Budget Planning Presentation UCSD Strategic Budget Group April 30, 2013
Outline State and UC Budget I. State Fiscal Overview ■ State Budget Impact to UC ■ UC Fiscal Overview & Outlook ■ UC Capital ■ UC San Diego Financial Overview II. Revenues ■ Expenditures ■ State Budget Impact ■ UCSD Budget Planning III. Budget Planning ■ Select Topics ■ Next Steps ■ 2
Budgetary Impact State Fiscal Overview State Budget Impact to UC UC Fiscal Overview & Outlook UC Capital 3
State and UC Budget 2013/14 Governor’s Proposed Budget General Fund Summary (Dollars in Millions) In 2011, the state faced $20 billion in expected annual gaps. Two years later, California is on a more stable fiscal footing due to tough spending cuts and temporary revenues provided by Proposition 30. Although the state’s budget is projected to remain balanced for the foreseeable future, by May Revise projected revenue could be ~ $5B higher than the budget. 2012/13 2013/14 Prior Year Balance ($1,615) $785 Revenues and Transfers $95,394 $98,501 Total Resources Available $93,779 $99,286 Total Expenditures $92,994 $97,650 Fund Balance $785 $1,636 Reserve for Liquidation of Encumbrances $618 $618 Special Fund for Economic Uncertainties $167 $1,018 Source: 2013/14 Governor’s Budget Summary 4
State and UC Budget State of California 2013/14 Revenue Sources General Fund: $98.5B (1) - Total Funds: $138.7B (2) (Dollars in Billions) Special Funds, $40.2 Personal Income Special Funds: 30.1% Taxes, $61.7 Other Taxes, $4.4 PIT = 62.6% General Funds: 70.9% of General Fund Corporation Tax, $9.1 Sales Tax, $23.2 2-Year 2-Year Change Change Dollar Dollar Percent Percent 2011/12 2012/13 2013/14 Change Change 2010/11 2011/12 2012/13 Change Change Personal Income Tax Personal Income Tax $54,186 $54,186 $60,268 $60,268 $61,747 $61,747 $7,561 $7,561 14.0% 14.0% Footnotes : Sales and Use Tax Sales and Use Tax $18,777 $18,777 $20,605 $20,605 $23,264 $23,264 $4,487 $4,487 23.9% 23.9% Corporation Tax Corporation Tax $9,479 $9,479 $8,488 $8,488 $9,130 $9,130 ($349) ($349) -3.7% -3.7% (1) 2012/13 State GF revenues were $95.7B. Special Funds Special Funds $31,978 $31,978 $37,015 $37,015 $40,174 $40,174 $8,196 $8,196 25.6% 25.6% (2) 2012/13 State total revenues were $132.7B. Other Taxes Other Taxes $6,164 $6,164 $6,526 $6,526 $4,360 $4,360 ($1,804) ($1,804) -29.3% -29.3% Source: 2013/14 Governor’s Budget Summary 5 Total Total $120,584 $120,584 $132,902 $132,902 $138,675 $138,675 $18,091 $18,091 30.5% 30.5%
State and UC Budget Growth in State General Fund – 21 years Health and Human Services Corrections K-12 Education Higher Education UC 300% Corrections has outpaced other agencies 250% in GF budget growth. 200% 150% 100% 50% 0% -50% 1990-91 1995-96 2000-01 2005-06 2010-11 Source: UC Budget Presentation to Board of Regents, January 2011. 6
State and UC Budget State of California 2013/14 Expenditures by Agency General Funds: $97.7 Billion (Dollars in Million) Other Agencies (1) , Legislative, Judical, $4,031 Executive, General Government, (4%) $2,546 $1,721 (3%) (2%) Health and Human Services, Higher Education, $28,370 $11,109 (29%) (11%) Revenue up Corrections and $1.3 B, or Rehabilitation, 13%, from $8,805 12/13 (9%) K-12 Education, 2-Year $41,068 Change Dollar Percent (42%) Agency 2011/12 2012/13 2013/14 Change Change Legislative, Judical, Executive $2,540 $2,056 $2,546 $6 0.2% Health and Human Services $26,668 $26,695 $28,370 $1,702 6.4% Corrections and Rehabilitation $7,849 $8,887 $8,805 $956 12.2% Footnote: K-12 Education $34,162 $37,848 $41,068 $6,906 20.2% (1) Includes State and Consumer Services; Business, Transportation & Housing; Higher Education $9,821 $9,432 $11,109 $1,288 13.1% General Government $1,834 $3,018 $1,721 ($113) -6.2% Natural Resources; Environmental Protection; Labor and Workforce Development. Other Agencies $3,638 $3,402 $4,031 $393 10.8% Source: 2013/14 Governor’s Budget Summary Total $86,512 $91,338 $97,650 $11,138 56.8% 7
