2011-12 Budget Kick-Off

1. 2011-12 Budget Kick-Off

2. Budget Overview • UVa’s Budget Approach • UVa’s Budget Development Cycle • 2010-11 Approved Budget • 2011-12 Critical Issues • 2011-12 Budget Submission Requirements • 2011-12 Due Dates

3. Budget Overview • UVa’s Budget Approach • UVa’s Budget Development Cycle • 2010-11 Approved Budget • 2011-12 Critical Issues • 2011-12 Budget Submission Requirements • 2011-12 Due Dates

4. Three Primary Budgeting Approaches • Targeted Budgeting • Sales and Services Budgeting • Summary Budgeting

5. Targeted Budgeting • State general (SG), state restricted (SR), local general (LG), F&A institutional (FI), endowment institutional (EI), and gift institutional (DI) • UBO provides budget target and modifies it for salary increases, fringe benefit changes, addenda, and budget reductions • Central covers costs for facilities and central administration • Unit manages internal allocation of budget, hiring, carryforward, and operational decisions • Central oversight is by UBO and budget entry is required in the Integrated System

6. Sales & Services Budgeting • State sales and services (SS), state auxiliaries (SA), local sales and services (LS), local auxiliaries (LA), and local other (LO) • Revenue-generating, self-supporting unit approach • Unit manages revenues and direct expenses (salary and fringe changes) • Cost for facilities and central administration responsibility varies: • 100% facilities and indirect costs paid by auxiliaries • 100% facilities and 10% revenue tax assessed to self-sufficient • 10%-15% revenue tax assessed to some self-supporting units • No facilities or indirect costs assessed to other sales and service units • Central oversight is by UBO and budget entry is required in the Integrated System

7. Summary Budgeting • Endowments (ER, EU, EF), gifts (DR, DU), F&A (FA), grants (G*, Z*), and intellectual property (IP) • Unit manages direct expenses (salary and fringe changes) • Central covers cost of facilities and central administration, with the exception of grants (reimbursed by federal gov’t) • Allocations are managed by Comptroller’s Office, Gift Accounting, Sponsored Programs and the VP for Research • Summary budgets (not uploaded to IS) are submitted to the UBO

8. Budget Overview • UVa’s Budget Approach • UVa’s Budget Development Cycle • 2010-11 Approved Budget • 2011-12 Critical Issues • 2011-12 Budget Submission Requirements • 2011-12 Due Dates

9. Budget Development Cycle Dec: University Budget Office (UBO) develops budget instructions, assumptions, and targets UBO estimates unavoidable cost increases (salaries, benefits, utilities, AccessUVa, etc.) MBUs submit special session tuition requests to UBO Jan: UBO holds budget kick-off and issues budget targets to EVPs EVPs distribute budget targets, instructions, and due dates UBO watches developments in state budget UBO communicates institutional graduate aid

10. Budget Development Cycle Feb: Major Budget Units (MBUs) develop budget details MBUs submit other fee and tuition requests MBUs submit research and private spending estimates MBUs develop and prioritize addenda requests VPs hold budget meetings with MBUs Board approves budget assumptions, special session tuition Mar: VPs continue budget meetings with MBUs VPs approve budgets and prioritize addenda requests UBO finalizes tuition proposal Apr 1: All budget submission items due to UBO

11. Budget Development Cycle Apr: Board approves tuition and fees; dining rates UBO reviews budgets and prioritized addenda requests UBO identifies available resources for addenda requests UBO recommends preliminary addenda allocations Senior administration finalizes addenda decisions May: UBO finalizes Budget Summary June: Board approves Budget Summary UBO communicates budget and addenda decisions to EVPs Jul 1: UBO loads GA and GL budgets into Integrated System

12. Budget Overview • UVa’s Budget Approach • UVa’s Budget Development Cycle • 2010-11 Approved Budget • 2011-12 Critical Issues • 2011-12 Budget Submission Requirements • 2011-12 Due Dates

13. University of Virginia 2010-2011 Operating Budget(in millions) Academic Division $ 1,326.7 Medical Center $ 1,020.6 College at Wise $ 34.4 Total $ 2,381.7

14. Major Funding Sources 2010-11Academic Division - $1.33 Billion

15. Major Spending Areas 2010-11Academic Division - $1.33 Billion

16. Budget Overview • UVa’s Budget Approach • UVa’s Budget Development Cycle • 2010-11 Approved Budget • 2011-12 Critical Issues • 2011-12 Budget Submission Requirements • 2011-12 Due Dates

17. 2011-12 Critical Issues • State Budget Reductions • Other State Actions • Salary and Fringe Assumptions • Endowment Distribution • New Budget Model Development

