Budgeting at Penn and
within Vice Provost for University Life (VPUL)
My View: William Turner
June, 2012
1
Learning Outcomes
• As a result of attending “Budgeting at Penn and within in the
VPUL” session, participants will be able;
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to define what a Responsibility Center is
to state VPUL’s primary source of funding
to define Responsibility Center Management
to list principals of Responsibility Center Management
to identify key decision makers who have a role in determining VPUL
funding
– to state the budgeting technique used by the VPUL and articulate the
disadvantages
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Responsibility Centers
• An organizational unit that is expected to develop and adhere
to a balanced budget.
– Revenue Generating: Schools, Resource Centers and Business Services
– Non-Revenue Generating: Administrative Service Centers
• VPUL is a diversified hybrid Responsibility Center
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VPUL Generates Direct Revenues from Services
VPUL receives Federally Sponsored Program awards
Fund Raising (term gifts; endowments)
Responsibility Center Management (RCM) funding
• VPUL receives Program Subvention
• VPUL receives allocation of University General Fee
3
Vice Provost for University Life
Three Responsibility Center’s
Responsibility
Center
Expenditures
Net of
Expense
Credits
Less:
Direct Revenues and
Resource Transfers
Less:
Funding from
General Fee
Net Budget
Student Activities
(VPUL84)
$4,946,000
$1,583,000
$3,363,000
$0
Student Services
(VPUL85)
$45,858,000
$22,893,000
$22,965,000
$0
$6,725,000
$3,449,000
$3,276,000
$0
$57,529,000
$27,925,000
$29,604,000
$0
College Houses and
Academic Services
(CHAS86)
Totals
Very dependent upon University General Fee:
51.5%
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Vice Provost for University Life: Student Services (VPUL85)
FY2012 Operating Budget
Expenditures by Fund aggregation (Net of Expense Credits)
$45,858,000
General Purpose Funds:
Ordinary day-to-day restricted activity. You are
most familiar with these funds. General fee
departmental budgets.
Special Purpose
Funds
5,168,000
11%
Endowment
Funds
177,000
1%
Gift Funds
135,000
0%
Sponsored
Program Funds
2,147,000
5%
Special Purpose Funds:
Unrestricted funds that are managed and
accounted for separately. Accumulate cash
balances. Examples; Fraternity and Sorority
Housing System.
Endowment Funds:
Records all endowment income and expenditures
which fulfill donor imposed limitations. Purpose
as well as time restrictions.
Gift Funds:
Funds that have been purpose restricted in some
way as to their use by donors.
Sponsored Program Funds:
General Purpose
Funds
38,231,000
83%
Grant and contracts that have been awarded to
VPUL. Mostly training grants.
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Vice Provost for University Life: Student Services (VPUL85)
FY2012 Revenues and Expenditures
Student Services (VPUL85)
FY 2012 Revenues by Source
Career Services
Sponsor Progr
302,000
Inc
1% Pre-Orient Progr 2,237,000
86,000 , 0%
5%
Invest Inc
338,000
1%
Gift Inc
320,000
1%
Resource
Transfers,
286,000
1%
Student Services (VPUL85)
FY2012 Expenditures by Type (Net of Exp. Cred.)
Program
Subvention
4,404,000
9%
Transfers from
Other Periods
198,000
0%
Frat & Sor
4,451,000
10%
Student Health
10,238,000
22%
General Fee
22,965,000
50%
Other Income
33,000
0%
Capital
Transactions
1,228,000
3%
Student Aid
229,000
0%
Expense
Credits
(185,000) 0%
Facility Maint
Allocated Costs
10,115,000 ,
22%
Current
Expense
11,989,000
26%
Compensation
22,482,000
49%
Net Expenditures: $45,858,000
Revenue and Resource Transfers $45,858,000
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Budgeting at Penn
Responsibility Center Management (RCM)
Delivers Resources to the VPUL
• Decentralized financial management model that facilitates
internal budgeting and financial reporting.
– Principals
• Attempts to align academic authority with financial accountability.
• Schools and Centers take ownership of their revenues and are responsible for
paying for all their direct and indirect costs.
• Schools and Centers must maintain adequate reserves.
• RCM retains some amount of Centralization
– to implement University’s Penn Compact.
– Senior decision makers determine adequate funding for shared
services and VPUL-Student Services.
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Responsibility Center Management (RCM)
Key Senior Decision Makers – Budget Steering Committee
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President
Provost
Executive Vice President
Vice President for Finance and Treasurer
Vice President for Budget and Management Analysis
Vice President and Chief of Staff
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Responsibility Center Management (RCM)
Key Centrally-Determined University Budget Planning
Parameters
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General Fee Growth Rates (subject to Trustee approval)
The Endowment Spending Rule (subject to Trustee approval)
The Employee Benefits Rate (subject to DHHS approval)
Salary Pool Growth for Faculty and Staff (in consultation with
the Deans)
• Growth Rates for Allocated Cost Charges
• Base Funding Growth for Administrative Centers (Funding
from Allocated Costs and General Fee)
– 2% incremental increases year-over-year on program base
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Budgeting in the VPUL
Ideal
The University Strategic Plan
The Penn Compact
Informs
VPUL Priorities
drives
VPUL Departmental Outcomes
drives
VPUL Departmental Budgets Consolidate to
the VPUL Budget
enables
Students to reach their fullest potential
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Budgeting in the VPUL
Is Turner Killing VPUL Strategy?
• Quota budgeting allocates resources to departments
– Challenges:
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Lessens capacity for decision making from VPUL Central administration
“New” budgets are based entirely on the “Old” one
Diminishes flexibility to react to changes in divisional circumstances
Deceases ability to move finite resources to meet evidenced divisional priorities
– Advantages:
• Easy to implement
• Departments know their total budget at an early date
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The Role of VPUL Finance
• Manage the budget process
• Consult with Stakeholders and Communicate
• Support Departments as they develop their budget
submissions
• Analyze individual department budget submissions and advise
the Vice Provost
• Consolidate the VPUL Budget
• Present to the Office of the Provost
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Bill Turner’s Role As I See It
• Be a partner with departments not an enforcer
• Focus VPUL leadership on critical resource issues
• Take a longer view: look at budgets 5 years out and make
decisions now that just don’t meet current needs
• Engage stakeholders in solving problems that face us
• Respect the way we have always done things but know when
to change it.
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Challenges
• Communication Challenges: How do we get VPUL’s story to
key decision makers?
– What is our story (i.e.. how we make a difference in students ability to
reach their fullest potential; how we support the successes of the
Penn Compact
– How successes of the Penn Compact impact VPUL services ( Changing
circumstances)
• Engaging stakeholders on knowing when to change
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Knowing When To Change
• Any thoughts on how to affect this?
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