Financial Outlook 2013/14
Tom Wale - PRAS
Helen Knight - Finance
What this presentation will cover

Budgeting process and timeline

JRAM allocations for 2013/14 – informed by:
 HEFCE grant for 2013/14
 Fee income for 2013/14


Services’ budgets for 2013/14
Infrastructure Charge allocations for 2013/14

Historic trends

The budget in a wider context
Page 2
S
Planning and budgeting timeline

Autumn 2012

PRAC agreed new integrated planning and budgeting process
 PRAC approved budget targets for services for 2013/14
 PRAC approved initial budget targets for divisions for 2013/14 – transitional year

February


March


PRAC agreed final budget targets
May/June


HEFCE grant letter received and JRAM allocations for 2013/14 calculated
April


Service costs for 2013/14 agreed by PRAC and divisional 123 charge allocations
for 2013/14calculated
Budgets and plans submitted
 Budget review meetings
 Planning review meetings
June

Final 2013/14 budget agreed
Page 3
S
Integrated planning and budgeting process
– new this year
Budgets & plans
submitted and
reviewed
Budget approved
by Council
T
PRAC approves
budget targets
PRAC receives
three-year
financial forecast
Resolution of
tension between
divisional
investment &
central surpluses
Budget
preparation
begins
M
Divisional
spending plans
approved
H
Divisions can
start to address
key planning
issues
Page 4
What this has meant for you

Divisional 5 year plans submitted in May along with the budget,
rather than in January.

Greater involvement of departments.
 Financial projections worksheet in budget template.

Plans submitted in May will be used to produce divisional budget
targets the following Autumn

Based on final 2013/14 budget
 Known before Christmas
 Updated in March / April for final JRAM, infrastructure and capital
charges

This year – combined Q2 / budget template
Page 5
JRAM Overview

The Joint Resource Allocation Method is the way of distributing
funds across the collegiate University
/£m
HEFCE Teaching (including Research students)
Fees
192.8
HEFCE Research Support
118.0
Other elements
Total allocation in JRAM

45.8
0.4
357.0
Sums allocated across academic divisions, OUDCE & Colleges
Page 6
HEFCE Grant Allocations 2013/14
2012/13
2013/14
(March 13)
(March 13)
181.9
173.6
-8.3
-4.6%
Teaching
44.2
33.6
-10.6
-24.0%
Research for PGRs
13.7
13.9
0.2
1.3%
115.9
118.0
2.2
1.9%
8.1
8.1
0.0
0.0%
All sums in £m
Total
Mainstream Research (not PGR)
Other (Libraries, Museums, HEIF)

Variance
Sums
Proportion
Teaching changes in line with move to new fee regime – offset by fees

2012/13 includes additional £778k as at March 2013 (not in JRAM 1213iya)
PGR volume up – bigger share of national pot
 Mainstream research – Charities & Business QR increased volumes


rates down but bigger share of national pot
Page 7
T
HEFCE Grant Allocations 2013/14
Teaching
All sums in £m
JRAM
JRAM
1213 iya
1314 i
Total Teaching Funding
Variance
Sums
Proportion
43.5
33.6
-9.9
-23%
New Regime UG
2.6
5.3
2.7
104%
Old Regime UG
35.2
23.4
-11.8
-34%
New Regime PGT
1.1
1.4
0.3
27%
Old Regime PGT
0.5
0.1
-0.4
-80%
Specific Funding Streams
2.2
1.7
-0.5
-23%
Allocated outside JRAM
1.9
1.7
-0.2
-11%

Additional HEFCE funding of £778k for 2012/13 not included in 1213 iya

Announced after JRAM 1213 iya

Divisional portion will be allocated as part of 2013/14 budgets (most +ve)
Page 8
T
HEFCE Grant Allocations 2013/14
Research
All sums in £m
JRAM
JRAM
1213 iya
1314 i
Variance
Sums
Proportion
Research Students
13.7
13.9
0.2
1.3%
Mainstream QR
77.3
77.3
0.0
0.0%
Charities QR
31.5
32.8
1.3
4.2%
Business QR
7.2
8.0
0.8
11.6%
129.6
132.0
2.2
1.7%
Total

PGR Funding updated for numbers (2011-12 HESA data)



Increase due to rise in numbers, subject weightings unchanged
Mainstream QR Funding unchanged
Charities & Business QR – rates down but volume up
Page 9
T
University & College Fees 2013/14
All sums in £m
Total
JRAM
JRAM
1213 iya
1314 i
Variance
Sums
Proportion
170.7
192.8
22.1
13%
Undergraduate UK/EU
49.9
65.1
15.2
31%
Undergraduate Overseas
21.8
23.3
1.5
7%
Postgraduate UK/EU
35.5
37.9
2.3
7%
Postgraduate Overseas
63.6
66.6
3.0
5%

