2. 2   Institutional Support Expenditures divided by Total Operating Expense   According to the Legislative Budget Board: “provides an indicator of the proportion of operating budget being spent on administrative costs.”   Institutional Support Expenditures divided by Total Operating Expense   According to the Legislative Budget Board: “provides an indicator of the proportion of operating budget being spent on administrative costs.”

3. 3   Institutional Support is a functional category defined by NACUBO (National Association College & University Business Officers) used to allocate costs between higher education activities.

4. 4 Institutional Support includes:   Executive Management – President, VPs & their staff including operations related to planning & legal   Fiscal Operations – should not include bad debt expense   General Administration– HR, Purchasing, etc.   Administrative Information Technology   Public Relations/Development Institutional Support includes:   Executive Management – President, VPs & their staff including operations related to planning & legal   Fiscal Operations – should not include bad debt expense   General Administration– HR, Purchasing, etc.   Administrative Information Technology   Public Relations/Development

5. 5  Instruction – costs  Instruction – costs directly related to instructional mission (includes department chairs).  Academic Support  Academic Support – includes dean’s offices & library, museums, academic computing & advising.  Research  Research– includes expenses for activities specifically organized to produce research whether internal or externally funded.  Public Service  Public Service – non instructional activities to external groups. Includes conferences, institutes, consulting & general advisory services.  Instruction – costs  Instruction – costs directly related to instructional mission (includes department chairs).  Academic Support  Academic Support – includes dean’s offices & library, museums, academic computing & advising.  Research  Research– includes expenses for activities specifically organized to produce research whether internal or externally funded.  Public Service  Public Service – non instructional activities to external groups. Includes conferences, institutes, consulting & general advisory services.

6. 6  Student Services –  Student Services – costs that have the primary purpose of contributing to students’ emotional and physical well being and intellectual, cultural & social development (outside the context of the formal instructional program.) Includes admissions & records, student IT, student health, counseling & career guidance, financial aid administration. Does not include intercollegiate athletics programs as those must be identified as an Auxiliary Enterprise by Texas law.  Student Services –  Student Services – costs that have the primary purpose of contributing to students’ emotional and physical well being and intellectual, cultural & social development (outside the context of the formal instructional program.) Includes admissions & records, student IT, student health, counseling & career guidance, financial aid administration. Does not include intercollegiate athletics programs as those must be identified as an Auxiliary Enterprise by Texas law.

7. 7  Operation & Maintenance of Plant – includes  Operation & Maintenance of Plant – includes administrative costs, building maintenance, custodial, utilities, landscape / grounds, repair & renovation, security & safety (police, disaster preparedness, environmental health & safety, etc.), logistical services (central receiving, stores) and facilities related IT.  Scholarships & Fellowships  Auxiliary Enterprises– self supporting entities  Auxiliary Enterprises– self supporting entities to furnish goods or services to students, faculty, staff or incidentally to the general public; includes all related administrative expenses.  Operation & Maintenance of Plant – includes  Operation & Maintenance of Plant – includes administrative costs, building maintenance, custodial, utilities, landscape / grounds, repair & renovation, security & safety (police, disaster preparedness, environmental health & safety, etc.), logistical services (central receiving, stores) and facilities related IT.  Scholarships & Fellowships  Auxiliary Enterprises– self supporting entities  Auxiliary Enterprises– self supporting entities to furnish goods or services to students, faculty, staff or incidentally to the general public; includes all related administrative expenses.

8. Institutional Support Expenditures Total Operating Expense (FY09 Annual Financial Report) $40,437,657 ____________ = 11.24% $363,087,491

9. 9 UTSA 5 Year Administrative Cost Trend AFR 2005AFR 2006AFR 2007AFR 2008AFR 2009 28,925,000 32,996,000 30,657,000 31,505,000 40,816,000 256,385,000277,752,000298,937,000328,230,000363,087,000 11.3% 11.9% 10.3% 11.2% FY96 (10.4%) FY97 (11.6%) FY03 (11.2%) FY04 (11.7%)

10. 10 Comparative Administrative Cost Trends AFR 2006AFR 2007AFR 2008AFR 2009 UTSA11.9%10.3%11.2% UT Dallas 9.6 8.5 9.8 9.1 UTEP 8.6 7.5 7.7 7.5 (est) UT Pan Am 8.2 9.7 9.610.9 UT Arlington 8.3 8.7 8.0DNR UT Tyler15.413.212.7DNR UT Austin 6.1 5.7 5.1DNR A small institution will usually have a higher institutional support percent of program expense than a large comprehensive institution.

