F–2 STANDING COMMITTEES Finance and Asset Management Committee

F–2/205-20 5/14/20

Finance, Budget, and Capital Report INFORMATION This item is for information only. BACKGROUND This is a standing monthly report.

Attachments 1. Monthly Budget Report – May 2020 2. Active Capital Projects Summary as of April 27, 2020

OFFICE OF PLANNING & BUDGETING

MONTHLY BUDGET REPORT – MAY 2020

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 business units. Unit carryover funds are not included within these

displays.

Overview – through March 2020 Month-End

The UW’s core operating funds as of March 2020 are on track to budget and in line

with historical trends after factoring in inflationary impacts. Historically, 74% of the

core funds distributed to business units were expended as of the end of March vs.

72% of core funds expended as of March 2020. Please note that the figures below

solely provide an overview of the UW budget through March, and thus do not

reflect the effects of COVID-19.

Core Operating Budget Enterprise-Level Trends

Compensation expenditures on core funds are up 2.7%

(from $580 million to $596 million), compared to the

same period last year. Benefit expenditures on core funds are down 1.7% (from

$174 million to $171 million), compared to the same

period last year. Non-compensation operating expenditures on core

funds are up 4.0% (from $199 million to $207 million),

compared to the same period last year. In total, expenditures on core funds are up 2.2% (from

$953 million to $974 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 March 2020 Month-End

Through March 2020, revenues, net of transfers, are less than expenditures by

approximately ($19) million, with a net margin of (2.70%) vs. prior fiscal year through

March, revenues, net of transfers exceeded expenditures by approximately $9 million,

with a net margin of 1.27%.

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

*Data reflects activity as of March month-end

ATTACHMENT 1F-2.1/205-20 5/14/20

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“Self-Sustaining” Enterprise-Level Trends

On self-sustaining funds, net of transfers:

Revenues are down 0.6% (from $707 million to $703 million), compared to the same period last year.

o Revenues for the month of March are down 32.5% (from $81 million to $55 million) vs March of FY19

Compensation expenditures are up 6.1% (from $342 million to $363 million), compared to the same period last year.

Benefit expenditures are up 2.7% (from $110 million to $113 million), compared to the same period last year.

Non-compensation operating expenditures are unchanged at 0% (from $246 million to $246 million), compared to the same period

last year.

Revenue & Expenditure Trend – cumulative through March of each FY Revenue – March of each FY

PLANNING & BUDGETING INITIATIVES & CHALLENGES

COVID-19 Revenue Loss and Expense Recovery Efforts: OPB has been engaged in leading two separate COVID-19 related revenue

loss and expense recovery efforts from federal funding sources on behalf of the University and in partnership with UW Medicine

finance (FEMA) and Financial Aid (CARES Act).

FEMA Public Assistance

On March 13, 2020, the President issued an emergency declaration in response to COVID-19. Concurrent with this declaration, the UW,

as a state agency, became eligible to access the FEMA Public Assistance program to support certain extraordinary operating costs

incurred. On April 10th, the UW submitted an $87M expedited funding request, encompassing estimated expenses eligible for Public

Assistance funding across the University and UW Medicine systems. The expedited funding path enables approved agencies to receive

funding for 50% of the estimated expenditures up front. As of April 30th, we are awaiting final approval and funding from FEMA.

CARES Act – Higher Education Funding

The CARES Act includes approximately $14B to both public and private higher education institutions directly from the Department of

Education. Each institution’s portion of these funds is based on a share of Pell FTE and non-Pell FTE before the crisis. The UW is eligible

to receive just under $40 million, half of which must be used for student grants and the remainder may be used for other institutional

needs. On April 30th, we received an award of approximately $19.8 million in student aid funds from the Department of Education.

Activity Based Budgeting (ABB) Phase III: The University has concluded the ABB Phase III formal review. The Provost, in consultation

with the President, received the Steering Committee recommendations and have agreed to move forward with planning and

implementation of the following:

Allocate a small fraction of the cutover funding in the supplement category as “values-driven,” to support academic program

development and subvention of cross-disciplinary initiatives. Due to COVID-19, implementation will be delayed until FY22.

Assign a team of individuals to begin developing enterprise objectives, grounded by our values and principles, to provide a

basis for review of taxation and overhead.

In the next fiscal year, charge OPB to monitor professional school tuition revenues and expenditure growth; publish

understandable ABB-related dashboards to enable unit-level monitoring; and prepare an inventory of overhead and taxation

to begin a thorough review of indirect and overhead costs and support.

