fiscal Year 2016 Principal State Institution Bonds (SIB) Columbia School of Medicine Aiken Upstate Beaufort Sumter Interest Total Subtotal 9,730,000.00 325,000.00 675,000.00 945,000.00 119,000.00 46,000.00 11,840,000.00 5,410,126.65 160,750.00 354,300.43 633,781.26 104,731.26 2,300.00 6,665,989.60 15,140,126.65 485,750.00 1,029,300.43 1,578,781.26 223,731.26 48,300.00 18,505,989.60 Subtotal 4,550,000.00 580,000.00 1,945,000.00 1,300,000.00 1,220,214.38 109,785.62 9,705,000.00 6,825,431.26 529,968.76 3,017,550.00 1,143,781.26 1,467,638.54 204,311.46 13,188,681.28 11,375,431.26 1,109,968.76 4,962,550.00 2,443,781.26 2,687,852.92 314,097.08 22,893,681.28 3,480,000.00 6,949,306.78 10,429,306.78 25,025,000.00 26,803,977.66 51,828,977.66 Revenue Bonds Columbia-Housing Columbia-Parking Columbia-Academic Aiken-Housing Upstate-Housing Upstate-Bookstore Athletics Revenue Bonds Columbia TOTAL 24 Financing Needs State Institution Bonds Columbia - Old Law School Replacement subtotal Revenue Bonds Columbia - Parking Master Plan Columbia - Housing Master Plan Columbia - Athletics Master Plan subtotal Total Estimated Additional Debt Amount 45,000,000 45,000,000 Amount 20,000,000 20,500,000 52,405,000 92,905,000 Planned Issuance FY 2018 Planned Issuance FY 2017 FY 2018 FY 2018 $ 137,905,000 25 University of South Carolina II. Budget Execution – Fiscal Year 2016 26 USC System Total Current Funds USC System Budget FY 2015-2016 Revenues Unrestricted Funds Education & General $ Auxiliaries $ Unrestricted Total $ 913,391,503 195,568,646 1,108,960,149 Restricted Funds Education & General $ Auxiliaries $ Restricted Total $ 333,880,603 0 333,880,603 Total Sources $ 1,442,840,752 27 Where the revenue comes from and what it covers 2015-16 Total Current Funds Revenue Budget – USC System - $1.4 Billion Operating Budget - “A” Funds ($806,115,489) Revenue comes from: State appropriations Tuition and Fees (education & general portion) Unrestricted Grants, Contracts & Gifts Sales & Services and Other Sources Pays for: Instruction Academic Support Student Services Restricted Funds ($333,880,603) Physical Plant Revenue comes from: Administrative Support Research Grants and Contracts Scholarships Gifts Federal and State Student Financial Aid Pays for: Research Public Service Scholarships 28 Where the revenue comes from and what it covers 2015-16 Total Current Funds Revenue Budget – USC System - $1.4 Billion Auxiliaries ($195,568,646) Revenue comes from: Athletics Housing Student Health Center Parking Dining & Bookstore commissions Student Activities & Departmental Accounts ($106,258,214) Designated Funds & Unrestricted Scholarships ($1,017,800) Pays for: Self-supporting units that pay all their expenses and receive no taxpayer support Scholarships Designated Fund activities Revenue comes from: Student board mandated fees Student technology fees Indirect cost recoveries from grant activity Service charges Revenue comes from: Vending commissions and similar Unrestricted gifts Portion of football ticket sales Pays for: Scholarships Designated Fund activities Pays for: Student Activities Technology support Research & Public Service Sponsored Award Management Contract & Grant Accounting 29 FY16 Conference Budget RECURRING FY2015 BASE USC Columbia USC SOM TOTAL USC Aiken USC Beaufort USC Upstate USC Lancaster USC Salkehatchie USC Sumter USC Union USC SYSTEM TOTAL FY2016 FINAL APPROPRIATIONS BUDGET INCREASE FY2016 BASE ESTIMATED NONSTATE RECURRING APPROPRIATED OPERATING PAY PACKAGE FINAL ADJUSTED FY2016 99,070,671 13,793,878 112,864,549 2,000,000 208,409 2,208,409 101,070,671 14,002,287 115,072,958 930,000 0 930,000 0 0 0 102,000,671 14,002,287 116,002,958 6,876,100 2,851,368 9,560,247 1,654,369 1,392,257 2,708,684 658,186 399,840 166,407 560,743 254,525 93,915 77,580 46,990 7,275,940 3,017,775 10,120,990 1,908,894 1,486,172 2,786,264 705,176 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,275,940 3,017,775 10,120,990 1,908,894 1,486,172 2,786,264 705,176 $3,808,409 $142,374,169 $930,000 $138,565,760 $0 $143,304,169 State budget requires an $800 per employee one-time bonus for employees earning less than $100,000. USC Columbia allocated non-recurring funds from the Capital Reserve Fund of $930,000 for the Honors College for equipment. Capital Project funding totals $11,497,162 for the USC System. Higher Education Efficiency, Effectiveness and Accountability non-recurring funds for FY14 were moved to deferred maintenance as $1,136,760 of these funds. Many of the House adopted regulatory provisos were deleted. 