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University of Arkansas Finance 101

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					University of Arkansas
 FY06 & FY07 Finances
          Faculty Senate
           March 8, 2006
  Ordinary folk (parents, the
 public, university students,
 staff & faculty, etc.) at right
 after 20 minutes of trying to
understand the in’s and out’s
     of university financial
     operations (after The
  Scream by Edvard Munch
            below)
               FY06 Financial Issues
 E&G utility budgets are less than projected
  expenditures by $1.75 million. With a $660K
  reserve, the deficit carried forward to FY07
  is expected to be $1.09 million.
 Annual expenditures of about $3 million for
  new faculty start-up and matching funds for
  grants are NOT in the FY06 budget.
 Uncommitted & unrestricted year-end
  balances that are used to supplement
  inadequate contingencies are decreasing as a
  result of the carry-forward policy. Thus, it is
  harder to find funds for activities, like start-
  ups & matches, that the university cannot
  decide to stop doing.
                           FY07 Revenues
 State Appropriations
    FY06              $104,180,511
    FY07
        RSA “A”         $94,980,287
        RSA “B”         $6,861,071
        RSA Total       $101,841,358
        EETF (9/2/05)   $8,338,715
   FY07                 $110,180,073
   FY07 Increase        $5,999,562
 FY06 SSCH Growth in FY06 Tuition Dollars
                      $5,064,106
 Additional Revenue from Tuition Rate
  Increase            $658K/ (% of increase)
       FY07 Revenues Continued
 FY07 Projected Enrollment Increases
    Undergraduate    6.3%
    Graduate         5.1%
    Law              (0.7%)
    Revenue Growth   $5 million
 Remaining Unrestricted & Undesignated
  Revenue Adjustment (primarily to reduce
  expected earnings on cash management)
                        ($267K)
 Generally positive financial picture for FY07
  though it is doubtful that there will be
  sufficient funding to do “all good things that
  should be done”.
Unrestricted but Dedicated Fee Revenues
  Mandatory fees are part of the cost of
   education
  Student initiated new mandatory fees:
       Readership Fee
       Concert Fee
  Institutionally initiated fees such as:
       Teaching Enhancement & Laboratory
         Equipment Fee (varies by College or School)
         has provided increased teaching support to
         offset the lack of departmental maintenance
         increases
       Mandatory fees are not available for general
         budget considerations.
                          Tuition and Mandatory Fee (30 credit hours) History


$7,000
            Tuition
            Tuition & MandatoryFees

$6,000




$5,000




$4,000




$3,000




$2,000




$1,000




   $0
     1965    1970         1975        1980        1985      1990          1995   2000   2005   2010
                                             Fiscal Year Ending June 30
                                      4-Year US Public vs UA Tuition &
                                                  Fees
                                      $6,000



                                      $5,000
  Resident Tuition & Mandatory Fees




                                      $4,000



                                      $3,000



                                      $2,000



                                      $1,000



                                          $0
                                               77   81   85   89             93             97   01   05   09

                                                                       Fiscal Year
                                ,
Source: Trends in College Pricing College Board, 2004 &
NASULGC for FY06
                                                                   $UA Tuition    $US Tuition
                                               UA Enrollment
                       18,000



                       17,500



                       17,000
Headcount Enrollment




                       16,500



                       16,000



                       15,500



                       15,000



                       14,500



                       14,000
                                89   90   91   92   93   94   95   96   97     98   99   00   01   02   03   04   05
                                                                        Fall
                               UA Enrollment (FTE)
                 16,500



                 16,000



                 15,500
FTE Enrollment




                 15,000



                 14,500



                 14,000



                 13,500



                 13,000
                          90   91   92   93   94   95   96   97   98    99    00   01    02    03   04   05   06
                                                             Fiscal Year


                                                                  Note: FY06 is an estimate.
$120,000,000
                    UA State Appropriation
$100,000,000




 $80,000,000




 $60,000,000




 $40,000,000




 $20,000,000




          $0
           1965   1970   1975   1980        1985      1990          1995   2000   2005   2010
                                       Fiscal Year ending June 30
                                            UA Appropriation per FTE
                                                   Student
                                   $7,000