Legislative Session & State Budget Process: In April, Governor Jay Inslee vetoed the majority of the new funding approved by the

legislature in anticipation of projected budget deficits due to COVID-19. State leaders have indicated that there will likely be a special

legislative session following the next revenue forecast to align current budgets with expected revenue. The 2020 supplemental budget

brief has been updated on OPB’s "Briefs" page. We will continue to update the Board as new information becomes available.

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ACTIVE CAPITAL PROJECTS SUMMARY

as of April 27, 2020

Project Name Financial Details Schedule Project Health Trending

Regent

Approval Budget Forecast

Funding

Committed Target Forecast Budget Funding Schedule Safety

Business

Equity

M/W Equity

Goal %

M/W Equity

Forecast

Hans Rosling Center for

Population Health Miller Hull Partnership/LCL II, 01/18 $230.84 $226.93 $230.84 7/20 7/20

*

*

*

*

*

15% 25%

NCH Phase IV(b): Denny Field,

Haggett & Oak Halls Kieran Timberlake/Absher II, 02/19 $65.50 $65.46 $65.50 7/20 8/20

*

*

(1)

(2)

*

N/A 3%

Parrington Hall Renovation INTEGRUS Architecture, PS/Absher II, 04/19 $23.80 $23.85 $23.80 8/20 9/20

*

*

(1)*

*

*

15% 19%

Stevens Court Exterior Enclosure RDH Building Sciences Inc./GLY Delegated $13.22 $13.22 $7.17 9/20 9/20

*

*

*

*

(3)

15% 9%

Kincaid Hall Renovation Perkins+Will/Skanska II, 04/19 $45.96 $45.96 $43.22 3/21 3/21

*

*

*

(4)

*

15% 23%

UWMC NW Hospital Childbirth

Center ZGF Architects/ABBOTT II, 11/18 $26.80 $30.04 $25.00 10/21 11/21

(5)

*

(5)

*

*

15% 20%

Founders Hall (old MacKenzie) LMN Architects/Hoffman II, 11/19 $75.10 $75.37 $75.10 12/21 12/21

15% 15%

Seismic Improvements - Phase 2 Mithun Architects/CLARKCONS Delegated $17.40 $15.00 $15.00 12/21 12/21

5% 5%

UW Bothell | Cascadia College

STEM 4 Mithun Architects/LCL II, 03/19 $79.65 $79.44 $79.40 4/22 4/22

*

*

*

*

*

TBD TBD

Health Sciences Education

Building Miller Hull Partnership/LCL II, 12/19 $100.62 $101.39 $100.62 5/22 5/22

*

*

*

*

*

15% 15%

UW Tacoma Milgard Hall

(Academic Innovation) /ANDCON I, 11/19 $50.00 $50.47 $4.50 1/23 1/23

*

*

*

*

*

TBD TBD

U District Station Building Perkins+Will/GLY II, 12/19 TBD TBD TBD 5/23

N/A N/A

Behavioral Health Teaching

Facility SRG Partnership/Clark/Abbott 07/19 $224.50 $224.50 $33.25 11/23 11/23

15% 15%

ICA Basketball Ops & H2P Center 02/20 $60.54 $60.54 $60.51 12/23 TBD

(6)

TBD TBD

Totals $1,013.93 $1,012.17 $764.12

$ All Dollars in Millions

Targets Legend

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

Funding: Funding and cashflow 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-2.2/205-20 5/14/20

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ACTIVE CAPITAL PROJECTS SUMMARY

as of April 27, 2020

Notes:

(1) COVID-19 has adversely impacted the project schedule. The project will complete 30 days behind schedule, project teams are working to minimize the impacts.

(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) Business equity to date is currently less than the intended plan. A recovery plan is in place. Procurement of two buildings remain with a plan to achieve the project equity goals.

(4) A safety incident during the demolition phase of work resulted in arm laceration. The worker was treated and returned to work that day. The project hours and this incident

result in a yellow indicator light.

(5) The current budget forecast has been negatively impacted by slab, foundation and hazardous material unforeseen conditions. A proposed budget revision seeking approval

will consider combing portions of a separate adjacent project. Combining projects has cost, schedule and minimized disruption advantages.

(6) ICA has paused the design-builder selection process pending clarity on COVID-19 impacts on department.

(7) The University has paused the developer selection process in order to have better clarity on COVID-19 impacts on the development market.

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