Budget TrainingThe University of Montana

2010/2011Session I

The Budget Environment

Course Outline

• The funding foundation

• The process

• Break

• The current situation and the outlook…

Learning Objectives

At the conclusion of this session, you will be able to: describe the types of funds utilized by the University, and identify the primary

purpose of each fund

identify major sources and uses of each fund

describe the General funds appropriation and allocation processes

explain the concept of spending authority, and the fiduciary responsibilities at various levels of delegation

describe the planning / budget / assessment cycle and associated timelines.

Let’s Start with Fund Accounting.(Don’t be scared.)

What is a fund?A fund is an activity or entity separately accounted for – with its own cash, balance sheet, or income statement

How many different kinds of funds do we have?

Current Restricted Funds

• Grants• Contracts• Gifts

Current Unrestricted Funds

• E&G Funds– General Funds– Designated

Funds• Auxiliary Funds

Non-Current Funds

• Plant Funds• Loan Funds• Endowment

Funds• Agency Funds

General Funds

GENERAL FUNDS revenue comes from:• state appropriations • millage• tuition and fees • investment income

General Funds

R e v e n u e F Y 10A ppropria t ion $45,525,726M illage 6,228,129Tuit ion and F ees 88,185,331O ther O C H E /S ta te F und ing 1,497,938O ther 811,304

To ta l $142,248,428

General Funds

S tate A p p r o p r iati o n4 5 ,5 2 5 ,7 2 6

3 2 %

M illag e6 ,2 2 8 ,1 2 9

4 %

Tu iti o n & F e e s8 8 ,1 8 5 ,3 3 1

6 2 %

O th e r O C H E/S tate F u n d in g

1 ,4 9 7 ,9 3 81 %

O th e r8 1 1 ,3 0 4

1 %

General Funds

General Funds support:• basic teaching, research & public service mission• academic and administrative support activities• maintenance and operation of the University and its

academic facilities

The heart of university financial resources

General Funds

• Instructional programs

• Library operations

• Business services

• Utilities

Examples of General Funds Activities

General Funds – Uses

E x p e n d itu re s b y C a te g o ryS a la rie s 82,272,164B e n e fits 26,863,580T ra n sfe rs 2,644,881O p e ra tin g C o sts 16,366,553Eq u ip m e n t a n d C a p ita l 2,377,509S ch o la rsh ip s a n d F e l lo w sh ip s 11,723,741

$142,248,428

General Funds – Uses

S alar ie s5 9 %

B e n e fi ts1 8 %

O p e r ati n g C o sts1 1 %

Eq u ip m e n t an d C ap ita l

2 %

S c h o lar sh ip s an d F e llo w sh ip s

8 %

Tr an sfe r s2 %

Designated Funds

DESIGNATED FUNDS revenue comes from:• Fee-for-service activities• Self-support activities• Entrepreneurial activities • Indirect cost recovery• Investment income

Designated Funds

• Designated for purposes specified by the Board of Regents or the campus

• Separately classified to accumulate costs or to re-charge other funds or accounts

Designated Funds

• Computing & Information Services

• Student Course Fees

• Indirect Cost Recoveries

• Continuing Education

• Sales & Service Accounts

Examples of Designated funded activities

Designated Funds – Uses

Expenditures by CategorySalaries 11,591,450Benefits 3,947,901Transfers 4,633,655Operating Costs 23,754,997Equipment and Capital 1,656,958Scholarships and Fellowships 1,361,450

$46,946,411

Designated Funds – Uses

S alar ie s$ 1 1 ,5 9 1 ,4 5 0

2 5 %

B e n e fi ts3 ,9 4 7 ,9 0 1

8 %

O p e r ati n g C o sts2 3 ,7 5 4 ,9 9 7

5 1 %

Eq u ip m e n t an d C ap ita l

1 ,6 5 6 ,9 5 8 3 %

S c h o lar sh ip s an d F e llo w sh ip s

1 ,3 6 1 ,4 5 0 3 %

Tr an sfe r s4 ,6 3 3 ,6 5 5

1 0 %

Auxiliary Funds

AUXILIARY FUNDS revenue comes from:Primarily student-related

• Fee-for-service activities• Self-support activities• Entrepreneurial activities and• Investment income

Examples of Auxiliary Funded Activities• Residence Halls

• Food Services

• Printing & Graphics Services

• Golf Course

• Campus Recreation Center

Auxiliary Funds

Auxiliary Funds – Uses

Expenditures by CategorySalaries 16,224,017$ Benefits 4,974,924 Transfers 7,598,225 Operating Costs 17,468,256 Equipment and Capital 177,365 Scholarships and Fellowships -

46,442,787$

Auxiliary Funds – Uses

S alar ie s$ 1 6 ,2 2 4 ,0 1 7

3 4 .9 %

B e n e fi ts4 ,9 7 4 ,9 2 4

1 0 .7 %

O p e r ati n g C o sts1 7 ,4 6 8 ,2 5 6

3 7 .6 %

Eq u ip m e n t an d C ap ita l

1 7 7 ,3 6 5 0 .4 %

Tr an sfe r s7 ,5 9 8 ,2 2 5

1 6 .4 %

Restricted Funds

• Funds which are limited to purposes specified by sources external to the Board of Regents or the Legislature

• Specific projects or programs, which can only be expended under the terms of a governmental or private gift, grant or contract.

