BUDGET 101 Academic Affairs Harry Hellenbrand Provost and Vice President for Academic Affairs October 2006 Today’s Agend

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BUDGET 101 Academic Affairs Harry Hellenbrand Provost and Vice President for Academic Affairs October 2006 Today’s Agend Powered By Docstoc
					           BUDGET 101
           Academic Affairs

              Harry Hellenbrand
Provost and Vice President for Academic Affairs

                October 2006
                 Today’s Agenda

•   Terminology and Definitions
•   Budget Cycles / Processes
    •   State
    •   CSU
    •   Campus
•   Budget Planning and Management Overview
•   Best Practices and Tools
•   Discussion

•   Headcount—count of students enrolled in course
•   CCU-course credit unit; credit units assigned for each
•   WTU-weighted teaching units; course credit units times
    workload factor
•   FTES—Full-time Equivalent Students
    FTES = (CCU * number undergrads) + (CCU * number master’s)
                    15                         12

•   FTEF—Full-Time Equivalent Faculty
    •   Full-time Faculty = 1.0 FTEF
    •   Part-time Faculty = Weighted Teaching Units/15
•   Student Faculty Ratio (SFR or Funding Ratio) =
•   Budget—a plan of operation for a specific period of time
    expressed in financial terms
•   Appropriation—authorization to spend provided in the
    State Budget Act, particularly from the General Fund

•   Fee Revenue—fees paid by students that are (1) included
    in budget plans or (2) differ from budget plans when
    enrollment is different from target.
•   Allocation—a distribution of funds, or an expenditure
    limit, established for an organizational unit or function.
•   “Base” or “Continuing” Budget—recurring budgets
    available to the university, its divisions, and its colleges
•   “One-time” Budget—allocation for only the current year
•   Augmentation—An increase in appropriation or
    allocation; generally refers to one-time budgets.
•   Marginal Funding—funds received above the prior year
    base budget; usually linked with growth in enrollment or
    other changes “on the margin;” may be continuing or one-
    time funds.
•   Academic Year (AY)—the period from late August
    through May that includes the required academic days for
    instructional faculty; usually comprised of both fall and
    spring semesters with time off between the semesters.

•   College Year (CY)—the entire year, including
    summer, for purposes of calculating enrollment
    (FTES) targets and their attainment.
•   Year-Round Operations (YRO)—summer
    session is now counted as a regular term; FTES
    are included in CY targets; students pay regular
    fees in summer; funding for summer is included in
    base budgets and the program is no longer run
    through Extended Learning.

•   “Rebenching” FTES—a recent activity in the
    CSU to recalculate graduate enrollments on a base
    of 12 units rather than 15 units (as is the case for
    undergraduates). This restates the university’s
    FTES targets and reports and will fully take effect
    on our campus in 2007/08. This does not result in
    increased base budgets, however.
                                               State Budget Cycle

Source: CSU Budget Central, http://www.calstate.edu/BudgetCentral/8-step.html, 7/27/05
                             State Budget Cycle (cont.)

Source: CSU Budget Central, http://www.calstate.edu/BudgetCentral/8-step.html, 7/27/05
                                    CSU Budget Calendar

2006/07 State of California Budgeted Expenditures
             (Percentage by Agency)

                                                                                  State Higher
                                                        Other Higher                 11.3%
                              Corrections and              7.8%
                               Rehabilitation                              CSU
                                   6.4%                                    3.5%

                                                                                                      K-12 Education
    Health and Human

    Environmental                                                                                Labor and Workforce
      Protection                                                                                     Development
        0.9%             Resources                                                                      0.3%
                                                                             Legislative, Judicial,
                       Business, Transportation                                   Executive
                                                             General Government     4.4%
                              & Housing                             5.3%
                                7.5%          State and Consumer
        CSUN Budget Planning Process

•   Budget Process
    •   FTES Targets Defined (each fall for following year)
         •   Based on estimates of student enrollment demand
         •   Limited by physical space capacity and campus master plan
    •   University Budget Process (when new funds available)
         •   Enrollment Growth Basis
         •   Projects that Support Strategic Priorities
    •   University Planning and Budgeting Group (UPBG)
    •   Timeline (December through June)—new planning
        process under way for 2007/08
                    CSUN General Fund Budget
                                          Components of the General Fund Base Budget




Source: CSUN Office of Budget Planning and Management
  Budget Flow


   Flow Control
          Budget Flow

       CSUN                $9,100 per FTES


                     University Needs
$5,100 per FTES

       $4,000 per FTES for
        enrollment growth
    History of CSUN Budget Planning

