Budget Model Initiative (Phase 1) March 2017 Higher Purpose. Greater Good. ™ 1 Budget Inititative deliverable ... CHI
The Budget Model initiative is divided into two phases Phase 1: Transparency Phase 2 : Redesign (Fall 2016 / Winter 2017) (Q2 2017) Thoroughly define, describe and Redesign budget model to provide communicate the current process leaders the flexibility to achieve in order to seek necessary their strategic goals feedback for Redesign phase 2 Budget Inititative deliverable ... CHI
Phase 1 : Budget Model Initiative team represented both faculty and staff with a variety of expertise Mardell Wilson Kent Porterfield Initiative sponsors Dean, Doisy College of VP of Student Health Sciences Development Brianne Burcke Initiative manager Director, Financial Planning and Budget Faculty Staff Jim Fisher - Professor, Cook (Marketing) Kellisa L. Fiala - Financial Coordinator, Social Initiative Work team Hal Parker - Associate Professor, A&S (History) Kevin Riordan – Director Administrator, Surgery Kerry Ryan – Associate Professor (Law) Cyn Wise – Business Manager, Center for World Health & Medicine 3 Budget Inititative deliverable ... CHI
The current budget model is perceived as a source of confusion WHAT WE’VE HEARD • There is a high degree of frustration and confusion about the budget model & process as it functions today - Lack of understanding about how budgets are set - Lack of clarity around how funding decisions are made - Definition of “budget model” varies across campus/groups - Layers of approval required for groups to reallocate budgeted funds • Limited alignment of incentives and funding allocation with desired behaviors / performance • Funding decisions are frequently “one off” vs tied to long -term strategic or resource planning • Shifting funds can be onerous and difficult 4 Budget Inititative deliverable ... CHI
Summary of report THIS REPORT DOES… THIS REPORT DOES NOT… • Define and describe the budget model • Diagnose SLU’s financial challenges at SLU as it exists today - For more detail on SLU’s financial/operating challenges and • Provide information on key aspects how initiatives being developed, see the MOE SLU develops its annual budget and website how it manages changes to spending ( www.slu.edu/operational-excellence) throughout the year • Provide a set of evaluations or • Summarize SLU’s capital budget recommendations on what should be • Detail elements of the decision-making changed within the current process - This will be included in Phase 2: Redesign process associated with resource allocations within the University • Provide transparency on major pain- points/myths associated with the budget process The goal is to provide accurate facts to clear up as much confusion and frustration as possible related to the current budget model 5 Budget Inititative deliverable ... CHI
Budget definition THIS SECTION WILL… • Clarify the differences between Budget and Budget Model • Describe the 4 most commonly used fund types of the 9 total that comprise the budget model • Explain the different methods that SLU uses to estimate revenues and expenses depending on fund type 6 Budget Inititative deliverable ... CHI
Definition : Budget and budget model are separate but related concepts BUDGET MODEL BUDGET • The Budget Model refers to the process/tools • SLU prepares an annual operating budget to by which the budget is created (i.e., method estimate revenue and reflect the spending for estimating revenue and expenditures for a plan of our expenses fiscal year) • A capital budget is also determined to • This method differs across SLU’s 4 major evaluate new and ongoing investments and fund types improvements - Unrestricted - SLUCare / Center for Advanced Dental Education • Key reference point used throughout the - Designated / Restricted year to compare whether our revenues and - Sponsored Programs costs are above or below what was budgeted • Also contains a multi-year analysis developed centrally that is used to ensure that our financial projections allow us to achieve future goals 7 Budget Inititative deliverable ... CHI
Definition : Revenue and expenses roll up into 4 major fund types Revenue and Expense Fund Types SLUCare / Center for Designated / Sponsored Unrestricted Advanced Dental Restricted programs Education (CADE) Revenue largely Revenue largely from endowment from tuition used Patient care spend and other Grant/contract to fund operating revenue used to clinical enterprises Description revenue to fund expenses at SLU fund patient that is typically sponsored activity management/ activity designated or Board’s discretion restricted for a specific purpose 8 Budget Inititative deliverable ... CHI
