1. PREPARING BUDGETS & THE FBM PROCESS Academic Leadership Forum 21 October 2014

2. REAL DEL DEGAN INTERIM DIRECTOR OFFICE OF THE BUDGET 2 Budgeting for Your Unit 21 October 2014

3. Content 3  The “Big” Picture  Impact of academic units on University revenues  Building the University’s budget  Academic units and the budget process

4. The Big Picture: Total Operating Revenues estimated at $768.8M for FY2015 4

5. The Big Picture: Total Operating Expenses estimated at $775.8M for FY2015 5 $’000

6. The Big Picture: “Financed” Accumulated Deficit Outlook 6

7. 7 Building the University’s Budget See handout

8. Impact of academic units on University revenues 8  Enrolment changes  Research -Indirect costs of research -CRC / CFI allocation calculations  Endowments / Gifts  Specific grants / contracts / community service

9. Major Revenue Components 9 Enrolment Changes Provincial Grant Tuition

10. Academic Units and the Budget Process 10  Faculty-level (not directly with academic departments)  Each Faculty can adopt its own specific budget process “The Agreement”  Reached with each Faculty stating:  priority investments,  targets, and  proposed new initiatives  Multi-year and ALL funds  Involves performance measures  Not just incremental

11.  Faculties prioritize requests from their academic units  NOT done directly by the Provost’s Office 11 Academic Units and the Budget Process

12. Priority-focus of the Agreement: Open, Connected, Purposeful: McGill and the Next Five years  Student Life and Learning  Research  Engagement  A Learning Organization  Space

13.  Draft agreement documents stipulated between the AP(BR) and the Faculties (or Admin units) -No template -No dropdown menus and formatted sections -No responses to documents – just one document  Meetings between AP(BR) and units to culminate with a signed agreement by end of November/early December  Integrating with other planning processes: -Enrolment targets -Academic Renewal -Space, IT, etc. The Agreement: What’s new for the FY16 exercise?

14.  Previous year’s budget +/- allocations for the new year  Cuts from the MESRS will continue:  No indication of changes to the tuition framework assume rules remain unchanged  No changes to FIO (ancillary fees) framework The Agreement: What can units expect for FY2016?

15. Budget allocations: What can an academic unit expect? 15  Allocations are to Faculties, not directly to academic departments  Faculties each adopt their specific budget allocation rules  Some allocations provided: -Academic Renewal -Salary Policy -Benefits -Enrolment Driven Allocation -Indirect Research Cost Allocation -CFI LOF envelope (for wet lab areas) -CRC allocation -Graduate Student Support (through GPSO) -Funding for specific initiatives (priority pool envelopes)

16. Academic Renewal 16  Target complement for each Faculty  TT salaries covered by central  Related allocations include: -Start-ups -Endowed chair contributions -Provostial hires -Salary award incentive contribution -Contribution to recruitment costs -Moving expenses (including immigration fees) -French courses  Funds for salaries revert to the central pool when TT staff depart -http://www.mcgill.ca/provost/files/provost/academic_renewal__hr-budget_feed_1-oct- 2012.pdfhttp://www.mcgill.ca/provost/files/provost/academic_renewal__hr-budget_feed_1-oct- 2012.pdf

17. CRISTIANE TINMOUTH INTERIM ASSISTANT VICE-PRINCIPAL FINANCIAL SERVICES 17 The Financial Budget Model (FBM)

18. Managing the Budget and year-end results 18  Dean has statutory responsibility for the Faculty’s budget  But, Chairs definitely have a role  Results (positive or negative) are carried forward to the next fiscal year  Positive carry forwards in 1A funds (unrestricted operating) are put into a reserve at the Faculty level  Use of the reserve funds require permission from the Provost

19. The Financial Budget Model (FBM)  The Financial Budget Template - is used for submitting the agreed upon multi-year and multi-fund planning - has an Excel-based tool capturing all revenues and expenditures per org - provides an overview of the spending capacity on a multi-year, multi-fund basis (e.g., provision of carry forward for future expenditures) - allows a financial plan aligned with the Agreement - is aligned with the Budget Book and Financial Statements - must be completed by the Faculty Financial Officer with input from various Faculty/Unit members, upon request  Enables stewardship and management of all fund types  Allows for variance analysis: - Budget allocations vs. Actuals by account grouping

