1. TRAC – the Transparent Approach to Costing Finance Services

2. TRAC basics TRAC is a government initiated “activity based costing” methodology to cost teaching, research and other income-generating university activities This requires the answer to two big questions: – How do academics spend their time? – How do we attribute overheads to activities? TRAC is based on economic cost, not accounting cost TRAC data is considered to be important information in relation to financial sustainability by the government

3. TRAC perceptions HE FUNDERS TRAC provides accountability for public money, assurance around regularity of expenditure, a tool for informing teaching funding, and a consistent approach for costing research projects and benchmarking costs between institutions PROFESSOR PERFECT TRAC lacks credibility, is intrusive, and is an unnecessary burden

4. TRAC process Cost of Teaching Cost of Research Cost of Other Activities TAS Students StaffSpace Total Costs Direct Costs Staffing Indirect Costs Source: Financial Statements + TRAC economic cost adjustments SWARM/ TAS Staff SpaceStudents

5. TRAC Outputs Cost of Teaching Cost of Research Cost of Other Activities TAS Students Space Full Economic Cost Rates for Research Grants (=funding) Subject – FACTS Average Cost of Teaching Surplus/ (Deficit) Teaching income Research income Other income

6. TRAC outcomes (2014/15) (Results exclude non-repeat RDEC income £5.8m (Research) and UPP income £3m (Other) Conclusion > high margin activity funds low margin activity

7. TRAC key facts Exeter and the sector are in economic deficit Research funding doesn’t cover it costs Teaching international students (NPFT) more than covers its costs Research needs to be balanced with teaching to maintain financial sustainability

8. Let’s look at Research… If Exeter’s cost recovery on our current research activity was at 79.0%, the level of our RG peers, rather than the 66.6% we achieve, we’d have extra income of over £18m per year! ie (79.0% - 66.6%) x £150.0m = £18.6m

9. Research key facts We spend more of our own money on PGR students than our peers QR income is low in relation to current research activity levels We report high levels of own-funded research activity

10. TRAC key messages TRAC is important to funders and government TRAC data raises questions about the sustainability of research Exeter needs to balance poorly funded research activity with..high margin activity to pay for it Exeter spends more of its own money on own-funded research..and PGR supervision – this has to be paid for by earning high..margin income streams

11. Want to know more? Julia Hastings is the University’s Strategic Costing Accountant j.hastings@exeter.ac.uk The British Universities Finance Directors group (BUFDG) have published a handy guide to TRAC There is also a guide for Senior Managers and Governing Body Members published by the TRAC Development Group