F–3 STANDING COMMITTEES Finance and Asset Management Committee

F–3/210-19 10/10/19

Finance, Budget, and Capital Report INFORMATION This item is for information only. BACKGROUND This is a standing monthly report. Because the University’s debt portfolio is relatively static from month to month, the Monthly Debt Report will no longer be distributed. Instead, Semi-annual Debt Reports will be presented each December and June. The next report will be presented in December 2019. Attachments

1. Monthly Budget Report – October 2019 2. Active Capital Projects Summary as of September 27, 2019

OFFICE OF PLANNING & BUDGETING

MONTHLY BUDGET REPORT – OCTOBER 2019

CORE OPERATING BUDGET

The UW’s Core Operating Budget consists of activities within the General Operating Fund (GOF) and Designated Operating Fund (DOF),

which include state appropriations, tuition revenue, indirect cost recovery, institutional and administrative overhead, as well as several

smaller sources. Data displayed below consist of expenditures against permanent and temporary spending authority distributed to

campus business units.

Overview – through August 2019 Month-End

The UW’s core operating budget ended August 2019 on track to budget and in line with historical trends after factoring in inflationary

impacts. Budget and expenditure data will be available in November, after the budget system reflects FY20 budget allocations.

Core Operating Budget Enterprise-Level Trends

Compensation expenditures on core funds are up 2.6%

(from $43 million to $44 million), compared to the same

period last year. Benefit expenditures on core funds are even ($13.8 million),

compared to the same period last year. Non-compensation operating expenditures on core funds

are up 2.7% (from $16.7 million to $17.2 million), compared

to the same period last year.

In total, expenditures on core funds are up 2.1% (from $74

million to $75 million) compared to the same period last

year.

The figure to the right shows trends over the last five years.

“SELF-SUSTAINING” ENTERPRISE REVENUES AND EXPENDITURES

The UW’s “Self-Sustaining” enterprise consists of many business-type activities that are

established with the understanding that these activities generate sufficient revenue to cover

direct expenditures and institutional overhead costs. This group encompasses a wide range

of instructional, research, student, and institutional support functions. Data displayed in this

section consist of revenues and expenditures, net of transfers. These data exclude UW

Medicine, which is reported in a discrete item.

Overview – through August 2019 Month-End

Expenditures exceeded revenues, net of transfers by $12.5 million, with a net margin of

(8.81%), which is generally reflective of the cyclical nature of activity ramping up prior to the

start of the academic year.

“Self-Sustaining” Enterprise-Level Trends

On self-sustaining funds, net of transfers:

Revenues are down 8.5% (from $155 million to $142 million), compared to the same period last year.

Compensation expenditures are up 3.9% (from $83 million to $87 million), compared to the same period last year.

Benefit expenditures are roughly even ($26 million), compared to the same period last year.

Non-compensation operating expenditures are down 11.5% (from $47 million to $42 million), compared to the same period last

year.

The figures below show trends over the last five years.

*All current year and comparison data is as of August month-end

*Data reflects Activity as of August 2019

*Data reflects Activity as of August 2019

ATTACHMENT 1F-3.1/210-19 10/10/19

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Revenue Trend Expenditure Trend

Revenue Trend Note: The FY17 revenue figure outlier was the result of a large ($160 million) transfer into the self-sustaining fund

group during the month of August 2016, which was subsequently reversed during the month of November 2016. After adjusting for this

entry, the FY17 revenue figure as of August month-end would land more in line with trend at $120 million.

PLANNING & BUDGETING INITIATIVES

Annual Review: In preparation for the roll out of the UW’s annual budget development process (unit “annual reviews”) in November,

the Office of Planning & Budgeting (OPB) is performing largely incremental improvements to planning tools and templates. Central

planning assumptions for incremental expenses and revenues are in development. We anticipate the FY21 planning process will mirror

the FY20 planning process in an effort to ensure consistency in the depth and breadth of quantitative data collected from campus

partners. Quantitative data will be supplemented by qualitative narrative responses from campus partners, focused on the fiscal and

programmatic vitality of their units.

As a reminder, the Annual Review process is an approximately nine-month budget development and holistic assessment effort that

involves deans, faculty, staff, and students. Through this process, the Provost and President work to identify and fund institutional and

unit-specific strategic goals and address resource constraints. This process also serves as an early warning system to identify and

address potential deficits within units.

State Supplemental Operating Budget Submission: The UW’s 2020 supplemental operating budget request was submitted to the

Governor’s Office of Financial Management on September 20, 2019. The submission included mandatory reports and three budget

requests. Supplemental requests are limited to technical corrections and only the highest priority policy enhancements. OPB, along

with campus partners, began working on the supplemental submission in June and submitted all materials prior to the deadline.

