Operating Expense Budget 2006
2006 recommendation (FAC consensus) and Secretariat’s indicative numbers for 2007 & 2008
Twelfth Board Meeting Marrakech, 15-16 December 2005
2006 Environment / Unknowns
2006 Unknowns: • Longer-term strategy is still being developed • Mid-term replenishment review is awaited • Transition of administrative services is pending FAC Concerns: • Important to maintain flexibility (and not over-commit to structures that may change) • Conscious of Board-mandated activities and other immediate needs that cannot wait for the outcomes
Twelfth Board Meeting Marrakech, 15-16 December 2005
Immediate Needs in 2006
• Greater grant management capacity
– Increased grant volume and complexity e.g. Round 5, Phase 2, enhanced M&E, better documenting of performance, EARS
• Staffing to sustain workload
– Retain skills and experience, avoid burn-out, enable appropriate oversight and control
• Organizational development and training
– Adequate training, efficient systems and processes, clearer performance management
Twelfth Board Meeting Marrakech, 15-16 December 2005
Review by FAC
• FAC reviewed the Secretariat’s proposal, with 2 videoconferences and numerous email exchanges, over a two-month period • The intensive review took account of supplementary information and oral presentations by the Secretariat in response to FAC queries • Included analysis of various budget scenarios and evolution of Secretariat proposal
Twelfth Board Meeting Marrakech, 15-16 December 2005
Consensus Recommendation
• Reached consensus to recommend a budget of $83.2m* for 2006 • This incorporates envisaged savings on LFA fees and other costs, based on assumptions regarding activity levels in 2006 • FAC will review actual costs after the first half of 2006 and, if necessary, will make further recommendations then
♦
* This does not include a provision for new rounds (in accordance with Board policy)
Twelfth Board Meeting Marrakech, 15-16 December 2005
Needs Addressed in the Budget
Budget increase of 25% ($16.9m):
76% of this is for: – Grant management and M&E (41%) – Secretariat systems and support services (mainly serving grant activities) (35%)
14% is for training, enhanced recruitment and HR processes, organizational development, etc.
10% is for, resource mobilization on new initiatives, OIG, Partnership Forum, etc.
Twelfth Board Meeting Marrakech, 15-16 December 2005
Needs Addressed in the Budget
Budget reflects a major increase in staffing
• 63% of the budget increase is for staff costs • Provides for a workforce of 252*
(with 21% of these on short-term contracts; all others on 2-year contracts)
• 72% of staff are allocated to grant management and monitoring and evaluation**
*Excluding Office of the Inspector General (OIG staffing and overall budgetary needs to be assessed by the IG and presented to Board in 2006) **Including share of support staff
Twelfth Board Meeting Marrakech, 15-16 December 2005
Allocation of Resources in 2006
A c tiv ity
D ire c t C o s ts S p re a d o f S u p p o rt C o s ts Cost of A c tiv ity US$m
% 75%
G ra n t m a n a g e m e n t, m o n ito rin g & e va lu a tio n , a n d L F A o ve rs ig h t B o a rd re la tio n s , re s o u rc e m o b iliza tio n a n d c o m m u n ic a tio n s E x e c u tive O ffic e (E D & D E D ), c o rp o ra te s tra te g y a n d p o lic y O ffic e in fra s tru c tu re a n d s u p p o rt s e rvic e s * O ffic e o f th e In s p e c to r G e n e ra l a n d O ffic e o f th e C h a ir o f th e B o a rd C o n tin g e n c y ($ 1 m ), le s s s a vin g s /e ffic ie n c y ta rg e t (-$ 2 .5 m ) T o ta l b u d g e t 2 0 0 6
