FY12 Spending Plan Process

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

2. Status of FY12 Budget • 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? • 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 • 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 • 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 • 1st step is to consolidate expenses to CTF • 2nd step is to move $4.4M of trust fund revenue to CTF • 3rd 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 • 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

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 • 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.