11. 11 5 Yr Comparison by Program UTSAFY05FY06FY07FY08FY095 Yr Chg Instruction 34%33% 30%-4% Research 7%9%8% 10% 3% Academic Support 7%8%9% 10%-1% Public Service 6% 5% 2% Student Services 8% 9%7%-1% Institutional Support 11%12%10% 11%0% O&M of Plant 9%10% 12%10%1% Scholarships 9%7%8% -1% Depreciation 8%7%8% 9%1%

12. 12  Higher education is under scrutiny for spending and considered to be inefficient.  Governor Perry has ordered a review of higher- education spending  executive order calls for a comprehensive review of cost- efficiency in the state's public higher-education system. The order lists a dozen areas to be considered, including faculty workload, basing state spending on student course-completion rates, and consolidating or eliminating academic programs. executive order executive order  To demonstrate a goal of lowering administrative costs is important when we are asking students to increase tuition rates over the next 2 years.  Higher education is under scrutiny for spending and considered to be inefficient.  Governor Perry has ordered a review of higher- education spending  executive order calls for a comprehensive review of cost- efficiency in the state's public higher-education system. The order lists a dozen areas to be considered, including faculty workload, basing state spending on student course-completion rates, and consolidating or eliminating academic programs. executive order executive order  To demonstrate a goal of lowering administrative costs is important when we are asking students to increase tuition rates over the next 2 years.

13. 13 UTSA’s LAR performance goal was 10%. We exceeded that by 1.2% What can we do to lower our ACR?   Assure we are using the account that correctly represents the functional NACUBO program for ALL expenditures. UTSA’s LAR performance goal was 10%. We exceeded that by 1.2% What can we do to lower our ACR?   Assure we are using the account that correctly represents the functional NACUBO program for ALL expenditures.

14. 14   Fill vacant faculty positions & improve the ratio of T/TT to NTT   Allocate administrative costs to Auxiliary Enterprises   Increase extramural funding – sponsored programs & gifts   Fill vacant faculty positions & improve the ratio of T/TT to NTT   Allocate administrative costs to Auxiliary Enterprises   Increase extramural funding – sponsored programs & gifts

16. 16  http://governor.state.tx.us/news/executiv e-order/13573/  Governor Perry’s Executive Order RP73 on Higher Education Cost Efficiency http://governor.state.tx.us/news/executiv e-order/13573/ http://governor.state.tx.us/news/executiv e-order/13573/ http://governor.state.tx.us/news/executiv e-order/13573/  Directs Coordinating Board to review and offer recommendations for cost efficiencies in higher education  http://governor.state.tx.us/news/executiv e-order/13573/  Governor Perry’s Executive Order RP73 on Higher Education Cost Efficiency http://governor.state.tx.us/news/executiv e-order/13573/ http://governor.state.tx.us/news/executiv e-order/13573/ http://governor.state.tx.us/news/executiv e-order/13573/  Directs Coordinating Board to review and offer recommendations for cost efficiencies in higher education

17. 17   Included in the review:   State funding based on student course completion   Restructuring financial aid to improve efficiencies & to provide aid to students who work hard to academically prepare for college   Academic program consolidation & elimination of programs that produce few graduates   Included in the review:   State funding based on student course completion   Restructuring financial aid to improve efficiencies & to provide aid to students who work hard to academically prepare for college   Academic program consolidation & elimination of programs that produce few graduates

18. 18   Included in the review, continued:   Faculty Workload   Articulation agreements between 2 and 4 yr institutions   Distance Learning   Alternatives to creating new campuses   Course redesign to improve quality & reduce instructional costs for more courses   Included in the review, continued:   Faculty Workload   Articulation agreements between 2 and 4 yr institutions   Distance Learning   Alternatives to creating new campuses   Course redesign to improve quality & reduce instructional costs for more courses

19. 19   Included in the review, continued:   Cooperative, cross-system contracting & purchasing   Space utilization   Energy use   Cost of instructional materials   Review of cost efficiencies in other states & nations   Included in the review, continued:   Cooperative, cross-system contracting & purchasing   Space utilization   Energy use   Cost of instructional materials   Review of cost efficiencies in other states & nations

20. 20   Executive Vice Chancellor Scott Kelley for Business Affairs at UT System is the sole UT Representative: http://www.utsystem.edu/BUS/vice_chancellor.htm http://www.utsystem.edu/BUS/vice_chancellor.htm  Report to be submitted to Governor, Legislature & institutions by November 1, 2010  Assumed to supplant HB4149 report: http://www.legis.state.tx.us/tlodocs/81R/senateamend /pdf/HB04149A.pdf http://www.legis.state.tx.us/tlodocs/81R/senateamend /pdf/HB04149A.pdf http://www.legis.state.tx.us/tlodocs/81R/senateamend /pdf/HB04149A.pdf   Executive Vice Chancellor Scott Kelley for Business Affairs at UT System is the sole UT Representative: http://www.utsystem.edu/BUS/vice_chancellor.htm http://www.utsystem.edu/BUS/vice_chancellor.htm  Report to be submitted to Governor, Legislature & institutions by November 1, 2010  Assumed to supplant HB4149 report: http://www.legis.state.tx.us/tlodocs/81R/senateamend /pdf/HB04149A.pdf http://www.legis.state.tx.us/tlodocs/81R/senateamend /pdf/HB04149A.pdf http://www.legis.state.tx.us/tlodocs/81R/senateamend /pdf/HB04149A.pdf