4 8 .4
1 3 .9
6 2 .3
1 0 .0
5 .3
1 5 .4
18%
3 .9
2 .1
6 .1
7%
2 1 .3
-2 1 .3
1 .0
1 .0
1%
-1 .5 8 3 .2 0 .0
-1 .5
-2 %
8 3 .2 1 0 0 %
* In c lu d e s re n t, e q u ip m e n t, te le c o m m u n ic a tio n s , o ffic e s e rvic e s a n d s u p p lie s , a n d a d m in is tra tio n , c o n tra c tin g , fin a n c e , H R & tra in in g , in fo rm a tio n m a n a g e m e n t & IT a n d le g a l te a m s
Twelfth Board Meeting Marrakech, 15-16 December 2005
Key Ratios
Key Ratios Operating Expenses as: As % of Disbursements As % of Expenditure As % of Value of Active Grants 2005 2006 2007 2008
Forecast Proposed
Indicative
5.3% 2.5% 1.4%
4.7% 3.0% 1.2% $228k
4.5% 3.9% 1.1% $221k
3.8% 3.2% 1.0% $222k
Operating Expenses per Active Grant $210k
Assumes one new round per year
Operating expenses in 2006 represent: 3% of total expenditure (in the year), and 1.2% of funds committed to active grants
Twelfth Board Meeting Marrakech, 15-16 December 2005
Growth in Grants and Expenses
G r o w th in V a lu e o f Ac tiv e G r a n ts
G ro wth F acto r
7 6.3 6 5 3.9 4 3 2.7 1.8 2 2.0 1 1.0 0 1.3
a n d O p e r a tin g E x p e n s e s S in c e 2 0 0 3
Value of Active Grants
Operating Expenses
2003
2004
2005
2006
Twelfth Board Meeting Marrakech, 15-16 December 2005
2006 Budget Summary
U S $ m illio n s
2005
B udget
2005 4 4 .3 1 8 .8 6 3 .1
2006 6 3 .6 2 2 .1 8 5 .7 -2 .5
2007 7 1 .0 2 0 .4 9 1 .4
2008 7 4 .9 1 5 .9 9 0 .8
F o re c a s t P ro p o s e d
In d ic a tive
S e c re ta ria t E x p e n s e s L F A S e rvic e s T o ta l O p e ra tin g E x p e n s e s
(b e fo re n e w R o u n d s a fte r R o u n d 5 )
4 4 .5 2 3 .4 6 7 .9 -1 .6 6 6 .3
le s s : E ffic ie n c y/s a vin g s T a rg e t N e t o f E ffic ie n c y/S a v in g s T a rg e t
1.
6 3 .1
8 3 .2
9 1 .4
9 0 .8
2. 3.
The above does not include a provision for new rounds (in accordance with Board policy). Costs associated with each new round will be presented for approval as an addition to the budget as and when the Board decides to launch the round. Includes a provision of US$797,000 for Office of the Inspector General, who will present his proposed workplan and budget to the Board during 2006. The indicative amounts for 2007 & 2008 are Secretariat estimates, not reviewed by FAC.
Twelfth Board Meeting Marrakech, 15-16 December 2005
Recommended Decision Point
• The Board approves the 2006 operating expense budget in the amount of US$83,200,000 as set out in Annex 1 to the Report of the Finance and Audit Committee (GF/B12/7) and as recommended by the Finance and Audit Committee (FAC) and proposed by the Secretariat. • The Board notes that the budget includes envisaged cost savings and requests FAC to review actual expenditure and budgetary needs after the first half of 2006 and, if necessary, make further recommendations to the Board at that time.
Twelfth Board Meeting Marrakech, 15-16 December 2005
Back-up Slides
Back-up Slides
Twelfth Board Meeting Marrakech, 15-16 December 2005
Composition of Budget Increase
$m G ra n t m a n a g e m e n t a n d M & E O ffic e in fra s tru c tu re a n d s u p p o rt s e rvic e s
(b )
6 .9 5 .8 1 .2 1 .1 1 .0 0 .7 0 .6 0 .5 -0 .9 1 6 .9
(a ) (a ) (a ) (a )
O rg a n iza tio n a l d e ve lo p m e n t (m a in ly tra in in g ) E n h a n c e d H R & re c ru itm e n t; s tra te g y d e ve lo p m e n t N e w re s o u rc e m o b iliza tio n in itia tive s P a rtn e rs h ip F o ru m a n d B o a rd m e e tin g s A d d itio n a l fin a n c ia l m a n a g e m e n t c a p a c ity O ffic e o f th e In s p e c to r G e n e ra l In c re a s e in s a vin g s ta rg e t