                                   $6,800


                                   $6,600
Annual Appropriation/FTE Student




                                   $6,400


                                   $6,200


                                   $6,000


                                   $5,800


                                   $5,600


                                   $5,400


                                   $5,200


                                   $5,000
                                            90   91   92   93   94   95   96   97   98   99   00      01   02    03    04   05   06

                                                                               Fiscal Year
                                                                                                   Note: FY06 is an estimate.
                                             UA Appropriation per FTE
                                                    Student
                                   $5,300



                                   $5,100
Annual Appropriation/FTE Student




                                   $4,900



                                   $4,700



                                   $4,500

                                                                (’89-’90 constant dollars*)
                                   $4,300



                                   $4,100



                                   $3,900



                                   $3,700
                                            90   91   92   93    94   95    96    97    98    99   00   01   02   03   04   05    06

                                                                                   Fiscal Year
                                        * Based on HEPI inflation rates                                       Note: FY06 is an estimate.
        Two Primary Sources of UA E&G Revenue:
                      Tuition & Fees and State Appropriations as % of E&G

80.0%



70.0%



60.0%



50.0%
           State Appropriations as % E&G
           Tuition & Fees as % E&G
40.0%



30.0%



20.0%



10.0%



0.0%
    1965     1970        1975         1980       1985        1990         1995   2000   2005   2010
                                             Fiscal Year ending June 30
                         Unrestricted E&G and 2010 Goal

$400,000,000



$350,000,000



$300,000,000


                                                                                         $45 million
$250,000,000
                  Total E&G (Unrestricted)
                  E&G Goal
$200,000,000



$150,000,000



$100,000,000



 $50,000,000



          $0
           1965   1970      1975       1980   1985      1990      1995     2000   2005         2010    2015
                                              Fiscal Year ending June 30
Discipline Conversions for the Need-Based Model*
            Discipline                                    CIP
            Cost Category                                 Code    Discipline Description
                                                           23     English Language and Literature/Letters
                                                           24     Liberal Arts, General Studies
                                                           27     Mathematics
                                                           30     Multi/Interdisciplinary Studies
                                                           34     Health-Related Knowledge & Sk
                                                           35     Interpersonal Skills
                   Cost Category I                         36     Leisure And Recreational Acts
                                                           37     Personal Awareness/Self Improvement
                                                           38     Philosophy & Religion
                                                           42     Psychology
                                                           43     Philosophy & Religion
                                                           44     Public Administration And Services
                                                           45     Social Sciences & History
                                                            5     Area, Ethnic, & Cultural Studies
                                                           8      Marketing And Distribution
                                                           9      Communications
                                                           12     Cons. Per. & Misc. Ser.
                                                           13     Education
                                                           16     Foreign Languages and Literature
                                                           19     Home Economics
                                                           20     Vocational Home Economics
                  Cost Category II                         22     Law And Legal Studies
                                                           26     Biological Sci/Life Sciences
                                                           31     Parks,Recreation & Leisure Studies
                                                           32     Basic Skills
                                                           46     Construction Trades
                                                           47     Mechanics And Repairers
                                                           48     Precision Production Trades
                                                           49     Transprtation & Material Moving
                                                           52     Business Management & Administration
                                                            1     Agricultural Business and Production
                                                            2     Agricultural Sciences
                                                            3     Conservation and Renewable Natural Resources
                                                           4      Architecture & Related Program
                                                           10     Communications Tech
                 Cost Category III                         11     Computer & Informational Sciences.
                                                           25     Library Science
                                                           40     Physical Sciences
                                                           41     Sciences Tech.
                                                           50     Visual & Performing Arts
                                                           51     Health Professions & Related Science


                                                           14     Engineering
                 Cost Category IV                          15     Engineering-Related Technology


            *Based upon a multi-year study of expenditures of 175 Institutions by the University of Delaware
University of Arkansas Fayetteville for FY2006
     Table 1                        Fiscal Year 2006 Enrollment (Spring 06 Projected from Fall 05 growth)
     Discipline Cost Categories     Undergraduate        Graduate          Doctoral          Total
     Category I                              143,377             6,107            3,645         153,129
     Category II                             144,004           38,146             4,378         186,528
     Category III                             84,249             6,824            3,698          94,771
     Category IV                              17,539             2,823            1,558          21,920
                                                                                                456,348
     Table 2                        SSCH to Produce a FTE Faculty
     Discipline Cost Categories     Undergraduate        Graduate          Doctoral
     Category I                                  645               170              130
     Category II                                 480               250              145
     Category III                                365               160              120
     Category IV                                 230               102               70

