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1. Faculty Affairs Forum August 18, 2014 Click to Add Title UIC Budget Overview Janet Parker, Associate Chancellor & Vice Provost, Budget & Resource Planning

2. Agenda • State of Illinois Budget Overview • UIC State Budget Overview • UIC Budget Model • Responsibility Centered Management • Tuition Revenue Sharing • Indirect Cost Recovery Sharing • Budget Planning

3. Overview of the State of Illinois Budget Governor Quinn approved a $35.7 billion FY15 State Budget, despite it being “incomplete”: • not structurally balanced (expenditures exceed revenues) • spending plan offsets big tax revenue hole with one-time measures (slow paying bills, defer one time expenditures) • will contribute to growing deficits and payables that continue to pressure the state's liquidity • bond rating agencies shifted state financial outlook to negative • possibility for a mid-year rescission

4. UIC State Budget Overview • From FY 2008 to FY 2015, UIC’s direct state appropriation has been reduced by over 30%. • The State of Illinois pays for most employee benefits & pension costs and that contribution amount has steadily increased by over 3.5 times during that same period.

5. Total State of Illinois Support to UIC These costs are typically borne directly by the Institution In $ x $1,000

6. UIC FY 2015 State Budget • <0.2%>, UIC’s appropriation reduced by $493,200 Excludes UIC’s share of UA Salary cost increases • Special Line items remain $500K for Rockford Pharmacy program intact • No additional funding for State’s required Medicaid match for UI Hospital (Special request) • No increase in Monetary Award Program (Governor’s Budget) State awarded need-based financial aid program • No funding for State mandated Veteran tuition grants Costs UIC $4-5 Million each year • No new capital funding for Higher Ed

7. State of Illinois Budget Outlook FY 2016 Outlook for the State budget is cloudy • November election - predictive of future budget impacts? • Income tax sunset and pension ruling looming • Shift pension costs to Universities? • Expect the best, prepare for the worst

8. State Appropriation RevenueBillings and Collections through August 11, 2014 Dollars in Millions State Surveys State Surveys State Surveys $697 $689 $663 $662 $662 $15.8 $16.8 $16.8 $689 $697 $646 $646 $645 $372 $273 $313 $188 $153 $156 $207 $133 $91 $89 $116 $65 $66 $66 $65 $64 $64 $55 $57 $59 $55 2011 2012 2013 2015 2014 CY/PY Receivable Appropriation Collected Billed Page 8

9. Overview of UIC FY 2015 Budget Dollars in $1000’s Total State Funds = 29%

10. Responsibility Centered Management Budgeting • Financial management philosophy that focuses on operational decentralization • Supports primary academic priorities • Aligns authority with responsibility • Use of RCM budgeting has grown • 21% of all public doctoral institutions report that they use the RCM model in 2011

11. RCM AT UIC UIC uses a modified RCM model • Tuition & ICR revenues are shared with Colleges • Subject to administrative tax aka “hold-back” • Colleges do not bear the fully-allocated costs of all central services • State appropriations were not reset/reallocated when we started the model • Annual reallocation funds strategic priorities • Salary program percentages are set centrally; administrative units receive funding through reallocation, colleges fund their own costs.

12. Tuition Revenue Sharing

13. Undergraduate Tuition Revenue Sharing • Summer Session UG base tuition and UG Non-resident tuition premiums are taken off the top • Computation of the base Undergraduate Tuition per Credit hour and headcount values • Net of revenue ‘unpaid’ due to mandatory & discretionary tuition waivers • FY15 $191.50 / credit hour and$1,332 / headcount • Projected revenue distribution is based on a 3 Year rolling average of credit hour and headcount • Reconciliation of budget to actual at the end of the fiscal year

14. Undergraduate Non-Resident Tuition Premiums Non Resident Students Admitted prior to FY 2014 • Premium Sharing - $8,000 per enrolled student Non Resident Students Admitted in FY 2015 (Chicago Grant Recipients) • Premium Sharing - $4,050 per enrolled student FY 15 Enrollment Projections • Chicago Grant 153 First time non-resident UIC students • Non Resident 190 Prior enrolled non-resident UIC students • International 267 610

15. Reallocation / State Budget Planning SOURCES State Appropriation <$493,200> Net Tuition <$1,074,000> Reallocation $12,445,322 Total Sources $10,878,122 USES UA Salary Program $ 965,400 Medicare, Liability Ins, WC $ 522,200 UIC Salary Program / Fac Promotions $ 2,594,614 Hold Harmless Units $ 1,895,908 Utility Costs $ 1,000,000 Strategic Priorities $ 3,900,000 Total Uses $ 10,878,122

