1. Financial Outlook 2013/14 Tom Wale - PRAS Helen Knight - Finance

2. What this presentation will cover  Budgeting process and timeline  JRAM allocations for 2013/14 – informed by:  HEFCE grant for 2013/14  Fee income for 2013/14  Services’ budgets for 2013/14  Infrastructure Charge allocations for 2013/14  Historic trends  The budget in a wider context Page 2S

3. Page 3S Planning and budgeting timeline  Autumn 2012  PRAC agreed new integrated planning and budgeting process  PRAC approved budget targets for services for 2013/14  PRAC approved initial budget targets for divisions for 2013/14 – transitional year  February  Service costs for 2013/14 agreed by PRAC and divisional 123 charge allocations for 2013/14calculated  March  HEFCE grant letter received and JRAM allocations for 2013/14 calculated  April  PRAC agreed final budget targets  May/June  Budgets and plans submitted  Budget review meetings  Planning review meetings  June  Final 2013/14 budget agreed

4. Integrated planning and budgeting process – new this year Page 4

5. What this has meant for you  Divisional 5 year plans submitted in May along with the budget, rather than in January.  Greater involvement of departments.  Financial projections worksheet in budget template.  Plans submitted in May will be used to produce divisional budget targets the following Autumn  Based on final 2013/14 budget  Known before Christmas  Updated in March / April for final JRAM, infrastructure and capital charges  This year – combined Q2 / budget template Page 5

6. JRAM Overview  The Joint Resource Allocation Method is the way of distributing funds across the collegiate University  Sums allocated across academic divisions, OUDCE & Colleges Page 6 /£m HEFCE Teaching (including Research students)45.8 Fees192.8 HEFCE Research Support118.0 Other elements0.4 Total allocation in JRAM357.0

7. HEFCE Grant Allocations 2013/14 All sums in £m 2012/13 (March 13) 2013/14 (March 13) Variance Sums Proportion Total181.9173.6-8.3-4.6% Teaching44.233.6-10.6-24.0% Research for PGRs13.713.90.21.3% Mainstream Research (not PGR) 115.9118.02.21.9% Other (Libraries, Museums, HEIF) 8.1 0.00.0% Page 7T  Teaching changes in line with move to new fee regime – offset by fees  2012/13 includes additional £778k as at March 2013 (not in JRAM 1213iya)  PGR volume up – bigger share of national pot  Mainstream research – Charities & Business QR increased volumes  rates down but bigger share of national pot

8. HEFCE Grant Allocations 2013/14 Teaching All sums in £m JRAM 1213 iya JRAM 1314 i Variance Sums Proportion Total Teaching Funding43.533.6-9.9-23% New Regime UG2.65.32.7104% Old Regime UG35.223.4-11.8-34% New Regime PGT1.11.40.327% Old Regime PGT0.50.1-0.4-80% Specific Funding Streams2.21.7-0.5-23% Allocated outside JRAM1.91.7-0.2-11% Page 8T  Additional HEFCE funding of £778k for 2012/13 not included in 1213 iya  Announced after JRAM 1213 iya  Divisional portion will be allocated as part of 2013/14 budgets (most +ve)

9. HEFCE Grant Allocations 2013/14 Research  PGR Funding updated for numbers (2011-12 HESA data)  Increase due to rise in numbers, subject weightings unchanged  Mainstream QR Funding unchanged  Charities & Business QR – rates down but volume up Page 9T All sums in £m JRAM 1213 iya JRAM 1314 i Variance Sums Proportion Research Students13.713.90.21.3% Mainstream QR77.3 0.00.0% Charities QR31.532.81.34.2% Business QR7.28.00.811.6% Total129.6132.02.21.7%

10. University & College Fees 2013/14 All sums in £m JRAM 1213 iya JRAM 1314 i Variance Sums Proportion Total170.7192.822.113% Undergraduate UK/EU49.965.115.231% Undergraduate Overseas21.823.31.57% Postgraduate UK/EU35.537.92.37% Postgraduate Overseas63.666.63.05% Page 10T  Forecast is based on this year’s students undertaking next year’s activity  e.g. year 2 students become new fee regime for 2013/14  Informed by work on Student Number Planning  Much of the increase is due to the transition to new fee regime on UG  But also changes to student numbers

11. Resource Levels  Based on FTEs  Must consider fees and other sources of funding (mainly HEFCE)  HEFCE funding split into five price groups according to activity  Price group D is classroom-based – no additional funding  Price group A is clinical medicine – highest levels of additional funding  UK/EU UG decreases in HEFCE funding more than offset by increases in fees  UK/EU PGT decreases not automatically balanced by HEFCE funding  Fees + other sources of student funding distributed via JRAM  Split of resources between departments & Colleges  Some targeted streams distributed outside JRAM Page 11T

