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2011-12 Budget Kick-Off

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Budget Overview• UVa’s Budget Approach• UVa’s Budget Development Cycle• 2010-11 Approved Budget• 2011-12 Critical Issues• 2011-12 Budget Submission Requirements• 2011-12 Due Dates

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Budget Overview• UVa’s Budget Approach• UVa’s Budget Development Cycle• 2010-11 Approved Budget• 2011-12 Critical Issues• 2011-12 Budget Submission Requirements• 2011-12 Due Dates

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Three Primary Budgeting Approaches

• Targeted Budgeting• Sales and Services Budgeting• Summary Budgeting

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Targeted Budgeting• State general (SG), state restricted (SR), local general (LG), F&A

institutional (FI), endowment institutional (EI), and gift institutional (DI)

• UBO provides budget target and modifies it for salary increases, fringe benefit changes, addenda, and budget reductions

• Central covers costs for facilities and central administration

• Unit manages internal allocation of budget, hiring, carryforward, and operational decisions

• Central oversight is by UBO and budget entry is required in the Integrated System

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Sales & Services Budgeting• State sales and services (SS), state auxiliaries (SA), local sales and services

(LS), local auxiliaries (LA), and local other (LO)• Revenue-generating, self-supporting unit approach• Unit manages revenues and direct expenses (salary and fringe changes)• Cost for facilities and central administration responsibility varies:

– 100% facilities and indirect costs paid by auxiliaries– 100% facilities and 10% revenue tax assessed to self-sufficient– 10%-15% revenue tax assessed to some self-supporting units– No facilities or indirect costs assessed to other sales and service units

• Central oversight is by UBO and budget entry is required in the Integrated System

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Summary Budgeting• Endowments (ER, EU, EF), gifts (DR, DU), F&A (FA), grants (G*, Z*),

and intellectual property (IP)

• Unit manages direct expenses (salary and fringe changes)

• Central covers cost of facilities and central administration, with the exception of grants (reimbursed by federal gov’t)

• Allocations are managed by Comptroller’s Office, Gift Accounting, Sponsored Programs and the VP for Research

• Summary budgets (not uploaded to IS) are submitted to the UBO

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Budget Overview• UVa’s Budget Approach• UVa’s Budget Development Cycle• 2010-11 Approved Budget• 2011-12 Critical Issues• 2011-12 Budget Submission Requirements• 2011-12 Due Dates

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Budget Development Cycle

Dec: University Budget Office (UBO) develops budget instructions, assumptions, and targets

UBO estimates unavoidable cost increases (salaries, benefits, utilities, AccessUVa, etc.)MBUs submit special session tuition requests to UBO

Jan: UBO holds budget kick-off and issues budget targets to EVPsEVPs distribute budget targets, instructions, and due datesUBO watches developments in state budgetUBO communicates institutional graduate aid

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Budget Development CycleFeb: Major Budget Units (MBUs) develop budget details

MBUs submit other fee and tuition requestsMBUs submit research and private spending estimatesMBUs develop and prioritize addenda requestsVPs hold budget meetings with MBUsBoard approves budget assumptions, special session tuition

Mar: VPs continue budget meetings with MBUsVPs approve budgets and prioritize addenda requestsUBO finalizes tuition proposal

Apr 1: All budget submission items due to UBO

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Apr: Board approves tuition and fees; dining ratesUBO reviews budgets and prioritized addenda requestsUBO identifies available resources for addenda requestsUBO recommends preliminary addenda allocationsSenior administration finalizes addenda decisions

May: UBO finalizes Budget Summary

June: Board approves Budget SummaryUBO communicates budget and addenda decisions to EVPs

Jul 1: UBO loads GA and GL budgets into Integrated System

Budget Development Cycle

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Budget Overview• UVa’s Budget Approach• UVa’s Budget Development Cycle• 2010-11 Approved Budget• 2011-12 Critical Issues• 2011-12 Budget Submission Requirements• 2011-12 Due Dates

University of Virginia 2010-2011 Operating Budget

(in millions)

Academic Division $ 1,326.7

Medical Center $ 1,020.6College at Wise $

34.4Total $ 2,381.7

Academic Division55.7%

Medical Cen-ter

42.9%

Wise 1.4%

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Major Funding Sources 2010-11Academic Division - $1.33 Billion

Tuition & Fees30.8%

Sponsored Programs

24.4%

Auxiliary Revenues

14.0%

State Tax Appropriation

10.3%

Endowment9.7%

Annual Giving6.9% Other

3.9%

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Major Spending Areas 2010-11Academic Division - $1.33 Billion

Direct Instruction, 25.2%

Research & Public Service, 23.7%

Libraries, Academic Technology, Deans, 9.4%

Student Support, 2.8%

Executive and Administration,

5.7%

Operations and Main-tenance of Facilities,

7.2%

Financial Aid; 11.2%

Auxiliaries; 14.7%

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Budget Overview• UVa’s Budget Approach• UVa’s Budget Development Cycle• 2010-11 Approved Budget• 2011-12 Critical Issues• 2011-12 Budget Submission Requirements• 2011-12 Due Dates

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2011-12 Critical Issues• State Budget Reductions

