MANAGING MONEY MANAGING STRESS Steps to Making Your Money Work for You.
Managing the Money
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Transcript of Managing the Money
October 28, 2011
Michelle QuinnSr. Vice President for AdministrationUniversity of Northern Colorado
MANAGING THE MONEY
Managing the Money? ...
We care about the money because we care about the mission.UNC President Kay Norton
Managing the Money! …
Four Key Questions*
• Are we achieving strategic and financial balance?
• What financial measures and reporting help us assess our effectiveness in fulfilling our mission?
• Are we demonstrating integrity in our financial management?
• What is our overall financial health?
* Strategic Financial Analysis for Higher Education: KPMG, Prager, Sealy & Co. LLC, Attain
Are we achieving strategic and financial balance?
• Making data-informed decisions
• Setting realistic strategic objectives given fiscal constraints
• Allocating resources in accordance with mission and priorities (connecting planning and budgeting)
University Finances are Complicated
State Funding19%
*Tuition On-Campus
32%
*Tuition Extended Campus5%
*Student Fees5%
*Academic & Technology Fees
2%
*Room & Board14%
Grants, Contracts,
Gifts9%
Pell, Loans6%
Retail , Athletic, Theater, Events
4%
Other1%
Parking, Rec, Health1%
Conferences, Catering1%
Capital1%
Revenue Sources
* Students 60%
Fiscal Constraints
FY 20
05-06
FY 20
06-07
FY 20
07-08
FY 20
08-09
FY 20
09-10
FY 20
10-11
FY 20
11-12
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$555,289,004$602,028,183$652,927,495$555,289,004
$323,956,816
$615,315,617$519,040,694
$150,676,055
$382,008,243
$29,167,486$555,289,004
$602,028,183$652,927,495
$705,965,059$705,965,059$644,483,103
$519,040,694 $4,074
$4,487 $4,814 $5,065
$4,626
$4,044
$3,225
State Funding for Public Institutions of Higher Education
ARRA General FundTotal State Fund-ing per Resi-dent Stu-dent FTE
Stat
e Fu
ndin
g pe
r R
esid
ent
Stud
ent
FTE
FY12 UNC = $32.8
M
Strategic and Financial Balance
• Enrollment growth• Discounting• Student success and support
• Mission-driven, data-informed
• “profitability”
• Reality of personnel costs• Functions
• Instruction• Academic Support• Research• Public Service• Student Services• Institutional Support• Operation & Maintenance of Plant• Auxiliary
What financial measures and reporting help us assess our effectiveness in fulfilling our mission?Basic:• Budget with comparison to actual• Revenue• Expense• Departmental• Natural• Functional
• Full cost of programs
Measures based on financial policy
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Proportion of revenues related to:• Student instruction and support
• Main campus• Other locations• Online
• Grants and contracts• Housing, Dining• Retail and events
Percent of revenues invested in innovation
Percent of revenues invested in capitalLevel of reservesDiscounting tuition
Are we demonstrating integrity in our financial management?
• Reasonable and appropriate control of university assets
• Compliance with standards and regulations
• Using consistent principles of money management
What is our overall financial health?• The sufficiency of resources to achieve
our mission• Adequate flexibility in deploying
resources to achieve its mission• Effective management of assets and
liabilities (including liquidity)• Operating results (relationship of
revenues and expenses)
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A little basic accounting, the balance sheet:
Assets -- Liabilities = Net Assets
House Mortgage Equity
CashAccounts Receivable
Buildings
BondsAccounts Payable
Fund Balance
A little basic accounting, the income statement:
Revenues (current year)-- Expenses (current
year)Change in Net Assets
+ Prior Year Cumulative Net Assets
Year End Net Assets ** Assets -- Liabilities = Net Assets
Composite Financial Index (CFI)
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Calculation (UNC and Foundation Results)
Purpose
Primary Reserve Ratio
Expendable Net Assets Total Expenses
Measures resource sufficiency and flexibility by comparing expendable net assets (“equity” not tied up in capital or endowments) to total expenses.
Net Operating Revenues Ratio
Revenues - Expenses Revenues
Measures operating results by comparing net income (before capital and other) to total revenues. In lieu of a for-profit operating margin.
Return on Net Assets Ratio
Change in Net Assets
Total Net Assets
Measures economic return – operating results and management of assets and liabilities – by comparing “the bottom line” to total net assets (“equity”).
Viability Ratio Expendable Net Assets Long-Term Debt
Measures management of debt by comparing expendable net assets (“equity” not tied up in capital or endowments) to long-term debt.
Graphic Financial Profile CFI
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Resource SufficiencyAre net assets (equity) sufficient compared to expenses?
Debt ManagementAre net assets (equity) sufficient compared to long-term debt?
Operating ResultsDo operating results indicate organization’s expenses are in alignment with revenues?
Asset Performance & ManagementAre our returns (operating & non-operating)appropriate compared to our net assets (equity)?
Budgets are only a small piece of managing the money
Budget ActualYear 1 - Groceries $6,000 $4,000Year 2 -- Groceries $5,000 $4,500Result Budget Cut of
$1,000Spent $500
More
We care about the money because we care about the mission