(a ) (b )
M a in ly s e rvin g g ra n t m a n a g e m e n t R e n t, e q u ip m e n t, te le c o m s , IT /IM s ys te m s , a n d a d m in is tra tive a n d c o n tra c tin g s e rvic e s
Twelfth Board Meeting Marrakech, 15-16 December 2005
Savings anticipated in the budget
A s s u m e d s a vin g s : L F A s e rvic e s : d e fe r s p e c ia l w o rk a n d /o r a s s u m e s a vin g s S ta ff: a s s u m e la te r s ta rts o n n e w h irin g s (a c ro s s a ll u n its ) A s s u m e fe w e r E A R S in te rve n tio n s a n d fe w e r q u a lity a s s u ra n c e a p p lic a tio n s fo r lim ite d a n d s in g le s o u rc e p h a rm a c e u tic a l p ro d u c ts D e fe r p h a s e 2 o f tra n s itio n s tu d y, p e n d in g B o a rd a p p ro va l G e n e ra l s a vin g s ta rg e t S c a le -b a c k s e rvic e s : S c a le b a c k m u ltid is c ip lin a ry m is s io n s to P R s , in -c o u n try w o rk s h o p s a n d re g io n a l m e e tin g s S c a le -b a c k n e w fu n d ra is in g in itia tive s a n d lin k a g e s to k e y c o n fe re n c e s S c a le -b a c k P a rtn e rs h ip F o ru m a n d s ite vis its a t M e x ic o b o a rd m e e tin g S c a le -b a c k s ta ff tra in in g , e x e c u tive s e a rc h a n d c a n d id a te tra ve l S c a le -b a c k s u p p o rt to c ivil s o c ie ty a n d C C M s , a n d to T E R G a n d M & E a c tivitie s T o ta l a s s u m e d s a v in g s a n d re d u c tio n s
Twelfth Board Meeting Marrakech, 15-16 December 2005
U S$m 4 .0 1 .8 0 .6 0 .3 2 .5 9 .2
0 .6 0 .7 0 .4 0 .3 0 .3 1 1 .5
Budget 2006, by Unit and Expense
Budget 2006 Before new Rounds Operations Strategic Information & Evaluation External Relations Executive Director's Office Deputy Executive Director Business Services Finance Office of the Inspector General Office of the Chair of the Board Sub-total, before Contingency Contingency Total Secretariat Expenses LFA Services Efficiency Target Total Operating Expenses 25% 6% 12% 3% 2% 21% 5% 1% 0% 75% 1% 76% 27% -3% 100% TOTAL 21,184 5,146 10,038 2,257 1,692 17,394 3,945 797 193 62,647 1,000 63,647 22,053 (2,500) 83,200 $83.2m
Budget 2006 (US$'000) Professional Staff Fees 14,517 1,728 3,507 933 4,336 984 1,543 178 999 545 5,911 3,221 1,317 2,590 462 125 109 32,592 10,412 39% 13% Office Communications Materials Meetings Infrastructure 1,019 363 270 34 89 1,492 38 951 118 15 15 33 3 13 80 7,617 10 3 25 60 32 3,015 7,824 1,441 4% 9% 2%
Travel 3,557 313 2,237 389 99 556 11 150 52 7,363 9%
Twelfth Board Meeting Marrakech, 15-16 December 2005
Staff Numbers
S ta ff N u m b e rs
F ix e d T e rm p e r Budget '0 5
2005 a d d : S h o rt T e rm (a s at Sep 05)
In c re a s e (2 0 0 5 to 2 0 0 6 )
2006 F ix e d T e rm S h o rt T e rm
2007
2008
T o ta l
F ix e d T e rm
S h o rt T e rm
T o ta l
% of to ta l
In d ic a tiv e T o ta l T o ta l
F u n d P o rtfo lio O p e ra tio n s S tra te g ic In fo rm a tio n & E va lu a tio n E x te rn a l R e la tio n s E x e c u tive D ire c to rs ' O ffic e D e p u ty E x e c u tive D ire c to r B u s in e s s S e rvic e s F in a n c e T o ta l
77 14 15 8 4 25 7 150 75%
12 5 12 2 2 16
89 19 27 10 6 41 7
15 8 9 1 2 11 2 48
10 1 -2
25 9 7 1
47% 17% 13% 2% 2% 13% 6%
92 22 24 9 6 36 9 198 79%
22 6 10 2 1 12 1 54 21%
114 28 34 11 7 48 10
45% 11% 13% 4% 3% 19% 4%
125 30 35 11 8 48 11 268
134 31 35 11 8 47 11 277
-1 -4 1 5
1 7 3
49 25%
199 100%
53 100%
252 100% 100%
Budget
$22m *
*S o m e s h o rt te rm s ta ff w e re fu n d e d fro m c o n s u lta n c y b u d g e ts
$33m
$38m
$40m
Twelfth Board Meeting Marrakech, 15-16 December 2005