     Table 3                        FTE Faculty Generated by SSCH*
     Discipline Cost Categories     Undergraduate       Graduate          Doctoral           Total
     Category I                               222.3             35.9             28.0
     Category II                              300.0            152.6             30.2
     Category III                             230.8             42.7             30.8
     Category IV                               76.3             27.7             22.3
     Total                                    829.4            258.8            111.3           1,199.5
     * Table 1 divided by Table 2

     Table 4                        Average Faculty Salaries for Each Level
                                    Undergraduate       Graduate          Doctoral
     Average Faculty Salary                 $56,221            $57,761        $74,752


     Table 5                         Teaching Salary Funds Produced by the Formula**
     Discipline Cost Categories      Undergraduate       Graduate        Doctoral            Total
     Category I                          $12,497,362       $2,074,979      $2,095,931
     Category II                         $16,866,769       $8,813,404      $2,256,995
     Category III                        $12,976,885       $2,463,507      $2,303,607
     Category IV                          $4,287,218       $1,598,621      $1,663,766
     Total                               $46,628,233      $14,950,511      $8,320,299      $69,899,043
     ** Table 3 Column Totals X Table 4
          University of Arkansas Fayetteville for FY2006
                                                                                                                            FY06 Prelim
Summary of Model Production                                                                                                   Calculated
Expense Category                        Explanation                                                       Square Feet        Funding
Teaching Salaries                                                                                                            $69,899,043
Other Instructional Costs               45% of Teaching Salaries                                                             $31,454,569
Library Cost                            11% of Teaching Salaries + Other Instructional Costs                                 $11,148,897
General Institutional Support           54% of Teaching Salaries + Other Instructional Costs                                 $54,730,951
Research                                5% of Undergrad + 25% of Graduate + 50% of Doctoral Teach. Sal.                      $10,229,189
Public Service                          3% of Teaching Salaries                                                               $2,096,971
Facilities Maintenance & Operation      $4.85 and $2.40 Square Foot                                            3,506,054     $17,467,412
Special Mission:
 Land Grant                             10 % of Teaching Salaries                                                       1     $6,989,904
 Minority Mission                       10 % of FTE Generated Funding
Diseconomy of Scale 3,500 FTE
Total                                                                                                                       $204,016,938
Less Tuition and Mandatory Fees         Per SSCH - Undergraduate $130, Graduate $190, Doctoral $230                          $69,355,879
State Appropriation Required                                                                                                $134,661,059
FY06 State Appropriation                                                                                                    $104,180,511
State Appropriation Increase Required                                                                                        $30,480,548
University of Arkansas Fayetteville for FY 2008                                                                                 DRAFT
Table 1                              Annualized Enrollment Calendar Year 2005
Discipline Cost Categories           Undergraduate         Graduate          Doctoral                                             Total
Category I                                    140,664              6,027            3,605                                            150,296
Category II                                   140,828            37,918             4,360                                            183,106
Category III                                   85,692              6,627            3,779                                             96,098
Category IV                                    17,611              3,007            1,479                                             22,097
                                                                                                                                     451,597
Table 2                              SSCH to Produce a FTE Faculty
Discipline Cost Categories           Undergraduate         Graduate                                    Doctoral                                            3/5/06
Category I                                        645                     170                                            130                   Macintosh HD:Users:dop:Desktop:NC Model for Colleges:[Model2007-08SSCHfordist.xls]uaf
Category II                                       480                     250                                            145
Category III                                      365                     160                                            120
Category IV                                       230                     102                                             70

Table 3                              FTE Faculty Generated by SSCH*
Discipline Cost Categories           Undergraduate         Graduate                                    Doctoral                   Total
Category I                                       218.1              35.5                                                 27.7
Category II                                      293.4             151.7                                                 30.1
Category III                                     234.8              41.4                Qu ic kTime ™ a nd a
                                                                                                                         31.5
                                                                                          dec omp re sso r
Category IV                                       76.6              29.5         are n eed ed to se e th is pi cture.
                                                                                                                         21.1
Total                                            822.8             258.0                                                110.4        1,191.3
* Table 1 divided by Table 2