Examples of Restricted Funds

• Federal grants and contracts

• Private grants

• Federal financial aid

• Restricted scholarships

• Restricted gifts

Other Fund Types

• Loan Funds

• Plant Funds

• Agency Funds

• Endowment Funds

Fund Integrity

• So, does it really matter what fund gets used for what?

Really?

Break!

Programs (Functions)

• Instruction• Research• Public Service• Academic Support• Student Services• Institutional Support• O&M Plant• Scholarships

Programs (Functions)

• Instruction• Research• Public Service• Academic Support• Student Services• Institutional Support• O&M Plant• Scholarships

So… What kinds of expenses are appropriate for each of these?

Programs (Functions)

• Instruction• Research• Public Service• Academic Support• Student Services• Institutional Support• O&M Plant• Scholarships

Programs (Functions)

• Instruction• Research• Public Service• Academic Support• Student Services• Institutional Support• O&M Plant• Scholarships

How much of our budget does each one represent?

General Funds – by ProgramIns t ruc t ion 69,297,093A c adem ic S upport 17 ,920,452R es earc h 1,703,790P lant 16,299,725Ins t itu t iona l S upport 14 ,858,171P ublic S ervic e 1,406,701S c ho lars h ips 11,723,741S tudent S ervic es 9,038,755

$142,248,428

FY10 Budgeted General Funds by Program

In str u c ti o n6 9 ,2 9 7 ,0 9 3

4 9 %

R e se ar c h1 ,7 0 3 ,7 9 0

1 %P u b lic S e r v ic e1 ,4 0 6 ,7 0 1

1 %

A c ad e m ic S u p p o r t1 7 ,9 2 0 ,4 5 2

1 3 %

S tu d e n t S e r v ic e s9 ,0 3 8 ,7 5 5

6 %

In sti tu ti o n al S u p p o r t

1 4 ,8 5 8 ,1 7 1 1 0 %

O & M P lan t1 6 ,2 9 9 ,7 2 5

1 2 %

S c h o lar sh ip s & F e llo w sh ip s1 1 ,7 2 3 ,7 4 1

8 %

Program Integrity

• So, again – does it really matter what program gets charged for what expense?

Really?

General Funds Process

How do general funds end up in your budget?

General Funds Process(es)

“Lump Sum”$$$

Legislative Appropriations

Executive Budget

Proposal

Allocation

Campus / Unit

Budgeting

General Funds Process(es)

Executive Budget Proposal – Present Law Adjustments– Decision Packages

General Funds Process(es)

Legislative Appropriations– HB2– HB13– OTO– Special Items– Others…

General Funds Process(es)

“Lump Sum”

General Funds Process(es)

Allocation (OCHE, Regents)

General Funds Process(es)

Campus / Unit Budget Process(es)BiennialAnnual

Administrative Assessment

• What is it, really?• Why do it?• Who determines how much, and how

do they do it?

Planning, Budgeting, and Assessment

The Budgeting Environment

• Where we’ve been…

• The current situation!!!

• The outlook???

Where We’ve Been…

• The 2008/2009 Biennium– PL & Payplan funded at 85%– 0% Resident tuition increase, 6.5% Nonresident– 2.9% Payplan– Record enrollments (res & nonres)– No funding for growth– No base funding for quality or new initiatives

Where We’ve Been…

• The 2010/2011 Biennium– Appropriation failed to cover PL & Payplan– 17.6 million (6.5 million Missoula) is Fed OTO– 3% Resident tuition increase, 8.5% Nonresident– No Payplan– Record enrollments (res grew significantly, nonres down

slightly)– No funding for growth– Quality, new initiatives funded from nonresident tuition

The Current Situation!!!

• FY10 tuition shortfall of $1.4 million

• FY11 tuition shortfall could exceed $2 million

• Planning for loss of $17.6 million (6.5 million in Missoula) in 2012/13 Biennium

• Conceptual framework in place

• Detailed planning & implementation will continue remainder of FY10

A Word (or 2) about Reallocation(…and the lump)

Total FY Resident FTE DifferenceCAP FY10 from CAP

The University of Montana-Missoula 8,923 9,967 1,044 Montana Tech of the University of Montana 1,725 1,971 246 The University of Montana-Western 909 941 32 UM-Helena College of Technology 731 948 217

The University of Montana 12,288 13,828 1,540

Montana State University-Bozeman 8,158 8,027 (131) Montana State University-Billings 3,912 3,872 (40) Montana State University-Northern 1,148 988 (160) MSU-Great Falls College of Technology 1,250 1,425 175

Montana State University 14,468 14,312 (156)

The Montana University System 26,756 28,140 1,384

The Outlook???

• State revenues down significantly, possibility of additional State appropriation reductions

• Enrollment prospects uncertain– Resident FTE and headcount continue to grow despite fewer

MT high school graduates– Nonresident enrollment more challenging

• Timing of economic recovery hard to project

• Commitment to continued excellence and achievement of strategic goals is unwavering

Learning Objectives

At the conclusion of this session, you will be able to: describe the types of funds utilized by the University, and identify the primary

purpose of each fund

identify major sources and uses of each fund

describe the General funds appropriation and allocation processes

explain the concept of spending authority, and the fiduciary responsibilities at various levels of delegation

describe the planning / budget / assessment cycle and associated timelines.

Questions?

Discussion?

Preview of Coming Attractions

Thank you !