The Ohio State University
Budgeting Basics
Presented by: John Kuhar, Financial Planning & Analysis
Henry Zheng, Office of Academic Affairs
1
Table of Contents
1.
2.
3.
5.
6.
Snapshot of The Ohio State University
•
Enrollment
•
Academic Structure
•
Budget
•
Source of Funds by College FY11-FY12
Guiding Principles of the Budgeting Process
•
Principles
•
Competing Goals
The Budgeting Process
•
Key elements
•
Rebasing
•
Centrally Distributed Budget Allocations
•
Allocation of Annual Changes in Revenue
•
Allocation of Annual Changes in Expenses
•
Central Tax
•
Illustration – Net Revenue per Student
Monitoring and Oversight
•
Quality of Instruction
•
Role of Senate Fiscal
Glossary
2
Snapshot of The Ohio State
University
Enrollment
(Autumn 2012 Headcount – Columbus)
•
•
•
•
Undergraduate
Graduate
Professional
Total
43,058
10,034
3,295
56,387
3
Snapshot of The Ohio State
University
Academic Structure
(Autumn 2012)
•
•
•
•
•
•
Number of Colleges
Undergraduate Majors
Master’s Degree Programs
Doctoral Degree Programs
Professional Degree Programs
Courses
14
175
115
90
7
12,000
4
Snapshot of The Ohio State
University Budget
Budgeted Resources – All Funds
Columbus Campus – FY 2013 (In Thousands)
Total Resources Including Health System
Restricted
16.2%
General
26.7%
Earnings
57.1%
Earnings
17.2%
Government Support
State Share of Instruction
Board Of Regents Appropriations
Ohio Grants & Contracts
Subtotal State Support
Federal Grants & Contracts
Build America Bonds
Subtotal Federal
Local Grants & Contracts
Subtotal Government
Student Fees
Instructional, General
Other
Subtotal Student Fees
Total Resources Excluding Health System
Restricted
31.2%
RESOURCES
Other Resources
Auxiliary Sales & Services
Departmental Sales & Services
Private Grants & Contracts
Endowment Income
Investment Income
Other
Subtotal Other
Total Resources without Health System
General
51.6%
General
332,010
0
3,075
335,085
59,735
59,735
8,005
402,825
828,001
60,574
888,575
14,318
0
0
5,200
5,200
41,678
51,362
93,040
308,554
11,252
319,806
13,998
426,844
332,010
41,678
54,437
428,125
368,289
11,252
379,541
22,003
829,669
0
828,001
65,774
893,775
16,790
3,425
10,604
13,463
58,600
445,556
389,836
1,350,001
450,756
816,680
2,617,436
2,104,435
335,027
2,439,462
4,012
4,012
2,108,447
335,027
2,443,474
2,890,218
820,692
5,060,911
1,350,001
338,556
105,000
Total
365,974
105,000
365,894
31,057
12,604
13,463
893,992
Health System
OSU - Physicians
Subtotal Health System
Total Resources Including Health System
Earnings Restricted
13,100
349,104
27,632
2,000
5
Snapshot of The Ohio State
University Budget
Budgeted Resources – General Funds
COLUMBUS CAMPUS – FY 2013 (IN THOUSANDS)
Other
13.8%
State
Support
24.8%
Instructional
Fees
61.3%
Instructional Fees
State Support
Other
TOTAL
828,001
335,085
186,915
1,350,001
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Snapshot of The Ohio State
University Budget
Comparison of State Support* to Tuition** Income
Columbus Campus
Com parison of State Support* to Tuition** Income: Columbus Campus
80%
70%
60%
50%
40%
30%
20%
10%
0%
% State Support
$ State Supp. (millions)
% Tuition
$ Tuition (millions)
1991
60%
$267
40%
$176
1993
54%
$245
46%
$206
1995
54%
$267
46%
$228
1997
53%
$283
47%
$254
1999
52%
$306
48%
$286
2001
50%
$328
50%
$329
2003
43%
$309
57%
$411
2005
37%
$313
63%
$528
2007
35%
$328
65%
$606
2009
36%
$376
64%
$662
2011
34%
$391
66%
$767
2013
28%
$332
72%
$853
* As used here, “State Support” includes State Share of Instruction and (through FY 2009) Success Challenge and Innovation Incentive funding.
