Budgeting and Financial Management at Case 101 Overview of the Case Budget Session 1 – October 26, 2006

1. Budgeting and Financial Management at Case 101Overview of the Case BudgetSession 1 – October 26, 2006 John Anderson, Provost Hossein Sadid, Chief Financial and Administrative Officer

2. Budget and Financial Management at Case 101Course Objectives • Session I Understand the alignment between academic and financial priorities • Understand the budget process on a university and school level • Session II Ability to read and understand the University’s Budget Book • Session III Become familiar with financial drivers: endowments, debt and working capital

3. Guiding Principles for Financial Management • Responsible risk taking guided by strategic academic plans and priorities • Focus on business plans to support spending • First quartile endowment performance • Capital investment guided by integrated planning • Debt supported by credible business plans • Transparency in all activities and communications coupled with accountability • Focus on optimal maintenance of physical assets

4. Office of Planning and BudgetsReporting Lines CFAO Finance and Admin. Provost Academic VP Planning & Budget (Split Personality)

5. Office of Planning and Budgets Functions • The reorganized Office of University Planning and Budget will oversee the following major functions (Aug. 2004): • Financial planning linked to the strategic plan (five-year plans, budget development) • Budget management (forecasting, compliance, control) • Institutional research (benchmarking, internal/external reporting, trend analysis)

6. Financial Planning/Budget/Forecast Process (FY07) Resource Key: FSBC – Faculty Senate Budget Committee UPC – University Planning Committee UBC – University Budget Committee THIS CYCLE ASSUMES THAT A STRATEGIC PLANNING PLATFORM EXISTS – VISION/GOALS/OBJECTIVES

7. Refresh Five Year Plans (FY08-FY12) • Certain revenue (i.e. undergrad tuition, endowment payout) and expense (i.e. indirect cost allocations, fringe rate, partnership fee) assumptions will be provided to the schools to refresh their five-year plans • The final document produced by The University Planning Steering Committee will be used as a guide • Input from the University Planning Committee, the University Budget Committee, and the Faculty Senate Budget Committee will be incorporated into the process • The schools will be asked to update their plans based on an integration of their priorities with university-wide goals • “In a decentralized university, planning proceeds on two fronts simultaneously: locally, from a school-specific perspective; and globally from a university-wide perspective. The sum of the local perspectives does not always equal the global one! Nor should it. The trick is to keep the system loosely coupled enough to sustain faculty and decanal entrepreneurship and survive in a complex world, yet tightly coupled enough to create a sense of the whole, a sense of bonding commonality, of one university.” (Edward L. Whalen, Responsibility Center Budgeting,1991)

8. Fiscal Year 2007 Revenue BudgetUniversity-wide ($000s) • Total Revenues - $815.7 million • Research and Training: 37% • Tuition & Fees: 30% • Endowment Income: 9% • Overhead Recovery: 9% • Auxiliary Services: 5% • Restricted/Unrestricted Gifts: 5% • Other Sources: 4% • Organized Activities: 1% • State Support: .5%

9. Fiscal Year 2007 Revenue BudgetBy School ($000s) • Total Revenues $815.7 million • Medicine: 50% • UGEN: 15% • Arts and Sciences: 10% • Engineering: 9% • Management: 5% • Law: 3% • Dental Medicine: 3% • Nursing: 3% • MSASS: 2%

10. Fiscal Year 2007 Revenue BudgetEngineering ($000s) • Total Revenues - $75.7 million • Research & Training: 37% • Tuition & Fees: 34% • Endowment Income: 11% • Overhead Recovery: 11% • University Support: 4% • Restricted/Unrestricted Gifts: 3%

11. Fiscal Year 2007 Revenue BudgetLaw ($000s) • Total Revenues - $28.4 million • Tuition & Fees: 77% • Endowment Income: 15% • Restricted/Unrestricted Gifts: 5% • Research and Training: 1% • Other Sources: 1% • Overhead Recovery: 1%

12. Fiscal Year 2007 Expense BudgetUniversity-Wide ($000s) • Total Expenses - $826.5 million • Salaries and Fringes: 32% • Non-Salary Direct: 29% • Student Aid: 13% • Plant: 6% • Auxiliaries: 5% • University Services: 5% • Info Tech Services: 3% • Student Salaries: 3% • Student Services: 2% • Library: 2%

13. Fiscal Year 2007 Expense BudgetBy School ($000s) • Total Expenses -$826.5 million • Medicine: 50% • UGEN: 15% • Arts and Sciences: 10% • Engineering: 9% • Management: 5% • Law: 3% • Dental Medicine: 3% • Nursing: 3% • MSASS: 2%

14. Budget and Financial Management at Case 101Course Objectives • Session I Understand the alignment between academic and financial priorities • Understand the budget process on a university and school level • Session II Ability to read and understand the University’s Budget Book • Pre-class assignment - Review Budget on Case’s website • Search for “2007 Budget” then click on Budget Performance Data or http://www.case.edu/provost/budget/budgetdata.htm • Come to class on November 16th with questions and ready for discussion • Session III Become familiar with financial drivers: endowments, debt and working capital