12. Resource Levels UK/EU Undergraduate All sums in £ Old Regime 1213 iya 1314 i New Regime 1213 iya 1314 i HEFCE funding Band D2,9883,012379383 University Fee3,465 8,5008,688 Total Band D6,4536,4778,8799,071 Add’l HEFCE Funding Band B2,7462,7901,4731,488 Total Band B9,1999,26710,35210,559 Page 12T  New regime fee increase is a result of fee waivers being higher in year 1  2013/14 has year 1 and 2 students on new fee regime  Note differential between Band D and Band B is much reduced in new fee regime – but overall resource is increased for both  Amounts are before allocation between departments and Colleges

13. Change in JRAM Allocations for 2013/14 Comparison of 1314 i with 1213 iya All sums in £m MSDSSDMPLSHum OUDCE Colleges OtherTotal HEFCE T incl PGR-0.8-0.6-2.2-1.5-0.1-4.00.0-9.2 UG Fees1.41.33.72.60.07.70.016.8 PG Fees-0.63.41.00.60.30.60.05.3 Other T0.0-0.1-0.0-0.2-0.4-0.00.0-0.7 Total T & related0.03.92.61.5-0.24.30.012.2 QR Mainstream0.0-0.10.0 -0.1 QR Charity1.4-0.0-0.10.10.0 1.32.6 QR Business0.7-0.10.20.0 0.81.7 Other R0.0 -0.10.0-0.1 Total R & Related2.0-0.20.1 0.0-0.12.24.1 Total Funding2.13.72.71.6-0.24.22.216.3 2.4%6.1%3.6%4.3%-5.1%5.6%8.0%4.2% Page 13T

14. Change in JRAM Allocations for 2013/14 Comparison of 1314 i with 1213 i & 1213 iya Page 14T

15. Services budget 2013/14 Page 15H

16. Page 16T 123 Infrastructure charge for 2013/14 £m Services budget target118.7 Other costs charged via the 123 model but not in the services: e.g. insurance2.8 TOTAL 123 charge for 2013/14121.5  Total 123 charge for 2013/14 is £5.7m higher than the total for 2012/13  Although this has increased, the charge rate as a percentage of divisional income has not 2011/122012/132013/14 Total charge as % of divisional income21.2%20.9%20.2%

17. 123 Infrastructure charge for 2013/14 Page 17T £mMSDSSDMPLSHum OUDCE colleges Other TOTAL 2013/14-32.3-16.7-27.3-15.5-1.6-2.4-25.6-121.4 2012/13-29.7-16.2-26.2-14.8-1.6-2.3-25.0-115.8 difference-2.6-0.5-1.1-0.70.0-0.1-0.6-5.6

18. Page 18T Capital charge for 2013/14  Band weightings and costs are unchanged  Increase is due to increase in space £mMSDSSDMPLSHumOUDCETOTAL 2013/14-3.7-0.9-4.8-0.6-0.2-10.2 2012/13-3.2-0.9-4.4-0.6-0.2-9.3 difference-0.50.0-0.40.0 -0.9 Band 1Band 2Band 3Band 4Band 5Band 6 Weightings2.521.510.5 £ per sqm£95£76£57£38£19

19. Budget v Actuals – historic trends Page 19

20. Looking back at 2011/12  Budget - £22.5m  Actuals - £52.3m.  Difference £29.8m  £13.1m of this arose in the divisions and services – mainly Medical Sciences and Social Sciences.  £16.7m arose in Central Costs & Adjustments  Current indications are that the 2012/13 budget is much more realistic – Q2 forecast is in line with budget Page 20

21. Why has our position improved?  Higher fee income  More money from OUP  Increased investment income  Flat staffing levels – impact of the recruitment protocol  Low pay awards Page 21

22. Russell Group Surpluses / Deficits 2011/12 Page 22

23. Surplus/ Deficit as % of Income Page 23 Oxford 5.1%

24. Setting the budget 2013/14 Page 24 Note – figures include £2m transfer from Medical Sciences to Humanities

25. Why do we need to make a surplus?  To fund capital investment  New buildings  Maintenance of existing buildings  IT  Equipment funding  To fund restructuring activities  Staff development Page 25

26. Threats to future surpluses  OUP funding may reduce  Increased pay awards  Cost of maintaining existing estate  Expansion of estate size – ROQ, Medical Sciences  Reduce funding from Research Councils  Move towards EU and other research funders  Desire of surplus departments to invest for the future Page 26

27. EBITDA Projections Due to increase in staff costs, sustainability gap widens in later years Page 27

28. Page 28

29. Any questions? Page 29 Further information Tom Wale Head of Resource Allocation http://www.admin.ox.ac.uk/pras/resource/ thomas.wale@admin.ox.ac.uk (01865 2) 70067 Helen KnightFinancial Planner http://www.admin.ox.ac.uk/finance/processes/planning_reporting/ helen.knight@admin.ox.ac.ukhelen.knight@admin.ox.ac.uk (01865 6) 16151