16. FINANCIAL & BUDGETMANAGEMENT Heather Haberaecker Executive Assistant Vice President for Business & Finance / Chief Business Officer

17. TOP FOUR THINGS YOU NEED TO KNOW ABOUT FINANCIAL MANAGEMENT AT UIC 1 What is a C-FOAP? It is a 25 digit number you will use to enter transactions and to query information for your department (similar to how one would use a bank account number to track personal deposits and expenses). C – Chart is a one digit code for a campus (Chicago = 2) 1 digit # 6 digit # 3 or 6 digit # 6 digit # 6 digit # ORGANIZATION O ACCOUNT A CHART C PROGRAM P FUND F

18. WHAT IS A C-FOAP? 1 A Fund provides a cumulative record of the sources and uses of monies. Examples of Funds (types are designated by the first digit of the 6-digit fund number): 1 = State 2 = ICR and other types of unrestricted funds 3 = Self-supporting activities 4 = Grants (federal) 5 = Grants (state, local and private) 6 = Gifts, endowments, service plans (medical, nursing, dental)

19. WHAT IS A C-FOAP (cont..) 1 • An Account is a code representing type of revenue, expenditures and transfers (e.g. supplies 121300). • A program code is used to group similar activities by function that are ongoing or span more than one year (e.g. administration, instruction or research). • Within the CFOAP, what is the most important number to remember? • Your Organization code whose first 3 digits are the department code! 752004 2 121300 752005 100014 ORGANIZATION O FUND F ACCOUNT A PROGRAM P CHART C

20. WHAT MONTHLY FINANCIAL REPORTS SHOULD I REVIEW? 2 There are four monthly financial reports you should review with your respective business manager to make sure you do not have any unauthorized transactions on your accounts and to assess the potential for fund balance deficits: • FIGL Detail Operating Ledger Statement • FIGL Operating Ledger Transaction Statement Chart 2  • Payroll Labor Distribution Report • Detail General Ledger Statement (for fund and cash balances)

21. HOW ARE INDIRECT COST RECOVERY (ICR) FUNDS DISTRIBUTED? 3 • Indirect Cost Recovery (ICR) Revenue (also referred to as Facilities & Administrative (F&A) Revenue) refers to funds generated from recovery of general infrastructure and other costs that cannot be directly charged when performing extramurally funded research. • Typical Standard ICR Distribution Colleges 47.5% * Campus 44.8% VC for Research 7.7% Total 100.0% • 30% of the 47.5% is governed by the Proposal Approval Form (PAF) with a standard10% college and 20% department split. The 30% may be shared with other departments and colleges based on the contributions of multiple researchers. The other 17.5% is distributed to the college administering the grant.

22. WHAT IS UIC’S DEFICIT REDUCTION POLICY? 4 • Deficits are a serious drain on the campus’ financial flexibility and should be avoided. • A usage charge is assessed on all non-state funds (excluding grants and contracts) with a deficit of $10,000 or greater • Financial reports are sent to Deans and College Academic Fiscal Officers (AFO’s) at the end of 2nd and 3rd quarters and the month of May to allow departments to review and initiate actions to address any potential reportable deficits

23. UIC DEFICIT REDUCTION POLICY (cont.) 4 If deficits remain at the end of fiscal year you will need to submit a deficit reduction plan as follows: • $10,000 - $149,999 – Completion of a simple form outlining the cause and planned resolution of the deficit • $150,000 - $499,999 - Completion of a three year action plan for resolution of the deficit • $500,000 and above - Completion of a five year plan and a meeting to discuss the proposed plan All plans will be reviewed and ultimately approved/disapproved by the Provost. If the plan is not approved, the unit owning the fund will be assessed a higher usage charge (currently 3% versus 1% for a deficit with an approved resolution plan).

24. IMPORTANT BUDGET MANAGEMENT PRINCIPLES TO REMEMBER • Avoid deficits • Review your department’s financial status monthly • Allocate salaries to grants as soon as they are received • Faculty and staff salaries should be allocated to the C-FOP’s based on the person’s effort (grants, serviceplans, self-supporting, state, etc.) • Self-supporting fund billing rates should recover the full costs of providing the goods or services. • Units that are generating revenue need to regularly bill and collect for services • Expenses should only be charged to the C-FOP for the established purpose (e.g. only grant-related charges on grant funds)

25. QUESTIONS