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Administrative Cost Ratio November 27, 2012 Strategic Resource Planning Council

Administrative Cost Ratio November 27, 2012 Strategic Resource Planning Council. What is the Administrative Cost Ratio ?. Institutional Support Expenditures divided by Total Operating Expense - Auxiliary Exp.

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Administrative Cost Ratio November 27, 2012 Strategic Resource Planning Council

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  1. Administrative Cost Ratio November 27, 2012 Strategic Resource Planning Council

  2. What is the Administrative Cost Ratio ? • Institutional Support Expendituresdivided by Total Operating Expense - Auxiliary Exp. • According to the Legislative Budget Board: “provides an indicator of the proportion of operating budget being spent on administrative costs.” 2

  3. What is counted as Institutional Support? • Institutional Support is a functional expense classification defined by NACUBO (National Association College & University Business Officers) used to allocate costs between higher education activities. As reported on the AFR, it tells the reader “why” an expense was incurred as opposed to “what” was purchased. 3

  4. What is counted as Institutional Support? Institutional Support includes: • Executive Management – President, VPs & their staff including operations related to planning & legal • Fiscal Operations – Accounting, Bursar and bad debt expense from loans but not from receivables • General Administration– HR, Purchasing, etc. • Administrative Information Technology • Public Relations/Development 4

  5. Other NACUBO Functional Programs • Instruction– costs directly related to instructional mission (includes department chairs). • Academic Support – includes dean’s offices & library, museums, academic computing & advising. • Research– includes expenses for activities specifically organized to produce research whether internal (separately budgeted) or externally funded. Includes institutes and research centers. • Public Service – non instructional activities to external groups. Includes conferences, institutes, consulting & general advisory services. 5

  6. NACUBO Functional Programs • Student Services – costs that have the primary purpose of contributing to students’ emotional and physical well being and intellectual, cultural & social development (outside the context of the formal instructional program.) Includes admissions & records, student IT, student health, counseling & career guidance, student activities, financial aid administration. Does not include intercollegiate athletics programs as those must be identified as an Auxiliary Enterprise by Texas law. 6

  7. NACUBO Functional Programs • Operation & Maintenance of Plant – includes administrative costs, building maintenance, custodial, utilities, landscape / grounds, repair & renovation, security & safety (police, disaster preparedness, environmental health & safety, etc.), logistical services (central receiving, stores) and facilities related IT. • Scholarships & Fellowships • Auxiliary Enterprises– self supporting entities to furnish goods or services to students, faculty, staff or incidentally to the general public; includes food services, athletics, residence halls and all related administrative expenses. 7

  8. UTSA 5 Year Administrative Cost Trend FY03 (11.2%) FY04 (11.7%) FY05 (11.3%) FY06 (11.9%) FY07 (10.3%) 8

  9. How is the Administrative Cost Ratio computed? Institutional Support Expenditures Total Operating Expense – Auxiliary Exp. We have lowered the rate by 1.86% Source: FY12 Annual Financial Report 9

  10. What we did to improve UTSA’s Administrative Cost Ratio • Evaluated opportunities to ‘spread’ costs coded to Institutional Support as allowed by NACUBO • $4.4M in IT expenditures allocated to Academic Support • Corrected coding, $3.0M • Capitalized PeopleSoft project team salaries, $965K- moved the expense to O&M of Plant • Administrative Overhead, $895K - moved the expense to Auxiliaries 10

  11. Comparative Administrative Cost Trends 11

  12. Why is this important? • UT System & Legislative pressures • Measures administrative efficiency • Stakeholder accountability • Affordability of higher education • Chancellor’s Framework 2. B. 1. Utilize Incentive Based Compensation Strategies: • Presidential Performance Reviews 12

  13. How do we Further Reduce or Maintain (Improve) UTSA’s Administrative Cost Ratio • Overall expenditures need to increase at a rate higher than Institutional Support costs increase • Fill vacant faculty positions • Add new faculty positions • Increase restricted funding expenditures – sponsored programs & gifts 13

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