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Budget 101Sarah Norris HallPlanning & Budgeting

February 25, 2015

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PRESENTATION OVERVIEW

Budget basics

Budget calendar and overview

FY15 Regents’ Budget

2015-17 State operating and capital submissions

• Next steps

Development of Provost’s FY16 budget process

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BUDGET VS. ANNUAL REPORT

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BUDGET OVERVIEW

The budget is a record of allocations, or a spending plan that incorporates values – it is one representation of many policy and financial decisions that have developed throughout the previous four months

The UW budget process allows Regents to Alter tuition rates Change allocations Consider capital projects Make changes to the prioritization of certain central efforts

No standard financial health metrics can be derived from a budget

However, we can evaluate whether allocation principles are effective

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TERMINOLOGY REVIEW: UW CODE TERMS General Operating Funds (GOF): budget type used for

allocations of state appropriations and net operating fee revenue (base component of tuition)

Designated Operating Funds (DOF): budget type used for allocations of indirect cost recovery from grants/contracts, summer quarter, overhead revenue, fees and discretionary investment income

Activity Based Budgeting (ABB): method by which incremental GOF/DOF revenue is taxed to fund central expenses and then allocated to schools and colleges

Ten-Year Capital Plan: list of proposed projects by Tier and Program Use (range of estimated expense now included)

Regents Cap Budget: list of projects that MAY go to Regents for approval in the coming fiscal year

ABB

Rule

s Ap

ply

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TERMINOLOGY REVIEW: STATE BUDGET

General Fund State (GFS): sales/B&O tax revenue supporting general government, for which HE (a discretionary part of the budget) receives 11%

Education Legacy Trust (ELT): estate/cigarette tax revenue supporting education for which K12 receives most

UW Building Account: Combination of Building Fee, MetroTract, timber/land revenue from which the Legislature appropriates funds for minor/major capital projects

Book 1/Book 2: Governor reqd. to write balanced budget or, “Book 1,” but will assume new revenue in a “Book 2”

Proviso: Operating budget allocation for specific program support in budget bill (T/P)

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F, or

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RESOURCES ON THE WEB

State Budget

• Runs on a two year (biennial cycle) starting with an even-numbered calendar year. The 2015 Legislative session will conclude with a 2015-17 (FY16 &FY17) budget

• http://www.leg.wa.gov/LIC/Documents/EducationAndInformation/Citizens_Guide_to_Budget.pdf

• http://www.leg.wa.gov/legislature/Pages/Bill2Law.aspx

Regents Budget

• Annual budget cycle that incorporates projections for Regents’ consideration and for GOF/DOF allocations to units http://opb.washington.edu/

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UW state budget

materials to OFM

Governor’s budget

released

Legislative session begins

Budget negotiations

Final Budget Released

Regents budget

adopted

Internal budget development

begins

UW state budget materials

developed

Tuition discussions

begin

Tuition projections produced

Tuition rates

finalized, published

BUDGET PROCESS

Thorough operating budget process timeline is available here: http://opb.washington.edu/sites/default/files/opb/Budget/OE_BudgetProcess_v5.pdf

Provost budget meetings held

Summary budget docs released for review

WE ARE HERE

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FY15 Regents’ Budget

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FY15 REVENUES AND EXPENDITURES = $6.4 BILLION

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UNIVERSITY OPERATING RESOURCES

FY 2015Proposed

FY 2014 Adopted

General Operating FundState General Fund 246,471,000 253,896,000Tuition Operating Fees 608,730,000 556,890,000TOTAL REVENUES 855,201,000 810,786,000

Designated Operating FundIndirect Cost Recovery 233,000,000 226,771,000Institutional Overhead 24,000,000 20,000,000Summer Quarter Tuition 50,570,000 51,631,000Investment Income 16,176,000 16,176,000Miscellaneous Fees 7,945,000 6,595,000UWB & UWT Admin Overhead 7,144,000 6,072,000Administrative Allowances 200,000 200,000TOTAL REVENUES 339,035,000 327,445,000

TOTAL - UNVERSITY OPERATING RESOURCES 1,194,236,000 1,138,231,000

University Operating Resources

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UNIVERSITY OPERATING RESOURCES BY CAMPUS

University Operating Resources

Seattle Bothell Tacoma TOTAL

State General Fund Base 219,125,000 11,754,000 15,506,000 246,385,000State Cuts (7,918,000) (480,000) (427,000) (8,825,000)Proviso Funds 7,261,000 566,000 1,084,000 8,911,000Tuition Operating Fees 514,146,000 50,042,000 44,542,000 608,730,000

732,614,000 61,882,000 60,705,000 855,201,000

Designated Operating Fund339,035,000 0 0 339,035,000

TOTAL REVENUES 1,071,649,000 61,882,000 60,705,000 1,194,000,000

FY 2015Proposed

General Operating Fund

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ALL OTHER REVENUES/EXPENDITURESFY 2015