Forecast is based on this year’s students undertaking next year’s
activity



e.g. year 2 students become new fee regime for 2013/14
Informed by work on Student Number Planning
Much of the increase is due to the transition to new fee regime on UG

But also changes to student numbers
Page 10
T
Resource Levels






Based on FTEs
Must consider fees and other sources of funding (mainly HEFCE)
HEFCE funding split into five price groups according to activity

Price group D is classroom-based – no additional funding

Price group A is clinical medicine – highest levels of additional funding
UK/EU UG decreases in HEFCE funding more than offset by
increases in fees
UK/EU PGT decreases not automatically balanced by HEFCE
funding
Fees + other sources of student funding distributed via JRAM

Split of resources between departments & Colleges

Some targeted streams distributed outside JRAM
Page 11
T
Resource Levels
UK/EU Undergraduate
All sums in £

Old Regime
New Regime
1213 iya
1314 i 1213 iya
1314 i
HEFCE funding Band D
2,988
3,012
379
383
University Fee
3,465
3,465
8,500
8,688
Total Band D
6,453
6,477
8,879
9,071
Add’l HEFCE Funding Band B
2,746
2,790
1,473
1,488
Total Band B
9,199
9,267
10,352
10,559
New regime fee increase is a result of fee waivers being higher in year 1

2013/14 has year 1 and 2 students on new fee regime

Note differential between Band D and Band B is much reduced in new
fee regime – but overall resource is increased for both
 Amounts are before allocation between departments and Colleges
Page 12
T
Change in JRAM Allocations for 2013/14
Comparison of 1314 i with 1213 iya
All sums in £m
HEFCE T incl PGR
MSD
SSD MPLS
Hum OUDCE Colleges Other
Total
-0.8
-0.6
-2.2
-1.5
-0.1
-4.0
0.0
-9.2
UG Fees
1.4
1.3
3.7
2.6
0.0
7.7
0.0
16.8
PG Fees
-0.6
3.4
1.0
0.6
0.3
0.6
0.0
5.3
Other T
0.0
-0.1
-0.0
-0.2
-0.4
-0.0
0.0
-0.7
Total T & related
0.0
3.9
2.6
1.5
-0.2
4.3
0.0
12.2
QR Mainstream
0.0
-0.1
0.0
0.0
0.0
0.0
0.0
-0.1
QR Charity
1.4
-0.0
-0.1
0.1
0.0
0.0
1.3
2.6
QR Business
0.7
-0.1
0.2
0.0
0.0
0.0
0.8
1.7
Other R
0.0
0.0
0.0
0.0
0.0
-0.1
0.0
-0.1
Total R & Related
2.0
-0.2
0.1
0.1
0.0
-0.1
2.2
4.1
Total Funding
2.1
3.7
2.7
1.6
-0.2
4.2
2.2
16.3
2.4%
6.1%
3.6%
4.3%
-5.1%
5.6%
8.0%
4.2%
Page 13
T
Change in JRAM Allocations for 2013/14
Comparison of 1314 i with 1213 i & 1213 iya
100.0
£m
Charities & Business QR
90.0
Mainstream QR
80.0
Fees
70.0
HEFCE T & related
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1213 i 1213 iya 1314 i
1213 i 1213 iya 1314 i
1213 i 1213 iya 1314 i
1213 i 1213 iya 1314 i
MSD
SSD
MPLS
Hum
MSD
MSD
SSD
SSD
MPLS
MPLS
Hum
Hum
1213 i 1213 iya 1314 i
OUDCE OUDCE OUDCE
Page 14
T
Services budget 2013/14
2012/13 budget
Inflation
Growth in size of University estate
Expansion of Development Office
Other changes
2013/14 budget target
Change
% change
ASUC
£'m
25.0
0.5
0.4
25.8
0.9
3.4%
UAS
Estates Total
£'m
£'m
£'m
57.3
30.9
113.1
1.3
0.5
2.2
1.2
1.2
0.9
0.9
0.4
0.4
1.2
59.9
33.0
118.7
2.6
4.6%
2.1
6.9%
5.6
4.9%
Page 15
H
123 Infrastructure charge for 2013/14
£m
Services budget target
118.7
Other costs charged via the 123 model but not in the
services: e.g. insurance
2.8
TOTAL 123 charge for 2013/14
121.5

