Financial Outlook 2013/14 Tom Wale - PRAS Helen Knight - Finance

What this presentation will cover  Budgeting process and timeline  JRAM allocations for 2013/14 – informed by:  HEFCE grant for 2013/14  Fee income for 2013/14  Services’ budgets for 2013/14  Infrastructure Charge allocations for 2013/14  Historic trends  The budget in a wider context Page 2S

Page 3S Planning and budgeting timeline  Autumn 2012  PRAC agreed new integrated planning and budgeting process  PRAC approved budget targets for services for 2013/14  PRAC approved initial budget targets for divisions for 2013/14 – transitional year  February  Service costs for 2013/14 agreed by PRAC and divisional 123 charge allocations for 2013/14calculated  March  HEFCE grant letter received and JRAM allocations for 2013/14 calculated  April  PRAC agreed final budget targets  May/June  Budgets and plans submitted  Budget review meetings  Planning review meetings  June  Final 2013/14 budget agreed

Integrated planning and budgeting process – new this year Page 4

What this has meant for you  Divisional 5 year plans submitted in May along with the budget, rather than in January.  Greater involvement of departments.  Financial projections worksheet in budget template.  Plans submitted in May will be used to produce divisional budget targets the following Autumn  Based on final 2013/14 budget  Known before Christmas  Updated in March / April for final JRAM, infrastructure and capital charges  This year – combined Q2 / budget template Page 5

JRAM Overview  The Joint Resource Allocation Method is the way of distributing funds across the collegiate University  Sums allocated across academic divisions, OUDCE & Colleges Page 6 /£m HEFCE Teaching (including Research students)45.8 Fees192.8 HEFCE Research Support118.0 Other elements0.4 Total allocation in JRAM357.0

HEFCE Grant Allocations 2013/14 All sums in £m 2012/13 (March 13) 2013/14 (March 13) Variance Sums Proportion Total % Teaching % Research for PGRs % Mainstream Research (not PGR) % Other (Libraries, Museums, HEIF) % Page 7T  Teaching changes in line with move to new fee regime – offset by fees  2012/13 includes additional £778k as at March 2013 (not in JRAM 1213iya)  PGR volume up – bigger share of national pot  Mainstream research – Charities & Business QR increased volumes  rates down but bigger share of national pot

HEFCE Grant Allocations 2013/14 Teaching All sums in £m JRAM 1213 iya JRAM 1314 i Variance Sums Proportion Total Teaching Funding % New Regime UG % Old Regime UG % New Regime PGT % Old Regime PGT % Specific Funding Streams % Allocated outside JRAM % Page 8T  Additional HEFCE funding of £778k for 2012/13 not included in 1213 iya  Announced after JRAM 1213 iya  Divisional portion will be allocated as part of 2013/14 budgets (most +ve)

HEFCE Grant Allocations 2013/14 Research  PGR Funding updated for numbers ( HESA data)  Increase due to rise in numbers, subject weightings unchanged  Mainstream QR Funding unchanged  Charities & Business QR – rates down but volume up Page 9T All sums in £m JRAM 1213 iya JRAM 1314 i Variance Sums Proportion Research Students % Mainstream QR % Charities QR % Business QR % Total %

University & College Fees 2013/14 All sums in £m JRAM 1213 iya JRAM 1314 i Variance Sums Proportion Total % Undergraduate UK/EU % Undergraduate Overseas % Postgraduate UK/EU % Postgraduate Overseas % Page 10T  Forecast is based on this year’s students undertaking next year’s activity  e.g. year 2 students become new fee regime for 2013/14  Informed by work on Student Number Planning  Much of the increase is due to the transition to new fee regime on UG  But also changes to student numbers

