1. 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

2. 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

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

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

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

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

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

8. Change in Expenditure by Function
Central Operations
Change in Expenditure by Function
Note change from

9. Change in Expenditure – Academic Support
Central Operations
Change in Expenditure – Academic Support
Note change from

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

11. Change in Staff Costs by Function
Central Operations
Change in Staff Costs by Function
Note change from

12. 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

13. 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.

14. 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

15. Financial Sustainability
Unrestricted funds

16. Financial Metrics Financial Sustainability
“aid organisations to carry out their mission, and
to achieve their goals”
Note change from

17. Financial Sustainability
Key financial ratios

18. 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

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

20. 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

21. 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