Proposed FY 2014

Adopted

Research EnterpriseGrants and Contracts Direct Costs 1,114,898,000 1,089,898,000Total 1,114,898,000 1,089,898,000

Restricted FundsGift Income & Endowment Distr. 243,800,000 224,715,000State Restricted Funds 8,776,000 8,844,000Total 252,576,000 233,559,000

UW Medicine health system (Preliminary)

UW Medical Center 1,016,000,000 944,000,000Harborview Medical Center*** 830,000,000 785,000,000Valley Medical Center 489,000,000 450,000,000NW Hospital 342,000,000 320,000,000UW Physicians 269,000,000 253,000,000Airlift NW 43,000,000 50,230,000UW Neighborhood Clinics 37,000,000 33,100,000Total 3,026,000,000 2,835,330,000

Auxiliary ActivitiesHousing and Dining 99,426,000 91,736,000Intercollegiate Athletics 103,886,000 95,621,000Educational Outreach 105,900,000 106,417,000Parking 37,943,000 36,598,000Additional Auxiliary Activities 468,000,000 418,443,000Total 815,155,000 748,815,000

Total Revenues/Expenditures 6,402,865,000 6,045,833,000

Revenues and Expenditures by Area

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2015-17 State Operating & Capital Submissions

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2015-17 OPERATING REQUESTS – PERFORMANCE

Performance Level Requests(in order of priority)

Requested State Funds($ in thousands)

FY16 FY17 Total

Required 15% Reduction Decision Package n/a n/a n/a

Competitive Compensation 18,903 38,563 57,466

WWAMI Spokane Expansion 3,481 4,541 8,022

School of Dentistry RIDE Expansion 987 1,685 2,672

Replacement of RV Barnes Research Vessel 11,207 0 11,207

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2015-17 CAPITAL REQUESTS - PRESERVATION

Preservation Project Requests(in order of priority)

Requested Funds($ in thousands)

StateFunds

UW Building Account

Minor Capital Repairs – Preservation & Sub Projects 57,800 69,000

Health Sciences Education Phase I – T Wing Renovation/Addition 8,000 -

UW Tacoma Classroom Building Renovation - Urban Solution Center 18,000 -

UW Tacoma Campus Development & Soil Remediation 5,000 -

Lewis Hall Renovation 16,000 -

Burke Museum Renovation (UW as Agent for Burke Museum) 46,200

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2015-17 CAPITAL REQUESTS - PROGRAMMATIC

Programmatic Project Requests(in order of priority)

Requested Funds($ in thousands)

State Funds

UW Building Account

Computer Science & Engineering Expansion 40,000 -

Life Sciences Building I 40,000 -

School of Nursing Simulation Learning Lab 4,000 -

Health Sciences Interprofessional Education Classroom Phase I 3,000 -

UW Bothell Phase 4 – Academic STEM 500 -

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OTHER ELEMENTS OF NOTE

Next Steps:

March revenue forecast released early, see: http://depts.washington.edu/opbblog/2015/02/february-revenue-forecast-update/

Governor’s budget was released in December and is largely described as a “cuts budget,” see: http://opb.washington.edu/sites/default/files/opb/Policy/Governor-Inslee-Budget-2015-17.pdf

Overly simplistic example for information’s sake: Governor’s budget sets bar for compensation but lacks sufficient funds. If all employees budgeted in GOF budgets rec’d a 3% increase (Gov’s assumption) we would need $24 million to implement, but only $4.8 million is provided and tuition is frozen for resident undergraduates

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Meanwhile…Provost FY16 Budget Development

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PROVOST’S FY16 BUDGET DEVELOPMENT Budget letter and all supporting materials/templates were

sent to Deans, Chancellors, Vice Presidents, Vice Provosts and Administrators. All documents are available online: http://opb.washington.edu/content/fy16-budget-development

Schools, colleges and campuses responded to requests for

• growth plans (contraction plans, if applicable)

• faculty hiring trends (recruitment, retention, retirement)

• tuition rate suggestions

• administrative obstacles

• carryover spending plans

• requests for Provost Reinvestment Funds

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Academic Support (admin units) submitted information about:

• Services provided and dollars dedicated to those services “Administrative Services Study”

• Requests for Provost Reinvestment Funds

• Carryover spending plans

PROVOST’S FY16 BUDGET DEVELOPMENT

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PROVOST’S FY16 BUDGET DEVELOPMENT Possible that we’ll be dealing with state budget reductions

and/or targeted reductions in specific areas (e.g. FY15’s “Lean” cut) in FY16

Resident undergraduate tuition is back on the table this legislative session, but all other rates (nonresident undergrad, grad and professional) remain under full control of the UW’s deans, faculty, leadership, Regents

Requests for new Provost funds will be contemplated alongside carryover spending plans

Undergoing significant effort to consider how academic support units conduct their work, how they’re funded, whether they’re adequately funded and whether the activities are mission-critical

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Questions