A Comprehensive Approach to Budget Planning at a Major Research University

1. A Comprehensive Approach to Budget Planningat a Major Research University David E. Hollowell, Executive Vice President and Treasurer Carol D. Rylee, Director of Budget Michael F. Middaugh, Assistant Vice President for Institutional Research and Planning University of Delaware

2. University of Delaware • Land Grant, Sea Grant, Space Grant, Urban Grant, Carnegie Doctoral/Research-Extensive University. • Independently chartered, State-assisted institution. • Board of Trustees with 32 members, 20 of whom are self-perpetuating. • Management of the University is vested with the Board. • Has authority to set its own tuition and fee rates. • Annual State Appropriation for Operations is a lump sum appropriation without line-item restrictions.

3. The University of Delaware • Enrollment is 21,289, including 16,419 undergraduates, 3,190 graduate students, and 1,680 professional and continuing students. • 3,620 full time employees, including 1,073 faculty, 1,212 professionals, and 1,335 salaried/hourly staff. • University land holdings total 2000+ acres, housing 449 buildings, with a total value of more than $1 billion. • FY03 operating budget totaled $565.8 million. • Endowment value approximately $800 million. • State appropriation represented 18.3% of operating budget. • Tuition and fees support for 44% of education and general expenditures budget.

4. Budget Building Blocks – General Considerations • Three Year Rolling Budget Plan • Series of Systematic Steps • Consistent Time Line Each Year

5. Budget Development Timeline

6. Budget Building Blocks • Preliminary, unbalanced budget developed in late Summer. - Covers next three years - Parameters determined by President, Executive Vice President/Treasurer, and Provost - Presented to Trustees in September for input and ratification of assumptions

7. Budget Planning – Global Revenue Issues • Enrollment and Retention Assumptions • Tuition and Fees Rate Assumptions • Endowment Projection • State Revenue Forecasts • Trend in Contracts and Grants • Trend in Gifts

8. Budget Planning – Global Expense Issues • Salary Plan • Benefits Cost Projections • Utilities Projections • Insurance Projections • Other Operating Costs

9. Budget Planning - Benchmarking • Salaries • Tuition and Fees • Externally Funded Contracts and Grants • Endowment Performance

10. Budget Building Blocks – State Process • Request for Appropriation presented to Governor’s Staff in October; revised Request presented to General Assembly in February • Comprised of Operating Request and Capital Request • Operating Request is in three parts - Inflationary increases in general operations and special lines - New continuing items - One time items • Capital Request is for funding in the next fiscal year, accompanied by funding plan for two out-years • New items as well as inflationary funding requests are prioritized by President, Executive Vice President and Treasurer, and Provost

11. Budget Building Blocks – Academic Units • “Block Budgeting” for Colleges and Library - Provost annually meets with each Dean - Baseline budget for next fiscal year is established in October of current year - Predetermined percentage returned annually to central academic resource pool • Overhead benchmarks are established for each area, with minimum targets

12. Budget Building Blocks – Administrative Units • Trend over time is for larger growth in academic budgets than for administrative units • Administrative units see modest increases in support funds in good years, zero growth in difficult times • Administrative units have reduced resource requirements over time by streamlining organizational processes through enhanced use of technology

13. Budget Building Blocks – Finalizing the Budget • State Budget, including University Appropriation, approved by Delaware General Assembly on or about June 30 • University’s opening fiscal year budget in place on or about July 1 • Academic year tuition and fee rates released after opening budget is in place

14. During Difficult Budget Cycles • Provost meets with Deans and unit heads to determine the distribution and magnitude of reductions across academic units. • In FY 2003, the University was required to return 3 percent of its Operating Appropriation to the State of Delaware. Budget reductions were anticipated and planned for well in advance of the mandate. • The Executive Vice President/Treasurer, after consultation with senior administrators, determines the distribution of reductions across administrative units. • In addition to budget reductions, adjustments to appropriate revenue streams are also determined. • Institution-wide savings are achieved through hiring restrictions, re-engineering of business processes, consolidation of units, communications via web, etc. • One-time funds provide some measure of flexibility in dealing with budgetary constraints.

15. Ongoing Budget Planning Resources The University is committed to the principle of the broadest possible sharing of information related to budget matters. The following are examples of information that is broadly shared: • Trend Report on Growth in Basic Budget Funds and Positions, by Unit (Available to Unit Heads) • Budget Support Notebook – Productivity and Cost Data (Web-Based – Password Accessible) • Delaware Study of Instructional Costs and Productivity (Web Based – Password Accessible to Participating Institutions)

16. Conclusions • Questions? • A copy of this presentation can be found at: http://www.udel.edu/ir