• Other State Actions

• Salary and Fringe Assumptions

• Endowment Distribution

• New Budget Model Development

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State Budget Reductions• Oct 2007 – $ 9.2 mill = 3.0% SG impact• Oct 2008 – $10.6 mill = 3.0% SG impact• Jul 2009 – $12.4 mill = 3.2% SG impact• Jul 2010 – $4.6 mill = 2.5% - 3.0% SG impact• Jul 2011 - $14.7 mill = 2.5% - 3.0% SG impact

Cumulative: $51.5 million = 14-15% SG impact

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State Budget Situation

• $23 million in stimulus funds in 2010-11 used for one-time items…do not need to replace in 2011-12

• $14.7+ million GF budget reduction in 2011-12

• So far, no further eminent scholar reduction

• No end (yet) to the ETF and maintenance reserve freeze

• No end to reversion of auxiliary cash balances and savings from retirement plan changes

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Governor McDonnell Salary/Retirement Proposals

• VRS employees – 3% salary increase and 5% required employee contribution, 7/1/2011

• ORP employees – no salary increase, 2% decrease in employer contribution, 7/1/2011

• Potential for 2%, one-time December 2011 bonus for all

• To the unit: potential savings in fringes offset by increased compensation costs = could be a net zero impact

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Fringe Benefits

• Projected fringe benefit rates, increased for healthcare but before 2011 General Assembly changes:– FT Faculty and Staff-Executive: 29.0%– FT Staff: 33.5%– PT w/ benefits: 29.5%– PT w/out benefits, wages: 6.0%

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Endowment Distribution

• Policy: 4%-6% of endowment value, with a 5% target

• 2010-11 was within policy target, so increased by an inflationary percentage to $242.24/share

– To be distributed January 2011 and June 2011

• Since June, endowment is up 10%; if this holds, expect an inflationary increase again for 2011-12

– To be distributed January 2012 and June 2012

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New Budget Model Development

• Top priority of President Sullivan

• New budget model– Comprehensive

– Encourage stewardship of resources

– Be transparent in decision-making

– Provide incentive-based execution

• Upcoming actions will identify a steering committee, establish working groups, and develop timeline

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Budget Overview• UVa’s Budget Approach• UVa’s Budget Development Cycle• 2010-11 Approved Budget• 2011-12 Critical Issues• 2011-12 Budget Submission Requirements• 2011-12 Due Dates

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Submission Requirements

• Budget Submission Narrative– Include summary of the impact of the new budget reductions

• Tuition and Fee Increases• Integrated System Budget Detail Entry

– New requirement to budget LS and LO activity

• Planned Expenditures from Selected Fund Sources

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Discoverer Reports to Review • WEB Target Development Report• WEB Budget Development Report

– GL and GA Budget Comparison

• GL_Cash Balance Summary by Org– Operational Cash Balance Summary– Non-operational Cash Balance Summary

• GL_Revenue Reconciliation Report– Cash Balance by Project

• WEB Selected Financial Data– 6) Summary-All Award Types– 8) Expenditure Detail-All Award Types

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Websites to Consult• Governor’s Proposal on Retirement:

http://www.hr.virginia.edu/news-events/news/gov-proposal/

• Human Resources Fringe Benefit Summary:http://www.hr.virginia.edu/other-hr-services/payroll-information/fringe-rates/

• UVIMCO Investment Reports: http://uvm-web.eservices.virginia.edu/public/reports/

• F&A Distribution Report:http://www.virginia.edu/finance/finanalysis/overhead.html

• Long-Term Pool Market Value Report:http://www.virginia.edu/finance/finanalysis/invest.html

• State Governmental Relations Analysis of State Budget:http://www.virginia.edu/governmentalrelations/reports.html

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Submission Requirements

• Addenda Requests– Unavoidable increases must be top priority!

• Capital Reserve Projections• Annual Renovation and Infrastructure Projects (ARIP)• Budget Checklist

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Budget Overview• UVa’s Budget Approach• UVa’s Budget Development Cycle• 2010-11 Approved Budget• 2011-12 Critical Issues• 2011-12 Budget Submission Requirements• 2011-12 Due Dates

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Provost Office Thoughts

• 2011-12 Due Dates

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UBO Contact Information• University Budget Office

– 434-924-3386– budget@virginia.edu– http://www.virginia.edu/budget/– Who Do I Contact? page:

http://www.virginia.edu/budget/Docs/Who%20Should%20I%20Contact.pdf

• Melody Bianchetto, Assistant VP for Budget and Financial Planning, msb2p@virginia.edu, 434-924-0994

• Keith Carter, Budget Analyst, kac9r@virginia.edu, 434-924-3969• Melissa Clarke, Associate Budget Director, mfc5g@virginia.edu, 434-924-0992• Robbyn Minnis, Budget Manager, rlm5s@virginia.edu, 434-924-0990• Rob Neil, Sr. Budget Analyst, rjn6x@virginia.edu, 434-924-3907• Tracy Plunkett, Budget Manager, tmp3a@virginia.edu, 434-924-0027• Judy Rowe, Budget Manager, jwr7e@virginia.edu, 434-924-7085• Bev Smart, Budget Manager, bsd4u@virginia.edu, 434-243-0417