1. FY12 Spending Plan Process Finance and Administration Advisory Group January 18, 2012

2. Status of FY12 Budget 2 8/8/11: Chancellor announced final budget decisions 8/31/11: OBFP uploaded adjusted base budgets excluding any approved spending cuts from 8% reductions scenarios into PeopleSoft (FAST has list of reductions) 9/16/11: OBFP uploaded carry-forwards for ESS and Gifts into PeopleSoft Next Step: Spending plans Loading New Strategic Amounts into FAST & PeopleSoft Loading of all other unrestricted carry forwards into FAST & PeopleSoft Movement of State Supported Salaries of Fund 11000 onto other funding sources

3. Why Spending Plans? 3 Spending plans are mechanisms for forecasting spending for our campus. The ability to forecast is especially important during turbulent financial times. We begin the budget process many months in advance of start of fiscal year, so we need to update our FY12 spending assumptions based on current information. We need an accurate projection of carry-forward spending. Spending plans are also accountability tool to help ensure that units have specific plans to live within their FY12 allocations. Living within our expense budgets will be particularly important in FY12. Many departments budget at high-level, and we need to confirm that they have feasible, detailed plans to live within their FY12 allocations.

4. Strategy for Balancing the FY12 Budget 4 Our FY12 budget-balancing strategy that relies on both new revenue and expense reductions/reallocations.

5. Key Components of FY12 Budget Strategy Involve Managing Expenses 5 Moving $4.4M of expenses to trust funds. Doing so in effect asks departments to absorb $4.4M of expenses within their base budgets. This is long-term change. Will continue to look at: Recent historical spending versus budget by major budget unit Trust funds with growing fund balances – capable of sustaining additional expenses long term. All-funds budgeting - Similar to UMass Amherst & Worcester 1 st step is to consolidate expenses to CTF 2 nd step is to move $4.4M of trust fund revenue to CTF 3 rd Step possible implementation of the General Operating Fund as currently used on the Amherst campus Must achieve $3M savings target from vacancy factor Departments cannot use savings from vacancies to fund other positions or for other, non-personnel purposes.

6. Key Points about FY12 Spending Plan Process 6 We continue to manage the spending plan process through VCs, with meeting(s) with each VC and business staff to discuss: FY12 first-quarter spending FY12 base budget Opportunities for absorbing expense increases into base budget Approved cuts from 8% reduction scenarios Approved new strategic resources, including recommendations of Growth Planning Committee. All-funds process: Spending plans cover all unrestricted funds. At level of major budget units (e.g., colleges for Academic Affairs, could be departments in other areas). At subsidiary code level; account-code level for some departments..

7. Proposal to Move Salaries off of State Funds Permanently Identify the issue: The State Appropriation is less than the State Projected Payroll Current State Appropriation $69.1 million Estimated State Payroll $87.6 million State Payroll to Move off State $18.5 million Places to move excess State Salaries to: Tuition Retention Available $ 5.7 million Remaining Salaries to CTF$12.8 million Moving the salaries to CTF does not solve the overall problem There is still a $12.8 million budget gap $2.5 million will be funded from reserve $2.0 - $3.0 million will be funded from vacancy factor savings $4.0 million will be funded from absorption of growth into base budgets FY12 current revenue 7

8. Proposal to Move Salaries off of State Funds Permanently Decision on who to move from State funds: We typically try and have union (unit) positions on State Funds With the possibility of State funding future union pay raises Chose non academic areas before academic areas Review of State Payroll: Approximately 1,344 benefitted employees are paid from State funds The Total Estimated State Payroll is $87,575,000 Paid thru 1-06-12 $44,567,000 Encumbrance @ 1-06-12$43,008,000 Total Estimated State Payroll$87,575,000

9. Proposal to Move Salaries off of State Funds Permanently Proposal: Move all Non-Unit Salaries Approximately 184 people for $17.1 million off State 127 people for $12.8 Million would move to CTF including: –All Non Academic Non Units –The Provost Office Non Units –The Dean’s Offices Non Units –Most Centers & Institutes Non Units 53 people for $4.3 Million would move to Tuition Retention including: –A few Centers & Institutes Non Units –All other Academic Non Units Some Unit people from Academic areas for $1.4 million would move to Tuition Retention

10. Preparation for FY13 Budget Process 10 Will also begin working on more long-term financial planning issues discussed with Vice Chancellors budget workgroup and with Implementation Design Team. Possible topics range from cell phone policy to support staffing to improving administrative processes. Not sure of process yet, but may seek volunteers from F&A to participate.