1. Budgeting at Penn and within Vice Provost for University Life (VPUL) My View: William Turner June, 2012 1

2. Learning Outcomes As a result of attending “Budgeting at Penn and within in the VPUL” session, participants will be able; – to define what a Responsibility Center is – to state VPUL’s primary source of funding – to define Responsibility Center Management – to list principals of Responsibility Center Management – to identify key decision makers who have a role in determining VPUL funding – to state the budgeting technique used by the VPUL and articulate the disadvantages 2

3. Responsibility Centers An organizational unit that is expected to develop and adhere to a balanced budget. – Revenue Generating: Schools, Resource Centers and Business Services – Non-Revenue Generating: Administrative Service Centers VPUL is a diversified hybrid Responsibility Center – VPUL Generates Direct Revenues from Services – VPUL receives Federally Sponsored Program awards – Fund Raising (term gifts; endowments) – Responsibility Center Management (RCM) funding VPUL receives Program Subvention VPUL receives allocation of University General Fee 3

4. Vice Provost for University Life Three Responsibility Center’s Responsibility Center Expenditures Net of Expense Credits Less: Direct Revenues and Resource Transfers Less: Funding from General FeeNet Budget Student Activities (VPUL84) $4,946,000$1,583,000$3,363,000$0 Student Services (VPUL85) $45,858,000$22,893,000$22,965,000$0 College Houses and Academic Services (CHAS86) $6,725,000$3,449,000$3,276,000$0 Totals$57,529,000$27,925,000$29,604,000$0 Very dependent upon University General Fee: 51.5% 4

5. Vice Provost for University Life: Student Services (VPUL85) FY2012 Operating Budget Expenditures by Fund aggregation (Net of Expense Credits) $45,858,000 General Purpose Funds: Ordinary day-to-day restricted activity. You are most familiar with these funds. General fee departmental budgets. Special Purpose Funds: Unrestricted funds that are managed and accounted for separately. Accumulate cash balances. Examples; Fraternity and Sorority Housing System. Endowment Funds: Records all endowment income and expenditures which fulfill donor imposed limitations. Purpose as well as time restrictions. Gift Funds: Funds that have been purpose restricted in some way as to their use by donors. Sponsored Program Funds: Grant and contracts that have been awarded to VPUL. Mostly training grants. 5

6. Vice Provost for University Life: Student Services (VPUL85) FY2012 Revenues and Expenditures Student Services (VPUL85) FY 2012 Revenues by Source Student Services (VPUL85) FY2012 Expenditures by Type (Net of Exp. Cred.) 6

7. Budgeting at Penn Responsibility Center Management (RCM) Delivers Resources to the VPUL Decentralized financial management model that facilitates internal budgeting and financial reporting. – Principals Attempts to align academic authority with financial accountability. Schools and Centers take ownership of their revenues and are responsible for paying for all their direct and indirect costs. Schools and Centers must maintain adequate reserves. RCM retains some amount of Centralization – to implement University’s Penn Compact. – Senior decision makers determine adequate funding for shared services and VPUL-Student Services. 7

8. Responsibility Center Management (RCM) Key Senior Decision Makers – Budget Steering Committee President Provost Executive Vice President Vice President for Finance and Treasurer Vice President for Budget and Management Analysis Vice President and Chief of Staff 8

9. Responsibility Center Management (RCM) Key Centrally-Determined University Budget Planning Parameters General Fee Growth Rates (subject to Trustee approval) The Endowment Spending Rule (subject to Trustee approval) The Employee Benefits Rate (subject to DHHS approval) Salary Pool Growth for Faculty and Staff (in consultation with the Deans) Growth Rates for Allocated Cost Charges Base Funding Growth for Administrative Centers (Funding from Allocated Costs and General Fee) – 2% incremental increases year-over-year on program base 9

10. Budgeting in the VPUL Ideal 10 The University Strategic Plan The Penn Compact VPUL Priorities VPUL Departmental Budgets Consolidate to the VPUL Budget Students to reach their fullest potential Informs drives enables VPUL Departmental Outcomes drives

11. Budgeting in the VPUL Is Turner Killing VPUL Strategy? Quota budgeting allocates resources to departments – Challenges: Lessens capacity for decision making from VPUL Central administration “New” budgets are based entirely on the “Old” one Diminishes flexibility to react to changes in divisional circumstances Deceases ability to move finite resources to meet evidenced divisional priorities – Advantages: Easy to implement Departments know their total budget at an early date 11

12. The Role of VPUL Finance Manage the budget process Consult with Stakeholders and Communicate Support Departments as they develop their budget submissions Analyze individual department budget submissions and advise the Vice Provost Consolidate the VPUL Budget Present to the Office of the Provost 12

13. Bill Turner’s Role As I See It Be a partner with departments not an enforcer Focus VPUL leadership on critical resource issues Take a longer view: look at budgets 5 years out and make decisions now that just don’t meet current needs Engage stakeholders in solving problems that face us Respect the way we have always done things but know when to change it. 13

14. Challenges Communication Challenges: How do we get VPUL’s story to key decision makers? – What is our story (i.e.. how we make a difference in students ability to reach their fullest potential; how we support the successes of the Penn Compact – How successes of the Penn Compact impact VPUL services ( Changing circumstances) Engaging stakeholders on knowing when to change 14

15. Knowing When To Change Any thoughts on how to affect this? 15