Resource Levels  Based on FTEs  Must consider fees and other sources of funding (mainly HEFCE)  HEFCE funding split into five price groups according to activity  Price group D is classroom-based – no additional funding  Price group A is clinical medicine – highest levels of additional funding  UK/EU UG decreases in HEFCE funding more than offset by increases in fees  UK/EU PGT decreases not automatically balanced by HEFCE funding  Fees + other sources of student funding distributed via JRAM  Split of resources between departments & Colleges  Some targeted streams distributed outside JRAM Page 11T

Resource Levels UK/EU Undergraduate All sums in £ Old Regime 1213 iya 1314 i New Regime 1213 iya 1314 i HEFCE funding Band D2,9883, University Fee3,465 8,5008,688 Total Band D6,4536,4778,8799,071 Add’l HEFCE Funding Band B2,7462,7901,4731,488 Total Band B9,1999,26710,35210,559 Page 12T  New regime fee increase is a result of fee waivers being higher in year 1  2013/14 has year 1 and 2 students on new fee regime  Note differential between Band D and Band B is much reduced in new fee regime – but overall resource is increased for both  Amounts are before allocation between departments and Colleges

Change in JRAM Allocations for 2013/14 Comparison of 1314 i with 1213 iya All sums in £m MSDSSDMPLSHum OUDCE Colleges OtherTotal HEFCE T incl PGR UG Fees PG Fees Other T Total T & related QR Mainstream QR Charity QR Business Other R Total R & Related Total Funding %6.1%3.6%4.3%-5.1%5.6%8.0%4.2% Page 13T

Change in JRAM Allocations for 2013/14 Comparison of 1314 i with 1213 i & 1213 iya Page 14T

Services budget 2013/14 Page 15H

Page 16T 123 Infrastructure charge for 2013/14 £m Services budget target118.7 Other costs charged via the 123 model but not in the services: e.g. insurance2.8 TOTAL 123 charge for 2013/  Total 123 charge for 2013/14 is £5.7m higher than the total for 2012/13  Although this has increased, the charge rate as a percentage of divisional income has not 2011/122012/132013/14 Total charge as % of divisional income21.2%20.9%20.2%

123 Infrastructure charge for 2013/14 Page 17T £mMSDSSDMPLSHum OUDCE colleges Other TOTAL 2013/ / difference

Page 18T Capital charge for 2013/14  Band weightings and costs are unchanged  Increase is due to increase in space £mMSDSSDMPLSHumOUDCETOTAL 2013/ / difference Band 1Band 2Band 3Band 4Band 5Band 6 Weightings £ per sqm£95£76£57£38£19

Budget v Actuals – historic trends Page 19

Looking back at 2011/12  Budget - £22.5m  Actuals - £52.3m.  Difference £29.8m  £13.1m of this arose in the divisions and services – mainly Medical Sciences and Social Sciences.  £16.7m arose in Central Costs & Adjustments  Current indications are that the 2012/13 budget is much more realistic – Q2 forecast is in line with budget Page 20

Why has our position improved?  Higher fee income  More money from OUP  Increased investment income  Flat staffing levels – impact of the recruitment protocol  Low pay awards Page 21

Russell Group Surpluses / Deficits 2011/12 Page 22

Surplus/ Deficit as % of Income Page 23 Oxford 5.1%

Setting the budget 2013/14 Page 24 Note – figures include £2m transfer from Medical Sciences to Humanities

Why do we need to make a surplus?  To fund capital investment  New buildings  Maintenance of existing buildings  IT  Equipment funding  To fund restructuring activities  Staff development Page 25

Threats to future surpluses  OUP funding may reduce  Increased pay awards  Cost of maintaining existing estate  Expansion of estate size – ROQ, Medical Sciences  Reduce funding from Research Councils  Move towards EU and other research funders  Desire of surplus departments to invest for the future Page 26

EBITDA Projections Due to increase in staff costs, sustainability gap widens in later years Page 27

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Any questions? Page 29 Further information Tom Wale Head of Resource Allocation ( ) Helen KnightFinancial Planner ( ) 16151