1. FY18 Budget Planning Council Orientation
August 31, 2017

2. Agenda FY18 OU Operating Budget State Share of Instruction
Tuition & Fees
Salaries & Benefits
Allocated Cost Model
Capital Cost Model
Strategic Opportunity Reserves
BPC Budget Topics & Planning Assumptions
FY19 Budget Timeline

3. FY18 OU Operating Budget
Budget Book Section 2, p. 16

4. FY18 Operating Revenues

5. FY18 Operating Expenses

6. FY18 Operating Transfers
Budget Book Section 2, p. 16
Transfers (from) Operating Reserve – $(36.3)M; Transfer Net Results to Fund Balance $(5.8)M; Total: $(42.1)M
WOUC Spectrum Auction $(18.4) M – earned in FY17, utilized in FY18
Planned Use of Reserves of $(23.7)M, inclusive of:
$15.9M from the Strategic Opportunity Reserve, in accordance with its intended use to seed institutional investments and address financial planning volatility.
$7.4M from Auxiliary fund balances to support planned facility projects (including $3.0M of earned ICA gifts supporting the Sook Center).
$6.7M from our Athens Colleges and Schools to support one time investments and to bridge multi-year cost reduction plans.

7. State Appropriations: SSI
Budget Book Section 3
SSI is an annual, fixed dollar appropriation from the State of Ohio that subsidizes the cost of education for Ohio residents.
Allocations to each University calculated by the Department of Higher Education funding formula primarily driven by:
course completions
degree completions
weighting factors based on subject field of courses and degrees
weighting factors associated with student demographics contributing to risk in course and degree completion
Medical funding is a direct allocation to medical schools based on headcount enrollments. HCOM has seen an increase in its share of Medical SSI funding based on annual enrollment growth driven by the new student cohorts at their Dublin and Cleveland location.
Athens Main Campus SSI funding is distributed to the colleges via an RCM model allocation, which is currently being evaluated by the Budget Model Committee.
HCOM and RHE SSI subsidies are allocated to their respective planning units.

8. State Appropriations: SSI
Ohio University’s Historical SSI shares:

9. Tuition and Fees
Budget Book Section 4
Tuition increases and enrollment projections are the primary revenue drivers for the our Tuition and Fee revenue budget.
Enrollments: Input from BPC is primarily Athens UG enrollments, although we will provide projections and information on all other student types
Undergraduate tuition revenues at the Athens Main Campus are distributed to the Athens Colleges using an RCM allocation, which is currently under review by the Budget Model Committee.

10. Tuition and Fees: FY19 Planning Assumptions
Gross UG Tuition: Based on Tuition Increases
Net UG Tuition: Impact of Student Financial Aid

11. Salaries & Benefits: FY19 Planning Assumptions
Budget Book Section 8
BPC’s initial proposal for salary and benefit increases in FY19 appear below:
Notes:
After the 0% raise pools in FY18, BPC’s proposal represents a starting point for FY19 prior to the availability of comparable data on OU’s faculty and staff compensation.
The Faculty Compensation Taskforce will be reconstituted to begin analyzing the results of the prior Faculty Compensation Initiative in an effort to create a new plan that will involve a review of the goals, metrics used and approach to maintaining competitive faculty compensation

12. Allocated Cost Model Budget Book Section 20.4
To support the costs of our Administrative and Academic Support units, each responsibility center (colleges and auxiliaries) is assessed a tax via the Allocated Cost Model (ACM).
The cost share for each responsibility center is determined by an allocator, which is detailed in section of the FY18 Budget Book.
Allocators are used for simple rough approximations of share – they are not intended to be an “accurate” representation of utilization
The Budget Model Committee is currently reviewing the RCM model including the appropriateness of the Allocated Cost Model (ACM) as the indirect cost methodology utilized to fund the academic support and administrative support units.
The primary expense drivers of the allocated costs, that are funded by the responsibility centers are included in the budget planning assumptions below:

13. Capital Cost Allocation Model (CCAM)
Budget Book
Section 7 Debt
Section 9 CIP
The Capital Cost Allocation Model (CCAM) is the methodology utilized to allocate the central debt service charges to colleges.
CCAM does not include the debt service paid directly by planning units (e.g. Housing & Residence Life)
The CCAM methodology is based on the depreciation for each building associated with a college.
As new capital projects occur in the buildings occupied by a college, the depreciation charge will continue to increase in the future.
The University’s 6-Year Capital Improvement Plan (CIP) is the basis of the future year CCAM charges. Link: FY19-24 Six Year Capital Improvement Plan

14. Strategic Opportunity Reserve (SOR)
Budget Book
Section 10
Ohio University introduced the concept of a Strategic Opportunity Reserve in FY12 (formerly referred to as $100M Investment Strategy).
The Strategic Opportunity Reserve targets areas of investment that will help preserve the quality of the institution, while maintaining a strong financial position.
The Strategic Opportunity Reserve is primarily supported by unallocated University resources:
2% of the SSI and Athens UG Tuition Revenues
$4.5M annually, from Investment returns on Working Capital

15. Strategic Opportunity Reserve (SOR)

16. BPC Budget Topics & Planning Assumptions
Budget Planning Council will be responsible for reviewing and recommending the macro revenue and expense assumptions as well as strategic investment initiatives adopted in the FY19 budget. The following planning assumptions will change throughout the year:
Enrollments
Tuition & Fees: Within the context of legislative restrictions on increases
State Subsidy
Other Revenues
Compensation
Capital Improvement Plan
Strategic Investments
**The Budget Model Committee is evaluating the appropriateness of the current RCM budget model which includes a review of RCM methodologies that allocate revenues and expenses to the respective colleges as well as the use of subvention in equalizing the model allocations.

17. FY19 Preliminary Budget Timeline

18. FY 2018 Planning Assumption Changes
Rollover from prior years and known changes
Informed by House Budget Bill; Enrollment tracking
Informed by Gov. Kasich Budget Proposal
Financial Impact of Assumption Changes
*The FY18 Budget Process provides an example of how planning assumptions change throughout the year.