Budget Kickoff Budget Development for Central Service & Auxiliary Units November 21, 2014

Budget Kickoff Meeting Central Service and Auxiliary Providers Meeting Objectives Open the lines of communication Status updated on the budget translation into the University Financial Model Budget Assumptions Highlights of What’s New this year Key Calendar/Due Dates Budget Portal Budget Meetings

Budget Kickoff Meeting Central Service and Auxiliary Providers Communication Today’s meeting is a starting point in an on-going dialogue. View this as an opportunity to receive answers to some of your questions, and exchange ideas and thoughts. Support each other through this period of change recognizing that we are in this together. Remember -- the next two years (2015 and 2016) will be budget neutral (a.k.a. hold harmless) to provide an opportunity to adapt and fully transition to the University’s Financial Model (UFM).

Budget Kickoff Meeting Status of the Budget Translation Starting point–the board approved budget (6/23/2014) –Approved new funding and compensation increases were processed as installments in the Integrated System and translated to UFM. –Revenue sources traditionally managed at the institutional level were translated to Activity Centers including: Specifically designated General Fund Appropriation Revenues G&C and F&A Revenues Endowment Distribution and Administrative Fee Revenues Expendable Gifts and Gifts from Affiliated Foundation Revenues Use of Current Year Cash Balances –New projects and awards were created to align budgeted revenue and expenditures to the appropriate Activity Centers.

Budget Kickoff Meeting Status of the Budget Translation (continued) –New projects and awards, as needed, were created to align budgeted revenue and expenditures to the appropriate Activity Centers. –Items traditionally reserved centrally were shifted to the appropriate Activity Centers including: »Weather-related and Utility reserves »Debt Service obligations »Financial Aid reserves –Adjustments to organizational hierarchies and structures were modified as were Activity Center mappings to support appropriate reporting structures in UFM. –Logic relating to the alignment and treatment of G&A recoveries and Central Assessments was formalized within the model. –Impact Analysis for the implementation of changes related to processing F&A and the Endowment Administrative Fee – confirmed that Central Service Providers will be budget neutral as part of this transition.

6 Highlights of What’s New this Year Timing -Early Board Approval – A high level version of the budget will be presented to the board in April 2015 rather than June Traditionally, administrative areas and schools adhered to the same budget calendar for developing budget materials. For FY , with the implementation UFM, CSPs will be asked to submit high level estimates based on: –Preliminary Assumptions approved by the Finance Committee Chair as of November 7, 2014, and –Any impact of any Service Level changes that would result in an increase in base expenses beyond the scope of expense increases outlined in the preliminary assumptions

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From Model 8

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State Cut 10

11 Highlights of What’s New this Year [continued] Budget Neutrality As was the case for F14-15, the UFM includes a provision for FY15-16 to be budget-neutral. This terminology replaces the term “hold harmless,” to acknowledge events that occur outside the scope of the financial model, such as state mandated appropriation reductions, which prevent the institution from guaranteeing a “hold harmless” status for all schools and units. T&F Fee Approval The current expectation is that both Graduate and Undergraduate Tuition & Fees will be presented at the February board meeting. A new T&F form has been developed through collaboration of the AVP of Finance special project team responsible for developing Multi-year tuition modeling, Student Financial Services, and the Provost’s office.

12 Highlights of What’s New this Year [continued] Allocations -The only areas that should budget G&A allocations are Auxiliaries. -Central assessments in the schools should NOT be budgeted for since this will be a product of the model. -ONLY budget direct expenditures. -The model’s allocation methodology includes: –Allocations to both CSP’s and School are at the Activity Center level. –The occupant of a space will pay for the space. –Service level modifications and related costs will be reviewed by executive management with feedback from schools.

13 Highlights of What’s New this Year [continued] CSP Early Estimate of Cost Changes Schools and CSPs are responsible for budgeting ONLY direct costs; however; schools will need an early indication of changes impacting their allocable costs for planning discussions. CSPs will be required to provide estimates earlier in the process to facilitate approval of requested changes and any service level modifications –Template for direct costs –Baseline is the translated budget –UFM Discoverer Reports: Actual reports Budget reports - under development

14 Highlights of What’s New this Year [continued] CSP of Cost Changes [continued] The expectation is that CSPs will develop their costs at whatever level of granularity that this meaningful to them and provide at a minimum, summarized estimates in an excel template - currently under development

15 Incremental State Budget Requests For , UVA requested the following budget amendments to provide incremental funding to enable the university to further achieve the goals of the Higher Education Opportunity Act of 2011 (HEOA): $1,411,000 – Enrollment growth $5,400,000 – Funding for New and Replacement Start- up Packages (STEM), via an allocation from the Equipment Trust Fund (ETF)

16 Revenue Assumptions Tuition and Fees –The proposal for base undergraduate tuition increase The Finance Subcommittee on Affordable Excellence and administration are developing a comprehensive undergraduate tuition and financial aid strategy for the February 2015 Board –Fees Units will submit fee proposals Revised Template Assumptions: –20,500 regular session and 5,600 special session fee-paying students –Service Levels Review of proposed fees and rates will consider: –Impact to existing students – cost and benefit –Impact to AccessUVa –How proceeds will be deployed in support of overall budget objectives

17 Revenue Assumptions State General Funds –Assumes no growth and the continuation of the $8.16 million annual reduced appropriations, as expected in the Governor’s Budget to be released December 2014 Philanthropy –Schools should work with development officers