Table 4                              Average Faculty Salaries for Each Level
                                     Undergraduate          Graduate                                   Doctoral
Average Faculty Salary                        $57,919              $60,093                                  $77,868


Table 5                            Teaching Salary Funds Produced by the Formula**
Discipline Cost Categories         Undergraduate         Graduate          Doctoral                                               Total
Category I                              $12,631,155         $2,130,483       $2,159,329
Category II                             $16,992,903         $9,114,466       $2,341,399
Category III                            $13,597,755         $2,488,988       $2,452,181
Category IV                              $4,434,820         $1,771,573       $1,645,231
Total                                   $47,656,633        $15,505,509       $8,598,140                                          $71,760,282
** Table 3 Column Totals X Table 4

Summary of Model Production
Expense Category                                       Explanation                                                                                                    Funding        Square Feet
Teaching Salaries                                                                                                                                                     $71,760,282
Other Instructional Costs                              45% of Teaching Salaries                                                                                       $32,292,127
Library Cost                                           11% of Teaching Salaries + Other Instructional Costs                                                           $11,445,765
General Institutional Support                          54% of Teaching Salaries + Other Instructional Costs                                                           $56,188,300
Research                                               5% of Undergrad + 25% of Graduate + 50% of Doctoral Teach. Sal.                                                $10,558,279
Public Service                                         3% of Teaching Salaries                                                                                         $2,152,808
Facilities Maintenance & Operation                     $6.40 and $3.20 Square Foot                                                                                    $22,995,213        3,506,054
Special Mission:
 Land Grant                                            10 % of Teaching Salaries                                                                                       $7,176,028                  1
 Minority Mission                                      10 % of FTE Generated Funding
Diseconomy of Scale 3,500 FTE
Total                                                                                                                                                               $214,568,801
Less Tuition and Mandatory Fees                        Per SSCH - Undergraduate $145, Graduate $210, Doctoral $250                                                   $70,352,615
State Appropriation Required                                                                                                                                        $144,216,186
FY07 State Appropriation                                                                                                                                             $110,180,073
State Appropriation Increase Required                                                                                                                                 $34,036,113
                                   FY05 Expenses by Function
                     Financial Report            Budget*
Instruction                      $96,087,697    $86,947,457
Research                         $87,513,517    $11,583,474
Public Service                   $57,677,724    $4,998,619
Academic Support                 $28,909,057    $22,745,887
Student Services                 $16,292,007    $14,121,582
Institutional Support            $25,239,057    $19,279,045
Scholarships & Fellowships       $24,370,475    $22,858,145
Plant Operations & Maintenance   $29,503,679    $22,755,944
Auxiliary Enterprises            $63,467,384
Debt Service                                    $5,805,302
Reserves                                        $1,856,128
Depreciation                     $38,875,804
Total Operating Expenses         $467,936,401   $212,951,583

*0102, 0112 & 0372
Unrestricted Only
Revised Q4
                                       FY07 Budget
 Have to budget those expenditures not previously
    budgeted but for activities for which the institution
    does not or cannot made the decision to quit doing.
   Classified pay plan requires $896K
   GA stipend increases cost $63K/(% of increase)
   N/C Non-faculty salary increases cost $272K/(% of
    increase)
   Faculty salary increases cost $701K/(% of increase)
   Faculty promotion increases $318K
   Utility E&G budget increase for FY07 cost only is
    $1.48 million
   Additional funding for faculty positions under review
    General Financial Challenges
    Diversity enhancements
    Student centered
    Full formula funding
    Budgeting revenue enhancements (i.e., investments vs.
     improvements; e.g. SSCH growth and grants & contracts with indirect
     costs)
    Capital needs
    Need-based scholarships
    Balance need for flexibility with demonstrating full and effective use
     of funding
    Faculty, GA, & Staff salary improvement
    Base support for activities made possible by development
    Unrelated business & private sector competition
    Public sense that universities are not controlling costs
    Deferred maintenance & renovations to modernize

“Universities share one characteristic with compulsive gamblers and exiled royalty; there is never enough money to
    satisfy their desires.”
                                           —Derek Bok (1930- ) President, Harvard University (1971-1991)

				
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