School Financial
Management
Daniel Flaherty
Director Financial Services
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What Would You Like To
Know?
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Topics
1. How the University Earns Revenue
2. How that Revenue is Shared
3. Managing a School Budget
4. Day to Day Financial Management Issues
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1. How the University Earns Revenue
2010 Revenue: $374m
Consultancy
& contracts
3%
Other
10%
Australian Govt
Grants
52%
Fees
13%
Investments
3%
State & Local Govt
4%
HECS-HELP
Students
HECS-HELP
2%
Aust. Govt
15%
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University Budget - Defined
Recurrent Budget
•
•
•
•
Student revenue – Commonwealth & Students
DEEWR/DIISR Research revenue
Investments
Other
Total Budget
• Research grants
• Consulting/Commercial
• Other Grants
• Other
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2011 Recurrent Budget Funding
Investment
& Other 10%
Other DEEWR/DIISR
Funding (inc
Scholarships) 2%
CGS Student Funding
38%
DEEWR/DIISR
Research
10%
Student
Fees
17%
HECS 23%
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1. How the University Earns
Revenue
• DEEWR/DIISR Funding
– Commonwealth Grants Scheme
– Research Block Grants
– Indexation
• Student Fees
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Commonwealth Grants Scheme (CGS)
• 8 clusters with fixed $$ rates for each cluster
• Varying Commonwealth funding for each cluster
• Funding profile to be agreed with DEEWR
• Full Funding for up to 110% of agreed profile
• Can over enrol past 110% of agreed profile
– but only receive HECS payments
• Lose funding if below profile
– retain CGS for load between 99% and 100%
– cap at 95%
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Course Contribution Schedule 2011
Cluster
HECS
Band
1
2
1
3
2
3
1
1
3
2
3
4
4
NP
1
NP
5
1
5
6
6
7
7
8
8
2
1
NP
2
NP
2
3
Funding Group
Accounting, Administration, Economics, Commerce
(Pre-2008)
Law, Accounting, Administration, Economics,
Commerce
Humanities
Behavioural Science, Social Studies
Mathematics (Pre 2009), Statistics (Pre 2009),
Computing, Built Environment, Other Health
Mathematics, statistics
Education
Education
Clinical Psychology, Foreign Languages, Visual and
Performing Arts
Allied Health
Nursing
Nursing
Engineering, Science (Pre 2009), Surveying
Science
Agriculture
Dentistry, Medicine, Veterinary Science
CGS $
per
EFTSL
CGS
HECS $
transition
per
al $ per
EFTSL
EFTSL
$1,146
Gross
$1,793
$7,756
$1,793
$4,979
$8,808
$9,080
$5,442
$5,442
$10,873
$10,421
$14,250
$8,808
$8,808
$9,164
$9,164
$7,756
$4,355
$5,442
$4,355
$16,564
$16,534
$14,606
$13,519
$10,832
$10,832
$12,093
$12,093
$15,398
$15,398
$19,542
$19,542
$5,442
$7,756
$5,442
$4,355
$7,756
$4,355
$7,756
$9,080
$3,371
$3,371
$10,695
$16,274
$18,588
$17,535
$16,448
$23,154
$23,124
$27,298
$28,622
DIISR Funding
Research Block Grant Funding
• Research Training Scheme
• Joint Research Engagement
• Research Infrastructure Block Grant
• Sustainable Research Excellence
All subject to rules in how the funds can be used.
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DIISR Funding
Research Block Funding
• All performance based averaged over last two years
• Fixed funding pool
• Various indicators with differing weights
Scheme
RTS
JRE
RIBG
HDR
HDR Load Completions
50%
30%
Research
Income
Publications
40%
10%
60%
10%
Category
1
Research
Income
100%
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DIISR Funding
Sustainable Research Excellence
•20% - Category 1 Research Income
•If ERA compliant and Transparent Costing
undertaken
•13% - Category 1 Research Income up to $2.5m
•67% - Category 1 Research Income >$2.5m,
moderated by staff FTE, weighted publications &
SRE survey outcomes
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DEEWR/DIISR Funding
• Indexation
– applies to all DEEWR/DIISR funding
– assumes that costs are split:
75% salaries 25% non salaries
– non salary indexed by CPI
– salary indexed by
• 2011 Safety Net Adjustment (SNA) + teaching by
PSTS index
• 2012 PSTS wage index
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Student Fees
• ISP Onshore
• Offshore Students
• Fee Paying Postgraduate Student Fees
Total approx. 15% of University revenue
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How Funds Are Earned
Any questions???
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How the Revenue is Shared
Daniel (with
Council OK)
Major Cost
Centre Head
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Why the Revenue is Shared
–Teaching & Research
–Buildings development
–Building operating costs – power, water etc
–Library
–ICT
–Student Services
–Academic Support
–Marketing
–Research Administration
–General Admin eg payroll
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2011 Recurrent Budget Allocations
Strategic
Fund
1%
Research
4%
Reserves
2%
Capital
Infrastructure
6%
Faculties
55%
Uniwide
9%
Portfolios
23%
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Allocation Models
General
Allocation shares have been developed over time and
reflect:
– A Performance basis – student load and research
– Cost control
– Historical influences
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Distribution of Student
Revenue
Faculties
Capital
Support
CGS&
HECS ISP Onshore
Average
57%
54%
7%
13.5%
39% $5,586
ISP
ISP FD Offshore FPPG FPPG FD
79%
6%
15%
85%
6%
9%
69%
7%
24%
20
74%
7%
19%
Research Block Grant Distribution
Reserve
Research Budget
Faculties
Capital
Support
RIBG
5%
33%
48%
0%
14%
RTS
4%
9%
53%
3%
31%
SRE
10%
56%
21%
0%
14%
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JRE
4%
48%
30%
0%
18%
Running a School Budget
The University Dilemma
•The revenue earned per student is fixed by the
Commonwealth
•Commonwealth indexation has averaged around
2% to 2010. From 2012 indexation will increase
to 3% to 3.3% pa.