18. State Budget Reductions • Oct 2007 – $ 9.2 mill = 3.0% SG impact • Oct 2008 – $10.6 mill = 3.0% SG impact • Jul 2009 – $12.4 mill = 3.2% SG impact • Jul 2010 – $4.6 mill = 2.5% - 3.0% SG impact • Jul 2011 - $14.7 mill = 2.5% - 3.0% SG impact Cumulative: $51.5 million = 14-15% SG impact

19. State Budget Situation • $23 million in stimulus funds in 2010-11 used for one-time items…do not need to replace in 2011-12 • $14.7+ million GF budget reduction in 2011-12 • So far, no further eminent scholar reduction • No end (yet) to the ETF and maintenance reserve freeze • No end to reversion of auxiliary cash balances and savings from retirement plan changes

20. Governor McDonnell Salary/Retirement Proposals • VRS employees – 3% salary increase and 5% required employee contribution, 7/1/2011 • ORP employees – no salary increase, 2% decrease in employer contribution, 7/1/2011 • Potential for 2%, one-time December 2011 bonus for all • To the unit: potential savings in fringes offset by increased compensation costs = could be a net zero impact

21. Fringe Benefits • Projected fringe benefit rates, increased for healthcare but before 2011 General Assembly changes: • FT Faculty and Staff-Executive: 29.0% • FT Staff: 33.5% • PT w/ benefits: 29.5% • PT w/out benefits, wages: 6.0%

22. Endowment Distribution • Policy: 4%-6% of endowment value, with a 5% target • 2010-11 was within policy target, so increased by an inflationary percentage to $242.24/share • To be distributed January 2011 and June 2011 • Since June, endowment is up 10%; if this holds, expect an inflationary increase again for 2011-12 • To be distributed January 2012 and June 2012

23. New Budget Model Development • Top priority of President Sullivan • New budget model • Comprehensive • Encourage stewardship of resources • Be transparent in decision-making • Provide incentive-based execution • Upcoming actions will identify a steering committee, establish working groups, and develop timeline

24. Budget Overview • UVa’s Budget Approach • UVa’s Budget Development Cycle • 2010-11 Approved Budget • 2011-12 Critical Issues • 2011-12 Budget Submission Requirements • 2011-12 Due Dates

25. Submission Requirements • Budget Submission Narrative • Include summary of the impact of the new budget reductions • Tuition and Fee Increases • Integrated System Budget Detail Entry • New requirement to budget LS and LO activity • Planned Expenditures from Selected Fund Sources

26. Discoverer Reports to Review • WEB Target Development Report • WEB Budget Development Report • GL and GA Budget Comparison • GL_Cash Balance Summary by Org • Operational Cash Balance Summary • Non-operational Cash Balance Summary • GL_Revenue Reconciliation Report • Cash Balance by Project • WEB Selected Financial Data • 6) Summary-All Award Types • 8) Expenditure Detail-All Award Types

27. Websites to Consult • Governor’s Proposal on Retirement: http://www.hr.virginia.edu/news-events/news/gov-proposal/ • Human Resources Fringe Benefit Summary: http://www.hr.virginia.edu/other-hr-services/payroll-information/fringe-rates/ • UVIMCO Investment Reports: http://uvm-web.eservices.virginia.edu/public/reports/ • F&A Distribution Report: http://www.virginia.edu/finance/finanalysis/overhead.html • Long-Term Pool Market Value Report: http://www.virginia.edu/finance/finanalysis/invest.html • State Governmental Relations Analysis of State Budget: http://www.virginia.edu/governmentalrelations/reports.html

28. Submission Requirements • Addenda Requests • Unavoidable increases must be top priority! • Capital Reserve Projections • Annual Renovation and Infrastructure Projects (ARIP) • Budget Checklist

29. Budget Overview • UVa’s Budget Approach • UVa’s Budget Development Cycle • 2010-11 Approved Budget • 2011-12 Critical Issues • 2011-12 Budget Submission Requirements • 2011-12 Due Dates

30. Provost Office Thoughts • 2011-12 Due Dates

31. UBO Contact Information • University Budget Office • 434-924-3386 • budget@virginia.edu • http://www.virginia.edu/budget/ • Who Do I Contact? page: http://www.virginia.edu/budget/Docs/Who%20Should%20I%20Contact.pdf • Melody Bianchetto, Assistant VP for Budget and Financial Planning, msb2p@virginia.edu, 434-924-0994 • Keith Carter, Budget Analyst, kac9r@virginia.edu, 434-924-3969 • Melissa Clarke, Associate Budget Director, mfc5g@virginia.edu, 434-924-0992 • Robbyn Minnis, Budget Manager, rlm5s@virginia.edu, 434-924-0990 • Rob Neil, Sr. Budget Analyst, rjn6x@virginia.edu, 434-924-3907 • Tracy Plunkett, Budget Manager, tmp3a@virginia.edu, 434-924-0027 • Judy Rowe, Budget Manager, jwr7e@virginia.edu, 434-924-7085 • Bev Smart, Budget Manager, bsd4u@virginia.edu, 434-243-0417