** “Tuition Income” includes instructional, general, student activity, and recreation fees, non-resident surcharge, international student surcharge (starting FY 13) and student union facility fee
7
Snapshot of The Ohio State
University
Source of Funds by College FY12
* The source of funding varies from one academic unit to another
8
Budgeting Process
Guiding Principles
• General Fund allocation informed by Academic Plan
• General Fund revenues are allocated to colleges based on
hours taught and cost of instruction
• A portion of General Fund revenues dedicated to the support
of university-wide services
• At colleges level, deans allocate resources based on college
strategic priorities
• Maintenance of a certain level of budget stability and
predictability
• Appropriate oversight and accountability
• Continuous review and improvement
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Budgeting Process
Competing Goals
• Simple vs. Equitable
• Stability and predictability vs. revenue following the
generating units
10
Budgeting Process
Key Elements
• Budget rebasing of colleges over time
• Distribute annual change in revenue based on credit hours,
market share and cost of instruction
• Distribute annual changes in expenses
• Central tax
• Monitoring for unintended consequences
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Budgeting Process
Rebasing
• Revenues and expenses for each college were measured
• Significant differences between revenues and expenses were
identified
• Colleges were placed into three groups in relationship to the
goals of the Academic Plan
• Goals were established to reallocate over $15.5 million among
the colleges through the Provost’s Strategic Investment funds
and reductions in some college base budgets
• Base budgets continue to be adjusted annually based on each
college’s unique situation and their participation in strategic
objectives of the institution
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Budget Process for Colleges
The Big Picture
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN REVENUE
Allocation of Instructional Fees & State Share of Instruction
• Colleges receive all revenue generated for new credit hours
from both instructional fees and state share of instruction
(sometimes called state subsidy)
• Colleges are also impacted by changes in revenue associated
with existing credit hours of instruction, from both changes in
instructional fees and the change in state subsidy (which
could go up or down)
Does not apply to differential fees, program fees, technology fees, or
general fees
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN REVENUE
INSTRUCTIONAL FEES
• Fee rate per credit hour is established for each fee category
• Colleges receive the full fee rate per credit hour for each
additional credit hour they teach
• Colleges also receive the inflationary growth in the fee per
credit hour; this growth is distributed based on the total
credit hours taught
• The annual change in the instructional fee is shared based on
the average of two prior years of credit hours
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN REVENUE
STATE SHARE OF INSTRUCTION
• State Share of Instruction rate per credit hour is established
for each SSI category
• Colleges receive the full SSI rate per credit hour for each
additional credit hour they teach
• College also receives the change in the SSI rate per credit
hour, whether it is positive or negative; this change is
distributed based on the total credit hours taught
• The annual change in SSI dollars is shared based on the
average of two prior years of credit hours
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN REVENUE
INDIRECT COSTS
• 100% of the annual changes in indirect cost recovery
revenues are allocated directly to the generating college or
vice-presidential area except for that portion associated with
University Library costs. Annual changes in the portion
associated with the Libraries will be allocated to the Libraries
• Beginning in FY2013, rates have been locked in for the next
four years: 2013=52.5%, 2014=53.5% and 2015/2016 are
both 54.0%
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Budget Process for Colleges
The Big Picture
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN EXPENSES
The budget model includes five categories of expenses, each of
which is allocated to the colleges based on unique measures:
1. Student Services (applies to colleges & any support units
generating credit hours)
2. Physical Plant (applies to colleges & support units)
3. Research Administration (applies to colleges & any support
units having research activities)
4. Central Tax (applies to colleges and any support units
generating credit hours)
5. Assessment to Support Development (applies to colleges &
support units, auxiliaries and regional campuses)
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN EXPENSES
STUDENT SERVICES ASSESSMENT
There are Three Separate Student Service Cost Pools:
• Cost Pool 1 (Undergraduate): 89% of this cost pool is Undergraduate
Financial Aid. This is the largest pool. Also includes operating budgets
for Financial Aid, Undergraduate Admissions and First Year
Experience. Expense is allocated by average undergraduate credit
hours.
• Cost Pool 2 (Graduate): 82% of this cost pool is Non-Resident Fee
Authorizations. Also includes operating budget of the Graduate
School and Graduate and Professional Admissions. Expense is
allocated by average graduate credit hours.
• Cost Pool 3 (All Students): this is the smallest cost pool and includes
portions of operating budgets for Registrars Office, Enrollment
Services, Student Life and for new Library acquisitions. Expense is
allocated by an average of ALL credit hours.
