Budgets and resource allocation Two important issues to address: Understanding how we arrived at this point of financial challenges? And to improve transparency. Budgets and resource allocation Rhodes University Transformation Summit 28 July 2017

Budgets and resource allocation are subservient to the organisation’s: Vision: internationally-respected academic institution which proudly affirms its African identity and which is committed to democratic ideals, academic freedom, rigorous scholarship, sound moral values and social responsibility. Mission: Teaching, Research and Community engagement

University Income Note that the designation of funds also represent activities.

Drivers of Income Note FTE stands for Full-time Equivalent Graduate rate 2007 = 30% Graduate rate 2015 = 27%

Income and Expenditure 2016 Central Operations Income and Expenditure 2016 Financial Aid and Provision for Bad debt reduce cash available to allocate to expenditure

Composition of Expenditure by Type Central Operations Composition of Expenditure by Type Note change from 2007 – 2011 Staff costs grew ahead of Operating costs.

Composition of Expenditure by Function Central Operations Composition of Expenditure by Function Note change from 2007 - 2011 Academic Support cost grew ahead of the rest.

Change in Expenditure by Function Central Operations Change in Expenditure by Function Note change from 2007 - 2011

Change in Expenditure – Academic Support Central Operations Change in Expenditure – Academic Support Note change from 2007 - 2011

Composition of Academic Support Expenditure Central Operations Composition of Academic Support Expenditure Services and activities with lower value. Note change from 2007 - 2011

Change in Staff Costs by Function Central Operations Change in Staff Costs by Function Note change from 2007 - 2011

Financial Sustainability Financial sustainability is concerned with: the generation of income, and the provision of sufficient resources For the achievement of the organisation’s mission, the payment of its debt, and the funding of its future capital requirements. Note change from 2007 - 2011

Resources of the University Financial Sustainability Resources of the University Balance Sheet 2016: Total resources (assets) = R1.372 billion Less Liabilities Net resources (equity) = R1.039 billion, but Resources that are easily available and accessible to Council were R19 million That is because of the R1b in net resources, a very large part of it is restricted.

Resources of the University Financial Sustainability Resources of the University Net Resources R1.039bn Earmarked R254mi Earmarked R254mi Earmarked R254m R785mi Endowments R371mi Endowments R371mi R414mi Property, Plant & Equipment R395mi Unrestricted funds R19m

Financial Sustainability Unrestricted funds

Financial Metrics Financial Sustainability “aid organisations to carry out their mission, and to achieve their goals” Note change from 2007 - 2011

Financial Sustainability Key financial ratios

Vision and Strategic objectives Budgets and Resource allocation Tools/mechanisms/processes that assist the organisation to execute its Mission and to achieve its Vision and Strategic objectives

Organisational Values Budgets and Resource allocation So, before we start Strategic plan Vision statement Mission statement Organisational Values

Requirements for a good process Budgets and Resource allocation Requirements for a good process Alignment with the mission, vision and strategic objectives Collaboration between the institutional planning and financial planning functions Communication with stakeholders Transparency Budget co-ordination Responsibility and Accountability

Conclusion and Key observations Relatively strong growth in income Driven initially by enrolments, then focus on research and earmarked activities Decline in weighted graduates and graduation rates Expenditure patterns aligned to growth in enrolments and research focus Prolonged poor financial health (based on key financial ratios) Significant use of own funds, very little use of debt Budgets and resource allocation are strategic support mechanisms Transformation summit outcomes must make their way into the strategic plan