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School Financial Management Daniel Flaherty Director Financial Services 1.

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Presentation on theme: "School Financial Management Daniel Flaherty Director Financial Services 1."— Presentation transcript:

1 School Financial Management Daniel Flaherty Director Financial Services 1

2 What Would You Like To Know? 2

3 Topics 1.How the University Earns Revenue 2.How that Revenue is Shared 3.Managing a School Budget 4.Day to Day Financial Management Issues 3

4 1. How the University Earns Revenue 4

5 University Budget - Defined 5 Recurrent Budget Student revenue – Commonwealth & Students DEEWR/DIISR Research revenue Investments Other Total Budget Research grants Consulting/Commercial Other Grants Other

6 6

7 1. How the University Earns Revenue DEEWR/DIISR Funding –Commonwealth Grants Scheme –Research Block Grants –Indexation Student Fees 7

8 Commonwealth Grants Scheme (CGS) 8 clusters with fixed $$ rates for each cluster Varying Commonwealth funding for each cluster Funding profile to be agreed with DEEWR Full Funding for up to 110% of agreed profile Can over enrol past 110% of agreed profile –but only receive HECS payments Lose funding if below profile –retain CGS for load between 99% and 100% –cap at 95% 8

9 Course Contribution Schedule 2011

10 DIISR Funding Research Block Grant Funding Research Training Scheme Joint Research Engagement Research Infrastructure Block Grant Sustainable Research Excellence All subject to rules in how the funds can be used. 10

11 DIISR Funding Research Block Funding All performance based averaged over last two years Fixed funding pool Various indicators with differing weights 11

12 DIISR Funding 12 Sustainable Research Excellence 20% - Category 1 Research Income If ERA compliant and Transparent Costing undertaken 13% - Category 1 Research Income up to $2.5m 67% - Category 1 Research Income >$2.5m, moderated by staff FTE, weighted publications & SRE survey outcomes

13 DEEWR/DIISR Funding Indexation –applies to all DEEWR/DIISR funding –assumes that costs are split: 75% salaries 25% non salaries –non salary indexed by CPI –salary indexed by 2011 Safety Net Adjustment (SNA) + teaching by PSTS index 2012 PSTS wage index 13

14 Student Fees ISP Onshore Offshore Students Fee Paying Postgraduate Student Fees Total approx. 15% of University revenue 14

15 How Funds Are Earned Any questions??? 15

16 How the Revenue is Shared 16 Daniel (with Council OK) Major Cost Centre Head

17 Why the Revenue is Shared –Teaching & Research –Buildings development –Building operating costs – power, water etc –Library –ICT –Student Services –Academic Support –Marketing –Research Administration –General Admin eg payroll 17

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19 Allocation Models General Allocation shares have been developed over time and reflect: –A Performance basis – student load and research –Cost control –Historical influences 19

20 Distribution of Student Revenue 20

21 Research Block Grant Distribution 21

22 Running a School Budget The University Dilemma The revenue earned per student is fixed by the Commonwealth Commonwealth indexation has averaged around 2% to 2010. From 2012 indexation will increase to 3% to 3.3% pa. Costs increase by up to 5% pa So either student load has to grow / prices for student fees increased / costs are reduced 22

23 Running a School Budget Cost Increases Salaries increase by around 4% pa due to Enterprise Bargaining pay rises Salaries further increase by around 1% pa due to promotions, increments, reclassifications Non salary expenses expected to grow 2% - 3% pa Overall cost growth in a school is around 4.75% pa. Therefore revenue needs to grow by at least 4.75% plus the cost of servicing increased load, just to “stand still” 23

24 Running a School Budget Revenue Generation Options Indexation - around 3% to 3.3% pa. Increased Commonwealth Student load Increased International Student load/price Improved Research performance 24

25 Running a School Budget Cost Management Options - Not many! Staff reductions –Typically 80% to 90% of costs Non salary cost reductions Overall can help for a time but you can’t reduce costs every year So need to grow revenue and manage costs 25

26 Running a School Budget Traditional University Cost Saving Options Reduction in topics Increased student staff ratios Workforce Planning –Transition to retirement options –Replacement of retiring staff with lower level staff Increased use of casual staff Review of non salary expenditure 26

27 Running a School Budget Practical Tools Development of 5 year financial projections Talent 2 HR system - for salary information –Salary projections by person by year Finance system for tracking financial transactions and budget position –Monthly emailed project manager reports Regular Review and Forecasting 27

28 Operational Issues University Policies – you are the front line Authorisations Insurance Independent contractors Purchasing and Credit cards Travel & Taxes Leave management 28

29 Operational Matters Authorisations To approve expenditure –Comply with Uni policies & grant conditions –Must be for bona fide University purposes –Can’t approve own expenses –BasWare (electronic invoices system) will ensure delegation limits are adhered to 29

30 Operational Matters Insurance Disclosure Travel Deductibles/excess - $5k Risks –Remote sites + valuable equipment –Theft –Contracts - indemnities 30

31 Operational Matters Independent Contractor Government laws extend the definition of employee to capture contracts with individuals where the labour component is >= 50% If a contract with an individual is planned – need to comply with the University policy dentContractors.html dentContractors.html Must have a contract in place Risk for University/school – liability for payroll tax, super guarantee charge, workers compensation if we get this wrong 31

32 Operational Matters Purchasing Purchasing policy –Value for money and fair trading principles –Tender required > $100k –Compliance with quotation requirements –Plan to mandate Purchase Orders for expenditure > $20k Preferred suppliers Procurement web site Contact Procurement Manager for assistance 32

33 Operational Matters Credit Cards Benefits Risks –Fraud –Use on insecure/dodgy internet sites –Avoid staff sharing 33

34 Operational Matters Travel Preferred suppliers –Phil Hoffmann Travel –STA Travel On-line booking tool OHS&W for travellers Policy on travel, particularly international DFAT warnings Credit cards, travel advances, per diems 34

35 Operational Matters Taxes GST –Normally charged on contracts –All contracts should have a GST clause –Normally not a cost to business /government Fringe Benefits Tax (FBT) –Adds approx 100% to benefit cost –Private & business travel –Travel diaries –Entertainment –Other staff benefits 35

36 Operational Matters Management of Annual Leave 36

37 Operational Matters Management of Annual Leave  Need to plan usage  Increases with each pay rise  Can cause sudden budget problems on staff cessation  New EB agreement reinstates a form of deeming 37

38 Operational Matters Management of LSL  Emerging cost – not provided for at the time it is earned.  Need to plan usage / set funds aside  Increases with each pay rise  Can cause sudden budget problems when staff leave unexpectedly and are paid out LSL in lieu 38

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40 Useful Web Sites Financial policies and procedures Financial Services Division Homepage 40

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