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN EXPENSES
PLANT OPERATION AND MAINTENANCE
• Annual changes in expenses are allocated to the units based
on the assigned square footage recorded in the university’s
space inventory
• The square footage is multiplied by a flat rate per square foot
for four categories of costs: utilities, custodial service,
maintenance, and renewal & replacement, which cover
expenses related to heat, power, water/sewer, utilities debt
service, FOD operating costs, campus repair and renovation
and deferred maintenance
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN EXPENSES
RESEARCH ASSESSMENT
• The cost allocation covers the budgets of units that support
sponsored research (e.g. OSP formerly OSURF), guidelines and
research service improvements and mandated expenditures
• Individual colleges are allocated a research cost proportional
to their Modified Total Direct Cost expenditures
• The Central Tax funds the administrative components of the
Office of Research that have university-wide responsibilities
(e.g. Office of Responsible Research Practices)
DEVELOPMENT ASSESSMENT
• Expenses are allocated among the units proportionally, taking
in to account the development expenses on behalf of each
unit and designated funds raised for each unit
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Budgeting Process
ALLOCATION OF ANNUAL CHANGES IN EXPENSES
CENTRAL TAX
TAX RATE = 24%
• Supports units such as the President’s Office, OAA, Business &
Finance, Public Safety, OCIO, Gov’t Affairs, Legal Affairs are
funded by a 19% Central Tax
• An additional 5% tax funds Strategic Investments
• These taxes apply to:
– Instructional Fees
– State Share of Instruction
• These taxes do not apply to:
– Indirect Cost Recoveries, Differential, Program and Technology Fees
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Budgeting Process
CENTRALLY DISTRIBUTED BUDGET ALLOCATIONS
(Thousands)
Arts & Sciences
Fisher College of Business
Food, Agri & Env Sci.
Education & Human Ecology
Engineering
Nursing
Pharmacy
John Glenn Institute
Social Work
Dentistry
Law (Excluding Law Library)
Medicine
Public Health
Optometry
Veterinary Medicine
Interdisplinary
Provost Reserve
Total Colleges
FY 03 - FY 12
Historical
Continuing
12,719
953
1,475
698
6,257
2,282
550
0
287
663
345
5,954
1,728
1,260
662
0
*Includes Central Distributions from OAA and Research
35,834
FY 2013 Distribution of Central
Funds
Continuing
One-Time
0
7,065
0
0
0
223
16
254
0
3,217
0
0
0
0
0
0
0
18
0
0
0
50
0
676
0
0
0
500
0
50
0
8,750
3,601
3,617
20,803
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Monitoring and Oversight
QUALITY OF INSTRUCTION
Council of Academic Affairs ensures continued quality of
instruction through:
• A comprehensive review of existing courses before a new
course is approved
• Monitoring course and program quality through a number of
indicators, such as class size, level of instructor, and course
GPA
• Monitoring college honors course offerings, enrollment, and
quality of instruction
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Monitoring and Oversight
ROLE OF SENATE FISCAL
Senate Fiscal Committee:
• Provides the Provost and CFO with data and tools to assist in the Provost’s
review of the College base budgets
• Recommends to the Provost modified allocation models when unintended
consequences or changes in the financial environment suggest revisions
are appropriate. Allocation methodologies implemented in FY08 as a
result of these review include:
– Combining the undergraduate subsidy and fee revenue and allocating
60% of the revenue on a credit hour basis and 40% on a basis
weighted to reflect the cost of delivering instruction
• Additional recommendations made to the Provost and implemented
– Fee reconciliation distribution to the colleges
– New taxonomy for the distribution of weighted share of SSI
– Support Units participated with colleges in the State subsidy reduction
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Budget Process for Colleges
The Big Picture
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Budget Process for Support Units
The Big Picture
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Glossary
• Base Budget – Continuing funds also referred to as annual
rate and PBA
• Fiscal Year (FY) – University accounting/budgeting system
works on a standard fiscal year as opposed to calendar or
academic years. The fiscal year begins July 1st and ends June
31st Ex: FY13 = July 1, 2012 – June 30, 2013
• General Funds Spending Authority (GFSA) – General funds
cash available for your unit to spend. Includes cash carry
forward
• Indirect Cost Recovery (IDC) – Revenues received from
sponsored projects to offset costs already absorbed by the
University
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Glossary
• State Share of Instruction – Sometimes referred to as
instructional subsidy
• Net Marginal Resources (NMR) – Increase in your budget
from one year to the next
• Plant Operations and Maintenance Funds (POM) – Includes:
Utilities, custodial services, maintenance, and renewal and
replacement
• Present Budget Allocation (PBA) – Present budget that
generates your cash/GFSA. Also referred to as annual rate
30
Glossary
• Financial Planning and Analysis (FP&A) – Responsible for
University Budgeting
• Annual Rate – Present budget that generates cash/GFSA.
Also referred to as PBA
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Questions & Answers
ANY QUESTIONS?
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