30 What about the Lottery? The South Carolina Education Lottery provides funds to South Carolina students based on merit for use at public and private institutions in the state. 31 Where is the Money Spent? Pre and Post Great Recession South Carolina - General Funds FY 2007-2008 Transportation (DOT) 0% Correctional & Public Safety 9% FY 2015-2016 Correctional & Public Safety 9% Transportation (DOT) 2% +$112M +$49M Higher Education 8% Higher Education 13% K-12 Education 36% ($315M) K-12 Education 38% +$254M All Other+$59 17% All Other 17% Health and Social 25% Total: $6.743 Billion +$143M Health and Social 26% Total: $7.045 Billion Source: Executive Budget Office and Senate Finance 32 University of South Carolina III. Budget Development – Fiscal Year 2017 33 FY2017 Budget Development July 2015: August: USC Year End closeout process Preliminary University revenue & expenditure estimates for FY2015 Certification of state non-recurring funds and lottery funding available for August: FY2016 August/Sept: Development of Legislative agenda September 10: President’s State of the University September: Agency Accountability Report due to State September: Distribution of University Carryforward, pay package/fringe and BOT initiatives October 1: University financial statement draft due to State Comptroller General October TBD: FY2017 Governor’s Budget request and state line-item due Board of Trustees - receipt of FY2015 financial statements and presentation of October 16: year-end budget variance and financial performance November: Legislative pre-filing period begins Financial Reporting Dates BOT Quarterly Reports – 7/1-9/30; 1/31-3/31 Mid Year Review – All University Funds – 12/31/2015 Year End Review – All University Funds - 6/30/2016 Fall Review – Columbia “A” Funds – 10/31/2015 Spring Review – Columbia “A” Funds – 2/28/2016 34 FY2017 Budget Development January 2016:Call for Academic Unit Blueprint development January 4: Preliminary revenue & expenditure estimates and full mid-year review for BOT January 12: General Assembly convenes January 20: President presents budget request to House Ways & Means February: House Ways & Means budget development March: House budget final March: President presents budget request to Senate Finance March: Call for Service Unit Blueprint development April: Provost meets with all academic units April: President meets with all direct reports April-May: Senate Finance Budget development May: USC internal budget development May: Senate budget final Late May: Committee/Consensus Budget approved by the General Assembly May/June: General Assembly addresses vetoes June 2: Sine Die Early June: BOT reviews budget proposal June 24: Executive Committee and Full Board considers recommended University budget July 1: FY2017 Budget becomes effective 35 Internal Budget Process 36 External Budget Development & Execution Budget Development Commission on Higher Education Governor General Assembly Budget Execution Budget State & Control Board Treasurer Comptroller General 37 External Budget Process 38 External Budget Process Governor’s Executive Budget House Ways & Means Budget House Budget Senate Finance Budget Senate Budget Conference Committee Budget 39 State Budget Outlook Recurring Non-Recurring Funds Funds FY 2015-16 Capital Reserve Fund Contingency Reserve Fund BEA Revenue Estimate Adjustment Total Projected Non-Recurring Funds FY 2016-17 General Fund Revenue Available for Appropriation* (Incremental Increase Over Appropriation Base) Projected New EIA Revenue Projected New Lottery Funds (Total Available FY2016-17 Lottery Funds - $341,300,000) Total Projected Recurring Funds Total Unobligated Funds Available in FY 2016-17 (Includes recurring and non-recurring funding sources) 131,047,797 86,750,797 239,798,000 457,596,594 766,547,158 54,986,750 20,375,000 841,908,908 $1,299,505,502 40 Challenges for 2016 and beyond: Stabilizing OneCarolina and Implementing the remaining modules Balancing Enrollment and Net Tuition Revenue Controlling Costs Identifying Alternative Revenues Managing System Campus Enrollment Evaluating ongoing and new Operating and Capital Needs 41 FY2016 Tuition and Required Fee Comparison Public SEC Schools 43 Tuition and State Appropriation per Student SEC Comparison Peer & Peer Aspirant Comparison Source: Integrated Postsecondary Education Data System – IPEDS Finance Reports FY2013 44