21. 21  Continued scrutiny of tuition increases  Formula Advisory Committee work  Interim House & Senate committee studies  2010 Elections & Consequences  Continued scrutiny of tuition increases  Formula Advisory Committee work  Interim House & Senate committee studies  2010 Elections & Consequences

22. 22  State economic & budget condition  Stimulus funds not available ($338M for Higher Ed) For UTSA this means: $3.53M Formula Funding ($1.76M – 1 yr impact) $1.87M Higher Ed Incentive Funds $4M SALSI $0.5M P-16 Council  Structural deficit continues to grow ($12-15B)  Sales Tax Receipts down double digits (-12.8% Sept 09 as compared to Sept 08)  State economic & budget condition  Stimulus funds not available ($338M for Higher Ed) For UTSA this means: $3.53M Formula Funding ($1.76M – 1 yr impact) $1.87M Higher Ed Incentive Funds $4M SALSI $0.5M P-16 Council  Structural deficit continues to grow ($12-15B)  Sales Tax Receipts down double digits (-12.8% Sept 09 as compared to Sept 08)

23. 23  Rainy Day fund  May have $5B against the projected $12-15B deficit?  Repeat of 2003 or worse?  Some discussion about a mid biennium budget cut  Expenditure reductions of 10%?  Impacts to Budget Planning  Rainy Day fund  May have $5B against the projected $12-15B deficit?  Repeat of 2003 or worse?  Some discussion about a mid biennium budget cut  Expenditure reductions of 10%?  Impacts to Budget Planning

24. 24  Higher Education Funding Needs  Maintain formula funding (backed with ARRA money in the prior biennium)  TRBs or some form of capital construction support  Funding for UT Austin  Continuation of National Research University Initiative  Higher Education Funding Needs  Maintain formula funding (backed with ARRA money in the prior biennium)  TRBs or some form of capital construction support  Funding for UT Austin  Continuation of National Research University Initiative

26. 26 The Chancellor, under the direction of the Board of Regents, is encouraging each President to redirect resources towards:   High priority mission activities   Strategic competitive investments; and   Reserves in preparation for potential future financial shortfalls The Chancellor, under the direction of the Board of Regents, is encouraging each President to redirect resources towards:   High priority mission activities   Strategic competitive investments; and   Reserves in preparation for potential future financial shortfalls

27. 27 1. 1.Consider Scope and Mission – less effective activities may need to be reduced or eliminated 2. 2.Understand the Rationale – reasons should be soundly developed and communicated widely 3. 3.Transparency – decisions and actions must be clear and communicated widely 4. 4.Examine the entire budget rather than budgeting at the margin 1. 1.Consider Scope and Mission – less effective activities may need to be reduced or eliminated 2. 2.Understand the Rationale – reasons should be soundly developed and communicated widely 3. 3.Transparency – decisions and actions must be clear and communicated widely 4. 4.Examine the entire budget rather than budgeting at the margin

28. 28 5. Focus – separate the budget not available for redistribution; while resources from other areas of the budget may not be redistributed, any subsidies to those activities should be identified and discussed. 6. Prioritization 5. Focus – separate the budget not available for redistribution; while resources from other areas of the budget may not be redistributed, any subsidies to those activities should be identified and discussed. 6. Prioritization

29. 29 7. Revenue – new revenue opportunities are less predictable (and won’t necessarily result in additional discretionary income) 8. Tracking & Measurement 9. External Benchmarks 10. Flexibility 11. Decision Level 7. Revenue – new revenue opportunities are less predictable (and won’t necessarily result in additional discretionary income) 8. Tracking & Measurement 9. External Benchmarks 10. Flexibility 11. Decision Level

30. 30 12. Real v. Theoretical Reallocations – make identification of reallocation strategies reality versus an exercise. 13. Administrative & Academic Overhead – thorough review of non-mission specific activities & expenditures. Targeted reduction in admin OH which do not impede critical mission activities should be identified & communicated. 12. Real v. Theoretical Reallocations – make identification of reallocation strategies reality versus an exercise. 13. Administrative & Academic Overhead – thorough review of non-mission specific activities & expenditures. Targeted reduction in admin OH which do not impede critical mission activities should be identified & communicated.

31. 31 14. Efficiency & Productivity 15. Reallocation Targets – customized to each unit and not across the board; unit should understand the need and amount required; unit should benefit in some way from the reallocation. 16. Multi-year Plan 14. Efficiency & Productivity 15. Reallocation Targets – customized to each unit and not across the board; unit should understand the need and amount required; unit should benefit in some way from the reallocation. 16. Multi-year Plan