Definition : SLU’s approach to estimating revenue and expenses depends on the fund type Designated / Unrestricted SLUCare / CADE Sponsored Programs Restricted FORECAST REVENUE AND MAKE START FROM ZERO AND CARRY FORWARD INCREMENTAL BUILD REVENUE AND FUNDING FROM EXTERNALLY FUNDED CHANGES TO EXPENSES EXPENSES PREVIOUS YEAR PROGRAMS • Funds roll over • Awards fund • Business & Finance • Business & year-to-year and multi-year projects collaborates with Finance estimates are used to fund relevant revenue and • Year-to-year designated/ administrative expenses based on budgeting is based restricted activity divisions and Provost expected business on expenses to develop a view of activity in the reimbursed by revenue based on upcoming year outside funder projected tuition, room and board, etc. and expenses based on the previous year’s budget 9 Budget Inititative deliverable ... CHI
Budget development THIS SECTION WILL… • Provide a detailed analysis of various revenue sources and expenses including methodology for forecasting • Detail the process by which tuition revenue is calculated • Map the process and key stakeholders for setting the expense budget baseline • Explain the criteria used to make funding decisions and what roles each stakeholder plays • Define overhead and describe how it affects individual units • Summarize the capital budget and how it interacts with departments 10 Budget Inititative deliverable ... CHI
Method for deriving revenue projections varies by type METHODOLOGY DEFINITION FOR ESTIMATING SOURCE OF DATA Revenue received from Government grants the government for VP of Research Historical trends and contracts various projects and 4% and known info for studies 4% upcoming fiscal year 7% Contributions and Revenue donated by VP of Development private grants individuals or orgs. 9% Endowment and Income from investment Estimated returns Business & Finance other income gains Room and board, Projected housing VP of Student 34% athletics, retail and occupancy for Development and Auxiliary enterprises dining, parking services, upcoming year and Director of Housing etc. historical trends and Residence Life Gross Revenue billed by SLU to Historical trends VP of Enrollment tuition and students based on tuition and projection of then Provost sets mandatory rate enrollment change College goals fees Tuition & fees Any student assistance to Historical trends, Financial help meet financial 42% merit, gov’t VP of Enrollment aid obligations related to mandates their education Historical trends and known info for Patient care SLUCare patient fees upcoming fiscal year Source: Audited financial statements; “Other” category included in “Auxiliary enterprises” 11 Budget Inititative deliverable ... CHI
Development : Estimating net undergraduate tuition revenue requires inter-departmental coordination EXAMPLE: 100 UNDERGRADUATE Process for estimating Source STUDENTS Historical trends and Enrollment 100 students environmental scan Enrollment with input from external consultants Enrollment; ~$40K Tuition rate Provost office; Expected increases Advised by Tuition rate based on competitive Ruffalo Noel environment Levitz and other Gross tuition $4,000,000 3rd party consultants Historical trends and Institutional environmental scan aid with input from Institutional aid $1,404,000 external consultants Institutional aid / Gross Net tuition $2,596,000 tuition = Discount rate revenue Note: Approved by Board of Trustees; Graduate enrollment estimate is more College/School driven than undergraduate with institutional aid determined locally; Tuition rate includes fees; Institutional aid is both University funded (forgone revenue by the University (~90%)) or externally funded (covered by outside funds excluding Pell Grants (~10%)); Discount rate assumed to be 35.1% 12 (Actual FY16) Budget Inititative deliverable ... CHI
Development: General expense and compensation estimates are largely based on previous year’s budget METHODOLOGY FOR SOURCE OF DEFINITION ESTIMATING DATA Interest Expense on debt incurred expense by University 1% 5% Accounting expense Based on expectations from associated with cost of debt Accounting and Treasury 23% Depreciation & issuance and amortization spreading out the reduction in value as long-lived property is used Professional services, General travel, utilities, expenses maintenance supplies, rentals, etc. 71% Detailed expense budget on following slide Salaries & Compensation of personnel benefits Source: Audited financial statements 13 Budget Inititative deliverable ... CHI
Recommend
More recommend