18 Revenue Assumptions Research – Grants and Contracts and F&A –Expect less than 1% increase in base –Current federal F&A rate is 58%, for new grants as of 7/1/12 Endowment Distribution – distribution will be 4.28% of 6/30/14 market value –First half to be distributed in July, second half to be distributed in January Endowment Fee –0.5% of June 30 th market value each year

19 Expenditure Assumptions Continuation of the $8.16M state budget reduction –All units will be expected to provide prioritized plans of both a 1% and 3% reduction of their state E&G (SG), state sales and services (SS) and state restricted (non-financial aid) funding sources. Organizational Excellence Cornerstone Plan

20 Expenditure Assumptions (continued) Compensation –Anticipated BOV-authorized salary increases for July 2015 for both T&R faculty and University staff: T&R faculty – The salary base is projected to increase by 4.75%. The timing and level of faculty salary increases is subject to change by the 2015 General Assembly or the Board of Visitors All other faculty and University staff – It is projected that the Board of Visitors will authorize a 3.0 percent merit increase –Classified staff salary increases require state authorization. For planning purposes, the University assumes no increase for –As planned for the last several years, all schools and units will budget 27 (rather than 26) bi-weekly payroll periods for

21 Fringe Benefits – All units should use the Projected Rates from the table below: Expenditure Assumptions Approved FB Rates Projected FB Rates Full-time faculty and university staff – executive % Full-time classified staff and university staff – managerial & professional and operational & administrative 36.5%38.5% Part-time faculty and staff with benefits (20-31 hrs)27.7%27.8% Part-time faculty and staff without benefits and wage6.0%7.0%

FY15-16 Budget Calendar November 22 Budget assumptions approved by Finance Committee chair for planning Budget kickoff meetings for CSP’s and auxiliary units Preliminary budget instructions and budget assumptions available to units New Tuition & Fee form released to units

FY15-16 Budget Calendar December 23 New budget template for CSP’s and auxiliary units released to units FY14-15 budget translation to UFM completed; budget data available to users via Hyperion and Discoverer reports CSP’s develop estimates of sources and uses based on the new template format

FY15-16 Budget Calendar January 24 Units submit T&F requests by January 5 th FY15-16 budget submission template due from CSP’s including auxiliary operations with fees and rates requiring BOV action Senior Leadership review CSP’s proposed costs and service level agreements; make recommendation and approval –CSP’s revise budget submissions, based on approvals –UBO summarizes approved budgets in UFM

FY15-16 Budget Calendar January 25 UBO watches developments in state budget UBO provides updates as needed on state budget actions impacting assumptions University leadership consulted on tuition proposal requests CSP costs allocated through UFM and shared with schools and special academic/public service entities

FY15-16 Budget Calendar February 26 BOV approves all tuition and fees, housing and dining rates Provost holds budget meetings with schools Units finalize budget submission as needed and submit all budget forms and templates

FY15-16 Budget Calendar March 27 Proposed budget materials (Academic Division level sources and uses format) sent to BOV for review and approval at April BOV meeting UBO works with units as needed to finalize detailed budget materials that will be approved at the April BOV meeting

FY15-16 Budget Calendar April 28 BOV approval of high-level FY15-16 budget UBO communicates BOV approval of budget to units

FY15-16 Budget Calendar May- June July 29 UBO coordinates with units for final detailed budgets needed in preparation for the July 1 st upload to the integrated system UBO loads approved budgets into the IS

30 Budget Portal Review No significant changes to portal structure this year Forms are being modified based on input from a number of stakeholders and based on the impact of UFM Prior submissions are available in each MBU folder

31 Accessing the Budget Portal Accessible from Click on Budget Portal

32 Accessing the Budget Portal Click here to access the portal You will be prompted for a User Name and Password. Enter your ESERVICES userid and password. [abc9x or eservices\abc9x] You can adjust your computer’s settings to bypass this prompt in the future (see UBO’s website or Budget Portal User’s Guide for instructions).

33 Budget Portal Homepage

34 All budget forms (Budget Narrative, T&F Increase Request Form, pre-populated Planned Expenditures, IS Upload Template, Capital Reserve, and ARIP), as well as previous years’ budget submissions Standard materials prepared for school/VP budget meetings with the Provost and COO Annual budget instructions, planned expenditures instructions, portal user’s guide, UVA Budget Developer responsibility guide Frequently Asked Questions List of preparers and reviewers by MBU (i.e., who has access to your MBU Folder) Calendar of budget development dates Budget Portal Navigation Bar

35 Submission Requirements Central Service Unit Budget Tool (under development) Budget Narrative (format under discussion; may be modified or eliminated) Tuition and Fee Increase Requests Integrated System Budget Detail Entry Capital Reserve Projections Annual Renovation and Infrastructure Projects (ARIP) Major Capital Projects Plan Update

36 UBO Contact Information University Budget Office – – –Who Do I Contact? (see Reference Documents library in portal) Chip German, Interim AVP Budget/Financial Planning, rfg5h, Jen Hale, Financial Analyst, Budgeting & Managerial Reporting, jnh3h, Keith Carter, Senior Budget Analyst, kac9r, Melissa Clarke, Associate Budget Director, mfc5g, Richard Gatlin, Senior Capital Budget Analyst, rg5h, Donna Jennings, Budget Manager, dmj2nk, Tracy Plunkett, Budget Manager, tmp3a, Judy Rowe, Budget Manager, jwr7e, Bev Smart, Capital Budgets & Systems Manager, bsd4u, Disha Venkatesan, Budget/ Finance Special Projects Lead, dsv4sb, Eileen Young, Office Coordinator, epy4n,