State and UC Budget State and UC Budget Decline in State funding precedes 2008 crisis Since 1990 State per student expenditures have dropped 60% Over this same period, UC per student expenditures have declined 19% In the last decade, UC has experienced 7 years of cuts Today, UC relies on the same absolute level of funding as in 1997/98, even though it: $25,000 − Educates 73,000 more students $20,000 $2,680 $3,920 $1,970 $4,850 $1,920 − $15,000 $5,370 Operates one additional campus $1,880 $8540 $2,140 $10,000 Offers many new programs − $16,720 $2,080 $15,020 $12,860 $5,000 $10,100 $6,770 $0 1990-91 1995-96 2000-01 2005-06 2011-12 State General Funds UC General Funds Student Fees 8
State and UC Budget State and UC Proposed Budget For 2013/14, UC requested $291M from State + Student Tuition and Fee increases of 6% (PDST > 35%) = $185M Governor Proposed 2013/14 UC State General Fund $2,377M 2012/13 Tuition/Fee Buy-out 125M – Base budget adjustment – 5% (2012/13) 125M – Lease purchase revenue bonds 10M – Annuitant Health Benefits 6M – UC Operating Total $2,644M Transfer of GO bond debt service to UC Base 202M Total Proposed UC State General Fund $2,846 B *As recommended in the 2013/14 Governor’s Proposed Budget 9
State and UC Budget State and UC Proposed Budget Governor’s January Budget proposes increases for UC in each of next three years: 5% in 2014/15 ‾ 4% in 2015/16 ‾ 4% in 2016/17 ‾ Not enough to address base mandatory compensation costs on UC State general funds. Governor not supportive of Tuition & Fee increases. UC has agreed to NO Tuition & Fee increase in 2013/14, working with DOF on out years. UC has not made final decision on PDST increases. Proposal to Regents if March for discussion, and May or June for Vote. *As recommended in the 2013/14 Governor’s Proposed Budget 10
State and UC Budget UC 2012/13 Sources of Funds State Funding = Total Operating Budget: $24.1 Billion 38% of Core Funds, 9.9% of All Funds, come (Dollars in Millions) from the State 25.8% Core 25.8% Core 48.5% Sales, Services & Auxiliaries 48.5% Sales, Services & Auxiliaries Funds Funds S tudent Fees, $2,981 UC General Funds, $848 Medical Centers, $6,791 State General Funds, $2,378 Auxiliaries & Extension, $1,609 1.7% Other 1.7% Other Sources Sources Other, $406 C linics & Other Activities, $2,890 7.4% Private Support 7.4% Private Support Extramural Activities, $387 Regent's Endowments, $217 Private Gifts, Contracts and Grants, $1,616 D OE Laboratory Ops, $810 State Special & Extramural, $379 F ederal Appropriations & Extramural, $2,766 16.4% Goverment Contracts & Grants 16.4% Goverment Contracts & Grants Source: UC 2013/14 Budget for Current Operations Source: UC 2013/14 Budget for Current Operations 11
State and UC Budget UC 2011/12 Core Funds Expenditures By Function Total Core Budget: $6.2 B (Compared to 2010/11, Total Core Budget: $6.1 B) Research, 5% (6%) Nearly half of core funds are Public Services, 1% spent in general campus and (2%) health sciences instruction Academic Support, 8% (9%) Teaching Hospitals, 1% (1%) Instruction, 47% (47%) Student Services, 5% (5%) Institutional Support, 8% (8%) Operation and Maintenance of Plant, 7% (8%) Financial Aid, 15% Provisions for (12%) Allocation,3% (3%) Source: UC 2012/13 Budget for Current Operations; UC 2013/14 Budget for Current Operations 12
State and UC Budget UC 2011/12 Core Funds Expenditures By Type Total Core Budget: $6.2 B (Compared to 2010/11, Total Core Budget: $6.1 B) Student Financial Aid, 16% (14%) Academic Salaries, 30% (30%) Equipment, Utilities, & 69% of core funds are Other spent on salaries and 15% benefits, up from 68% in (18%) 2010/11 Employee & Retireee Benefits, 16% (14%) Staff Salaries, 22% Senior Management (23%) Salaries, 1% (1%) Source: UC 2012/13 Budget for Current Operations; UC 2013/14 Budget for Current Operations 13
State and UC Budget Sustainable Funding Model for UC 2012/13 Wise stewardship of the UC’s financial resources 1. Implementing efficiencies and organizational restructuring – Leveraging the other strengths of the UC 2. Working Smarter targets $500 million in positive fiscal impact – UC enterprise is both strong and diverse – Research o Private Philanthropy o Medical Enterprise o Other opportunities – Nonresident student enrollments o Self-supporting academic programs o A stable relationship with the State 3. Predictable funding from other financial sources, including student 4. tuition 14
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