Total 123 charge for 2013/14 is £5.7m higher than the total for 2012/13
 Although this has increased, the charge rate as a percentage of
divisional income has not
Total charge as % of divisional income
2011/12
2012/13
2013/14
21.2%
20.9%
20.2%
Page 16
T
123 Infrastructure charge for 2013/14
£m MSD
SSD
MPLS Hum
OUDCE colleges Other
TOTAL
2013/14
-32.3
-16.7
-27.3
-15.5
-1.6
-2.4
-25.6 -121.4
2012/13
-29.7
-16.2
-26.2
-14.8
-1.6
-2.3
-25.0 -115.8
-2.6
-0.5
-1.1
-0.7
0.0
-0.1
difference
-0.6
-5.6
-35
2012/13
-30
2013/14
-25
-20
-15
-10
-5
0
MSD
SSD
MPLS
Hum
OUDCE
colleges
Other
Page 17
T
Capital charge for 2013/14
£m MSD
SSD
MPLS
Hum
OUDCE TOTAL
2013/14
-3.7
-0.9
-4.8
-0.6
-0.2
-10.2
2012/13
-3.2
-0.9
-4.4
-0.6
-0.2
-9.3
difference
-0.5
0.0
-0.4
0.0
0.0
-0.9

Band weightings and costs are unchanged
 Increase is due to increase in space
Band 1 Band 2 Band 3 Band 4 Band 5 Band 6
Weightings
2.5
2
1.5
1
0.5
0.5
£ per sqm
£95
£76
£57
£38
£19
£19
Page 18
T
Budget v Actuals – historic trends
60.0
50.0
40.0
£'m
30.0
20.0
Budget
Actual
10.0
0.0
(10.0)
(20.0)
Page 19
Looking back at 2011/12



Budget - £22.5m
Actuals - £52.3m.
Difference £29.8m
£13.1m of this arose in the divisions and services – mainly
Medical Sciences and Social Sciences.
 £16.7m arose in Central Costs & Adjustments


Current indications are that the 2012/13 budget is much more
realistic – Q2 forecast is in line with budget
Page 20
Why has our position improved?

Higher fee income

More money from OUP

Increased investment income

Flat staffing levels – impact of the recruitment protocol

Low pay awards
Page 21
Russell Group Surpluses / Deficits 2011/12
Russell Group surpluses 2011/12
80,000
70,000
60,000
50,000
40,000
£'000 30,000
20,000
10,000
0
-10,000
-20,000
Page 22
Surplus/ Deficit as % of Income
30.0%
20.0%
Oxford
5.1%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Page 23
Setting the budget 2013/14
Division
Medical Sciences
Social Sciences
MPLS
Humanities
Continuing Education
Services
Central Costs & Adjustments
Target 2013/14
Budget
target
£'m
9.0
5.1
3.7
(1.4)
0.6
1.6
12.5
31.1
Note – figures include £2m transfer from Medical Sciences to Humanities
Page 24
Why do we need to make a surplus?

To fund capital investment

New buildings
 Maintenance of existing buildings
 IT
 Equipment funding

To fund restructuring activities

Staff development
Page 25
Threats to future surpluses

OUP funding may reduce

Increased pay awards

Cost of maintaining existing estate

Expansion of estate size – ROQ, Medical Sciences

Reduce funding from Research Councils

Move towards EU and other research funders

Desire of surplus departments to invest for the future
Page 26
EBITDA Projections
Due to increase in staff costs, sustainability gap widens in later years
120
100
£88m = 7.3%
60
EBITDA surplus
Target EBITDA surplus
40
£45m = 3.7%
20
2021/22
2020/21
2019/20
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
2012/13
2011/12
2010/11
2009/10
2008/09
2007/08
0
2006/07
Surplus £'m
80
Page 27
Developing the capital plan
Capital planning
due to complete
in Michaelmas
Strategic financing
plans now being
developed
Estimate demand
8...
7
4
3
2
1
depreciation
5
trac
PRAS
Finance
debt
growth
philanthropy
condition
projects
6
growth
Estimate supply
£
reconcile
£
disposal
grants
surplus
OUES
Page 28
Any questions?
Further information
Tom Wale Head of Resource Allocation
http://www.admin.ox.ac.uk/pras/resource/
thomas.wale@admin.ox.ac.uk (01865 2) 70067
Helen Knight
Financial Planner
http://www.admin.ox.ac.uk/finance/processes/planning_reporting/
helen.knight@admin.ox.ac.uk (01865 6) 16151
Page 29