•Costs increase by up to 5% pa
•So either student load has to grow / prices for
student fees increased / costs are reduced
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Running a School Budget
Cost Increases
• Salaries increase by around 4% pa due to Enterprise
Bargaining pay rises
•Salaries further increase by around 1% pa due to
promotions, increments, reclassifications
•Non salary expenses expected to grow 2% - 3% pa
•Overall cost growth in a school is around 4.75% pa.
•Therefore revenue needs to grow by at least 4.75% plus
the cost of servicing increased load, just to “stand still”
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Running a School Budget
Revenue Generation Options
•Indexation - around 3% to 3.3% pa.
•Increased Commonwealth Student load
•Increased International Student load/price
•Improved Research performance
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Running a School Budget
Cost Management Options - Not many!
•Staff reductions
–Typically 80% to 90% of costs
•Non salary cost reductions
Overall can help for a time but you can’t
reduce costs every year
So need to grow revenue and manage
costs
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Running a School Budget
Traditional University Cost Saving Options
•Reduction in topics
•Increased student staff ratios
•Workforce Planning
–Transition to retirement options
–Replacement of retiring staff with lower level
staff
•Increased use of casual staff
•Review of non salary expenditure
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Running a School Budget
Practical Tools
•Development of 5 year financial
projections
•Talent 2 HR system - for salary information
–Salary projections by person by year
• Finance system for tracking financial
transactions and budget position
–Monthly emailed project manager reports
• Regular Review and Forecasting
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Operational Issues
• University Policies – you are the front
line
• Authorisations
• Insurance
• Independent contractors
• Purchasing and Credit cards
• Travel & Taxes
• Leave management
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Operational Matters
Authorisations
• To approve expenditure
– Comply with Uni policies & grant
conditions
– Must be for bona fide University
purposes
– Can’t approve own expenses
– BasWare (electronic invoices system)
will ensure delegation limits are
adhered to
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Operational Matters
Insurance
• Disclosure
• Travel
• Deductibles/excess - $5k
• Risks
– Remote sites + valuable equipment
– Theft
– Contracts - indemnities
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Operational Matters
Independent Contractor
• Government laws extend the definition of
employee to capture contracts with individuals
where the labour component is >= 50%
• If a contract with an individual is planned – need
to comply with the University policy
http://www.flinders.edu.au/ppmanual/staff/Indepen
dentContractors.html
• Must have a contract in place
• Risk for University/school – liability for payroll tax,
super guarantee charge, workers compensation if
we get this wrong
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Operational Matters
Purchasing
• Purchasing policy
– Value for money and fair trading principles
– Tender required > $100k
– Compliance with quotation requirements
– Plan to mandate Purchase Orders for
expenditure > $20k
• Preferred suppliers
• Procurement web site
https://www.flinders.edu.au/finance/procurement/
• Contact Procurement Manager for assistance
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Operational Matters
Credit Cards
• Benefits
• Risks
– Fraud
– Use on insecure/dodgy internet sites
– Avoid staff sharing
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Operational Matters
Travel
Preferred suppliers
– Phil Hoffmann Travel
– STA Travel
•
•
•
•
•
On-line booking tool
OHS&W for travellers
Policy on travel, particularly international
DFAT warnings
Credit cards, travel advances, per diems
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Operational Matters
Taxes
• GST
– Normally charged on contracts
– All contracts should have a GST clause
– Normally not a cost to business /government
• Fringe Benefits Tax (FBT)
– Adds approx 100% to benefit cost
– Private & business travel
– Travel diaries
– Entertainment
– Other staff benefits
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Operational Matters
Management of Annual Leave
Annual Leave Liability - Academic & General Staff
$7M
$6M
Liability
$5M
$4M
$3M
$2M
$1M
$0M
Academic
30/6/06
$0.00M
31/12/06
$0.95M
30/6/07
$2.60M
31/12/07
$3.15M
30/6/08
$4.15M
31/12/08
$4.43M
30/6/09
$5.18M
31/12/09
$5.24M
30/6/10
$5.72M
31/12/10
$5.95M
General
$3.05M
$3.09M
$3.25M
$3.36M
$3.57M
$3.62M
$3.99M
$3.93M
$4.18M
$4.41M
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Operational Matters
Management of Annual Leave
 Need to plan usage
 Increases with each pay rise
 Can cause sudden budget problems
on staff cessation
 New EB agreement reinstates a form
of deeming
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Operational Matters
Management of LSL
 Emerging cost – not provided for at
the time it is earned.
 Need to plan usage / set funds aside
 Increases with each pay rise
 Can cause sudden budget problems
when staff leave unexpectedly and
are paid out LSL in lieu
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LSL Liability (incl Payroll Tax)
for staff with eligible service)
$6M
$5M
Liability
$4M
$3M
$2M
$1M
$0M
EHL
HS
31/12/2009
Portfolios
30/06/2010
SBS
SE
31/12/2010
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Useful Web Sites
Financial policies and procedures
http://www.flinders.edu.au/ppmanual/finance.html
Financial Services Division Homepage
http://www.flinders.edu.au/finance/
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