School Financial Management Daniel Flaherty Director Financial Services

1. School Financial ManagementDaniel FlahertyDirector Financial Services

2. What Would You Like To Know?

3. Topics • How the University Earns Revenue • How that Revenue is Shared • Managing a School Budget • Day to Day Financial Management Issues

4. 1. How the University Earns Revenue

5. University Budget - Defined • Recurrent Budget • Student revenue – Commonwealth & Students • DEEWR/DIISR Research revenue • Investments • Other • Total Budget • Research grants • Consulting/Commercial • Other Grants • Other

7. 1. How the University Earns Revenue • DEEWR/DIISR Funding • Commonwealth Grants Scheme • Research Block Grants • Indexation • Student Fees

8. Commonwealth Grants Scheme (CGS) • 8 clusters with fixed $$ rates for each cluster • Varying Commonwealth funding for each cluster • Funding profile to be agreed with DEEWR • Full Funding for up to 110% of agreed profile • Can over enrol past 110% of agreed profile • but only receive HECS payments • Lose funding if below profile • retain CGS for load between 99% and 100% • cap at 95%

9. Course Contribution Schedule 2011

10. DIISR Funding Research Block Grant Funding • Research Training Scheme • Joint Research Engagement • Research Infrastructure Block Grant • Sustainable Research Excellence All subject to rules in how the funds can be used.

11. DIISR Funding Research Block Funding • All performance based averaged over last two years • Fixed funding pool • Various indicators with differing weights

12. DIISR Funding • Sustainable Research Excellence • 20% - Category 1 Research Income • If ERA compliant and Transparent Costing undertaken • 13% - Category 1 Research Income up to $2.5m • 67% - Category 1 Research Income >$2.5m, moderated by staff FTE, weighted publications & SRE survey outcomes

13. DEEWR/DIISR Funding • Indexation • applies to all DEEWR/DIISR funding • assumes that costs are split: 75% salaries 25% non salaries • non salary indexed by CPI • salary indexed by • 2011 Safety Net Adjustment (SNA) + teaching by PSTS index • 2012 PSTS wage index

14. Student Fees • ISP Onshore • Offshore Students • Fee Paying Postgraduate Student Fees Total approx. 15% of University revenue

15. How Funds Are Earned Any questions???

16. How the Revenue is Shared Daniel (with Council OK) Major Cost Centre Head

17. Why the Revenue is Shared • Teaching & Research • Buildings development • Building operating costs – power, water etc • Library • ICT • Student Services • Academic Support • Marketing • Research Administration • General Admin eg payroll

19. Allocation Models General Allocation shares have been developed over time and reflect: • A Performance basis – student load and research • Cost control • Historical influences

20. Distribution of Student Revenue

21. Research Block Grant Distribution

22. Running a School Budget The University Dilemma • The revenue earned per student is fixed by the Commonwealth • Commonwealth indexation has averaged around 2% to 2010. From 2012 indexation will increase to 3% to 3.3% pa. • Costs increase by up to 5% pa • So either student load has to grow / prices for student fees increased / costs are reduced

23. Running a School Budget Cost Increases • Salaries increase by around 4% pa due to Enterprise Bargaining pay rises • Salaries further increase by around 1% pa due to promotions, increments, reclassifications • Non salary expenses expected to grow 2% - 3% pa • Overall cost growth in a school is around 4.75% pa. • Therefore revenue needs to grow by at least 4.75% plus the cost of servicing increased load, just to “stand still”

24. Running a School Budget Revenue Generation Options • Indexation - around 3% to 3.3% pa. • Increased Commonwealth Student load • Increased International Student load/price • Improved Research performance

25. Running a School Budget Cost Management Options - Not many! • Staff reductions • Typically 80% to 90% of costs • Non salary cost reductions Overall can help for a time but you can’t reduce costs every year So need to grow revenue and manage costs

26. Running a School Budget Traditional University Cost Saving Options • Reduction in topics • Increased student staff ratios • Workforce Planning • Transition to retirement options • Replacement of retiring staff with lower level staff • Increased use of casual staff • Review of non salary expenditure

27. Running a School Budget Practical Tools • Development of 5 year financial projections • Talent 2 HR system - for salary information • Salary projections by person by year • Finance system for tracking financial transactions and budget position • Monthly emailed project manager reports • Regular Review and Forecasting

28. Operational Issues University Policies – you are the front line Authorisations Insurance Independent contractors Purchasing and Credit cards Travel & Taxes Leave management

29. Operational Matters Authorisations • To approve expenditure • Comply with Uni policies & grant conditions • Must be for bona fide University purposes • Can’t approve own expenses • BasWare (electronic invoices system) will ensure delegation limits are adhered to

30. Operational Matters Insurance • Disclosure • Travel • Deductibles/excess - $5k • Risks • Remote sites + valuable equipment • Theft • Contracts - indemnities

31. Operational Matters Independent Contractor • Government laws extend the definition of employee to capture contracts with individuals where the labour component is >= 50% • If a contract with an individual is planned – need to comply with the University policy http://www.flinders.edu.au/ppmanual/staff/IndependentContractors.html • Must have a contract in place • Risk for University/school – liability for payroll tax, super guarantee charge, workers compensation if we get this wrong

32. Operational Matters Purchasing • Purchasing policy • Value for money and fair trading principles • Tender required > $100k • Compliance with quotation requirements • Plan to mandate Purchase Orders for expenditure > $20k • Preferred suppliers • Procurement web site https://www.flinders.edu.au/finance/procurement/ • Contact Procurement Manager for assistance

33. Operational Matters Credit Cards • Benefits • Risks • Fraud • Use on insecure/dodgy internet sites • Avoid staff sharing

34. Operational Matters Travel Preferred suppliers • Phil Hoffmann Travel • STA Travel • On-line booking tool • OHS&W for travellers • Policy on travel, particularly international • DFAT warnings • Credit cards, travel advances, per diems

35. Operational Matters Taxes • GST • Normally charged on contracts • All contracts should have a GST clause • Normally not a cost to business /government • Fringe Benefits Tax (FBT) • Adds approx 100% to benefit cost • Private & business travel • Travel diaries • Entertainment • Other staff benefits

36. Operational Matters Management of Annual Leave

37. Operational Matters Management of Annual Leave • Need to plan usage • Increases with each pay rise • Can cause sudden budget problems on staff cessation • New EB agreement reinstates a form of deeming

38. Operational Matters Management of LSL • Emerging cost – not provided for at the time it is earned. • Need to plan usage / set funds aside • Increases with each pay rise • Can cause sudden budget problems when staff leave unexpectedly and are paid out LSL in lieu

40. Useful Web Sites Financial policies and procedures http://www.flinders.edu.au/ppmanual/finance.html Financial Services Division Homepage http://www.flinders.edu.au/finance/