•   History of Decentralized Budget Model
    •   Position Management/Central Control/The
        “Orange Book”
    •   University Decentralization
    •   Academic Affairs Decentralization
    •   Fiscal Controls Prior to PeopleSoft Conversion
    •   Fiscal Controls After PeopleSoft Conversion
          Policy on Fiscal Responsibility

    •   Position Management and Hiring Review
    Academic Affairs Budget Management

•   Each college and major unit receives a continuing General
    Fund allocation (from the prior year) with adjustments for
    FTES growth, retirements, etc.
•   When faculty retire or resign, their position funding
    reverts centrally, but colleges receive a permanent
    allocation for replacement part-time faculty.
    •   The residual attrition funds are pooled and added to any
        enrollment growth funding for faculty positions in the following
    •   Academic Affairs also self-funds faculty promotions, staff
        reclassifications, and faculty equity pay from this pool.
    Academic Affairs Budget Management

•   Benefits funds are held centrally by the university.
    Benefit expenditures are recorded in each unit, but
    are offset by corresponding budget allocations.
•   The division also receives over $2 million each
    year in Lottery funds. Instructional equipment
    funds are allocated to colleges based on equipment
    inventory and enrollment; the Library also
    receives an allocation for library materials.
    Enrollment Funding in Academic Affairs

•   Enrollment growth is funded at new full-time
    faculty salary rate using a funding ratio of 22:1.
     •   For every 22 new FTES, we receive funding for one
         new faculty position
     •   Operating expenses are funded at 10% of salary cost
•   In the first year of enrollment growth, funds are
    allocated at part-time rates to the colleges and
    become full-time faculty positions in the following
    academic year.
Enrollment Funding in Academic Affairs

   FTES increase = 660
   SFR = 22
   Faculty positions (FTEF) = 660/22 = 30
   New full-time faculty hire rate = $60,000
   Part-time faculty (beginning of range) = $45,000
First year = ($45,000 X 30) = $1,350,000, plus operating
  expenses (10%), for total of $1,485,000
Second year = ($60,000 X 30) = $1,800,000, plus operating
  expenses (10%) for total of $1,980,000
         The Decentralized Model

•   Principles of Decentralized Budgeting in
    Academic Affairs
    •   Balanced Budgets
    •   Meet FTES Targets
    •   Communication and Disclosure
         •   ERC Recommendation
         •   College Budget Model
CSUN Policy on Fiscal Responsibility

Ensure that:
  •   Expenditures don’t exceed available resources
  •   Funds expended for intended purposes in appropriate
      time period
  •   Use internal controls to protect from misuse
  •   Correctly classify receipts and expenditures
  •   Comply with campus policies
        ERC Recommendation - 1999

•   Open budget reporting and consultation process
    •   Resources and allocations for all departments,
        centers, and programs
•   Contingency funds
    •   Maintain
    •   Communicate to department chairs
           Typical Funds in Academic

•       General Fund (appropriations, allocations, and
        fee revenue)
•       State Trust Fund (includes ExL revenues, IRA, etc.)
•       Auxiliary Funds (separate 501(c)(3) entities)
    •     Corporation
    •     Foundation
    •     Others (Not held in departments)
        Tenets of Academic Affairs
           Fiscal Management
•   Accountability
•   Continuity/Consistency of Practices
•   Clarity of Business Practices
•   Defensible Systems (audit readiness)
•   Facilitate Sharing of Information and Open
    Determination of College Budgets

•   Prior Year Base Budget
•   Budget Adjustments (Attrition, New Hires,
    FTES Increase Funding)
•   Salary Increases
•   Non-General Fund Resources
       •   Lottery Budget
       •   Extended Learning Partnerships
       •   Grants and Contracts
       Shortcomings of State/CSU/CSUN
               Budget Processes
•   Historical budgeting (based on prior year appropriations and
    allocations) is easy, but discourages repurposing of funds,
    particularly when combined with decentralized control. There are
    significant disincentives to scaling back or eliminating programs.
•   Compensation and other increases are determined on a system-wide
    basis and do not take into account local conditions and different
    costs of living.
•   As the major source of new funding to campuses, funds for
    enrollment growth end up funding many activities and mandatory
    costs such as insurance/risk pool, unfunded compensation
    increases, and other university priorities, leaving little infusion of
    resources to support growth and instructional innovation.
                 Best Practices

•   SOC Worksheet—plan for part-time faculty costs
•   Effective Scheduling—managing costs
•   Monthly Reconciliation—accounting for expenses
•   Line Item Budgeting at Departmental Level
•   External Funding
•   Contingency Planning
•   “Wish List”

Description: College Student Budget Allocation Worksheet document sample