Governor Inslee will release his proposed supplemental operating and capital budgets in December, marking the first step in the

legislative budget process. The 2020 legislative session will begin in January.

CONTINUING BUDGET PRESSURES

Market competition and the region’s high and rising cost of living continue to create expensive recruitment and retention issues.

Students are migrating toward higher-cost degrees and the need for student support services is growing.

The two core revenue sources that support the UW’s academic mission—state funding and tuition revenue—are constrained.

Annual Review Calendar

September October November December January February March April May June

OPB Develops Budget Assumptions and

Creates Unit Templates

Units Enter Data & Complete Templates

Unit

Responses

Due

OPB Data Validation & Budget Analysis

Unit Meetings with

Provost

OPB Develops UW

Operating Budget

Presentation & Approval

of UW Operating Budget

*All current year and comparison data is as of August month-end for each respective fiscal year

displayed

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ACTIVE CAPITAL PROJECTS SUMMARY

as of September 27, 2019

Project Name Financial Details Schedule Project Health Trending

Budget Forecast Funding

Committed Target Forecast Budget Funding Schedule Safety

Business

Equity

M/W Equity

Goal %

M/W Equity

Forecast

New Burke Museum Olson Kundig/Skanska $82.80 $82.85 $82.80 10/19 10/19

*

*

*

*

(1)

N/A N/A

Seismic Improvements - Phase 1 Schacht/Aslani Architects/CLARKCONS $17.60 $17.56 $17.60 11/19 10/19

*

*

*

(2)*

*

N/A N/A

NCH Phase IV(b): Denny Field, Haggett

& Oak Halls Kieran Timberlake/Absher $65.50 $65.47 $65.50 7/20 7/20

*

*

*

(2)

*

N/A 3%

Population Health Facility Miller Hull Partnership/LCL $230.84 $229.31 $230.84 7/20 7/20

*

*

*

*

*

15% 24%

Parrington Hall Renovation INTEGRUS Architecture, PS/Absher $23.80 $23.80 $23.80 8/20 8/20

*

*

*

*

*

15% 10%

HFS Stevens Court Exterior Enclosure

Rehabilitation (206686) RDH Building Sciences Inc./GLY $9.30 $9.30 $9.30 11/20 11/20

*

*

*

*

*

15% 9%

Kincaid Hall Renovation Perkins+Will/Skanska $43.22 $43.00 $43.22 3/21 3/21

*

*

*

(3)

*

15% 15%

Northwest Hospital Childbirth Center Zimmer Gunsul Frasca Architects/ABBOTT $26.80 $26.78 $25.00 4/21 4/21

(4)

*

*

*

*

15% 15%

Foster School Expansion LMN Architects/Hoffman $70.00 $73.10 $70.00 12/21 12/21

(5)

*

*

*

*

15% 15%

UW Bothell | Cascadia College STEM 4 /LCL $79.65 $79.44 $79.40 4/22 4/22

*

*

*

*

*

15% 15%

Health Sciences Education Building Miller Hull Partnership/LCL $100.62 $100.62 $10.62 5/22 5/22

*

(6)

*

*

*

15% 15%

Behavioral Health Teaching Facility Ankrom Moisan/ $224.50 $224.50 $33.03 11/23 11/23

*

*

*

*

*

TBD TBD

Totals $974.63 $975.74 $691.10

$ All Dollars in Millions

Targets Legend

Budget: Budget is equal to or greater than Forecast (1% Tolerance) Meeting Target

Funding: Funding and cash flow as planned Not Meeting Target, Plan in Place

Schedule: Forecast is equal to or sooner than Target Not Meeting Target, No recovery Plan in Place

Safety: Total Recordable Incident Rate of 2 or lower

Business Equity: Green=meeting plan; Yellow=behind plan, recovery plan in place; Red=currently behind plan, recovery not possible.

ATTACHMENT 2F-3.2/210-19 10/10/19

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ACTIVE CAPITAL PROJECTS SUMMARY

as of September 27, 2019

Notes:

(1) Project General Contractor buyout largely complete and business equity goals cannot be met with remaining spend

(2) Minor safety incidents have occurred exceeding the target safety goal for the project.; The contractor and University project teams are committed to finishing the project with

no additional incidents.;

(3) A safety incident during the demolition work resulted in arm laceration. The worker was treated and returned to work that day.

(4) The project team has determined that additional funding is needed to meet the project goals and a revised project work plan will be routed for approval.

(5) The project work plan is being revised to align with the budget forecast based on the decision and funding to utilize laminated timber.

(6) Funding plan is not yet finalized with the six Health Science Schools.

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