20. Planning with the FBM  Forecasting is - not an “exact science” - a projection into the time period(s) under consideration - based on assumptions, previous experiences, and reasonable expectations  FFO must - consult with VP, Dean, Chairs, Directors, professors, others for input - be familiar with your Unit’s historical data (prior year actuals) - have supporting documentation and estimates - proactively seek information from professors, researchers and fund holders - plan for the use of carry-forwards and ensure that these are included the Agreement  Remember that the FBM - must cover 3 fiscal years of budget - includes ALL fund types

21. Variance Analysis  Reports for Variance Analysis with: - Recording of changes relative to the Budget (e.g., Academic Renewal Plan) - Adjusted Budget (if applicable) versus Actual - Actual to Actual  Enables a more accurate analysis of the financial situation  Close coordination with FFO/FST

22. Resources and Support  FBI website: www.mcgill.ca/fbiwww.mcgill.ca/fbi  FBI reports: http://www.mcgill.ca/fbi/support/reports- tools http://www.mcgill.ca/fbi/support/reports- tools  FAQ’s :http://www.mcgill.ca/fbi/faqs’s :http://www.mcgill.ca/fbi/faqs  fbi.budget@mcgill.ca

23. Other Highlights  PCard default FOAPAL - Tri-Agency funds will no longer be accepted as default funds - Requires an alternate default fund for all Pcards - Communications are going out and most successful to date  Picture Receipts -Change in procedure for Research Grants and Contracts only -Effective 15 November 2014, all expense claims submitted on research grants/contracts must include original receipts for reimbursement -Capturing pictures of receipts with an iPhone is not considered an acceptable substitute for original receipts when charging research grants and contracts

24. Questions for discussion  Can my unit increase its enrolment-driven budget by accepting more graduate students?  Are there resources available to fund teaching for new graduate programs?  What mechanisms in place for funding the development of new initiatives and programs?

25. Enrolment-Driven allocation 25 -Current allocations for FTE changes for regulated students: FacultyUgradMastersPhD Agric & Env Sc $3,500$6,000$11,000 Arts $2,400$4,000$7,500 CCE $2,400$3,600 Dentistry $9,000$6,000$11,000 Education $2,400$4,000$7,500 Engineering $3,000$5,000$11,000 Law $2,400$4,000$7,500 Management $2,400$3,600$7,500 Medical Residents $4,000 Medicine $3,500$6,000$11,000 MSE $3,000$4,000 Music $3,500$5,000$7,500 Relig. St. $2,400$4,000$7,500 Science $3,000$6,000$11,000

26. Questions for discussion  Unionization is increasing our costs for TAs and possibly lecturers, but our budgets are not increasing. What can we do?  My unit pays a number of course lecturers, and McGill’s hourly rates are not as competitive as some of our neighbours’. How can I best manage this situation?

27. Questions for discussion  Is budget-interpretation training offered to new chairs/directors?  What are chairs/directors expected to do when it comes to reviewing budget reports and statements?

28. Provincial Teaching Grant weights 28 Level Discipline123 123 Dentistry7.966.5910.69Humanities and Social Sciences 1.074.426.40 Veterinary Sciences9.739.4110.69Geography2.116.5910.69 Optometry5.376.5910.69Education1.612.296.40 Allied health2.326.5910.69Physical Education2.114.4210.69 Nursing1.772.2910.69Management1.072.296.40 Pharmacy1.412.2910.69Fine Arts2.934.426.40 Pure Sciences2.116.5910.69Cinema and Photography1.874.426.40 Math1.414.429.42Music3.304.426.40 Architecture and Urban Planning 1.874.426.40Languages and Litterature1.004.426.40 Engineering2.114.429.42Law1.414.426.40 Computer Science1.412.296.40Medicine4.076.5910.69 Agricultural Sciences5.059.419.42Medical Residents-3.36- A weight of 1 is worth $3,711 per FTE

29. Other Provincial allocations 29  Administrative Support Grant: $1,706 per FTE  Graduation Premiums: -$500 per Bachelors -$1,000 per Masters -$7,000 per PhD  Student Services Grant: $77 per FTE  About 2 dozen other specific envelopes; eg.: -Libraries -Space maintenance -Space rental -Hospital support -Disabled student support

30. Tuition Fees 30  Three models currently at play: -Regulated fees: -Students pay regulated fees (gov’t decides) -All supplements (over and above Quebec tuition) are returned to Ministry -University receives grants for students  Deregulated fees: -Discipline specific (only for Engineering, Law, Management and Science) -Only for 1 st cycle programs (e.g. undergrad) -Only for international students -University keeps tuition (University decides on level) -Gov’t doesn’t provide teaching grant (other grants are however maintained)  Self-funded fees: -Allowed only in very specific cases -University keeps tuition -Gov’t provides no grant