1. at the University of Virginia
New Financial Model
at the University of Virginia

2. at the University of Virginia
New Financial Model
at the University of Virginia
Website:
Chip German

3. New Financial Model at the University of Virginia
Version 1.5
Dollars from Heaven
Actual Tuition Revenue
Direct Expenditures
Personnel Costs
Costs of Central Services
School Planning View
Costs of Financial Aid
Endowment Income
Private Gifts
The Past: Trying to look through deeply tinted glass

4. New Financial Model at the University of Virginia
Base and Strategic Operating Support
Actual Tuition Revenue
Complete Strategic Perspective
Direct Expenditures
Personnel Costs
Innovation and Entrepreneurship
School Planning View
Costs of Central Services
Endowment Income
Responsibility
&
Accountability
Private Gifts
Costs of Financial Aid
The Future: A complete financial picture

5. New Financial Model at the University of Virginia
Sources
Uses
University
Undergrad
Financial Aid
State
Funds
Private Gifts
/Endow. Inc.
Central Services
Operating
Support
Base
Additional
Support
Strategic
Tuition
Allocated Costs
Research Funds
School
Direct Expenditures
Portion of undergrad tuition that goes to undergrad financial aid
Toward a more transparent financial system

6. at the University of Virginia
New Financial Model
at the University of Virginia
Current Status:
Discussion of initial school scenarios between Provost, COO, and individual school deans has just concluded
Focus is now shifting to parallel processes:
Budget building for FY14-15
Scenario and reporting refinement
Improvement of accuracy and precision in underlying data
Move of modeling platform from Excel to Hyperion “cost of education” with transparency of allocation methods and drill-down capabilities
Parallel processes will converge near beginning of FY with translation of budget into NFM terms and organization and new means of tracking

7. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Define Service Categories that are not metered and/or directly recovered
Facilities Services
IT Services
Employee Services
Development/Alumni-Engagement Services
Central Library Services
Research Support Services
Student Support Services
Undergraduate Admissions Services
Academic Support Services
General Services (executive/managerial)

8. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Each central-cost category has its own
Developed by planning committees over years prior to 2013
Proposed by New Financial Model steering committee to President, EVP/COO and EVP/Provost in December 2012; adopted in spring 2013

9. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Facilities Services:
Total cost is allocated by proportion of square feet occupied by all entities (includes proportional share of “general” space in shared buildings)
Note that utilities will be directly billed to units/schools for space they occupy (currently viewable as “memo” bills)

10. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
IT Services:
Total costs allocated by this formula: weighted 0.75 x proportion of serviced employees (excludes Facilities and IT employees) + weighted 0.25 x proportion of annual FTE students
Excludes Communication Services costs, which are recovered through billing.

11. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Employee Services:
Total costs allocated by this formula: proportion of FTE employees

12. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Development (all University entities receiving gifts):
41.5 percent of total central costs allocated by this formula: proportion of school/unit-specific gifts greater than $100K for last four years
58.5 percent of total central costs temporarily covered by University grant
Alumni Engagement (schools only):
41.5 percent of total central costs allocated by this formula: proportion of living alumni for all schools

13. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Central Library Services:
Total costs not covered by other funding sources allocated by this formula: proportion of sum of annual headcount students + annual number of doctoral degrees + FTE instructional/research faculty

14. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Research Support Services:
Total costs not covered by other funding sources allocated by this formula: weighted 0.5 x proportion of total research dollars + weighted 0.5 x proportion of total awards

15. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Student Services:
Total costs not covered by other funding sources allocated by this formula: proportion of annual FTE students

16. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
Academic Support Services:
Total costs not covered by other funding sources allocated by this formula: proportion of (annual FTE Faculty + annual FTE students)

17. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Apply Allocation (Usage Approximation) Algorithms
General Services (executive/managerial):
Total costs not covered by other funding sources allocated by this formula: proportion of annual direct school expenditures

18. at the University of Virginia How Do We Allocate Revenues?
New Financial Model
at the University of Virginia
How Do We Allocate Revenues?
Important issue for Central Service Providers: Are you affected by changes in allocations of revenue?
Undergraduate tuition (net of financial aid and blind to in-state vs. out-of-state proportions) will be allocated via a blended formula that considers includes the credit hours students take within a school (75%) and the schools with which students are affiliated (25%). Those undergraduate schools with differential tuitions or school-specific fees will receive that tuition (net of financial aid) or fee revenue directly, not through an allocation formula. Tuition revenues fees from summer session will be allocated directly to schools through a methodology currently in development.

19. New Financial Model at the University of Virginia
How Do We Allocate Central Service Costs?
Important issue for Central Service Providers: Are you affected by changes in allocations of revenue?
Graduate tuition will be allocated directly to the schools of enrollment (and includes both financial aid and any out-of-state differential); implemented for Graduate tuition revenues and school-specific fees from summer session will be allocated directly to schools through a methodology currently in development.
Grants and contracts will be allocated to the unit holding the grant or contract.
Facilities and administrative cost recoveries will be allocated to the unit holding the research grant.
Restricted endowment distribution will be allocated according to the donor’s wishes.

20. at the University of Virginia How Do We Allocate Revenues?
New Financial Model
at the University of Virginia
How Do We Allocate Revenues?
Important issue for Central Service Providers: Are you affected by changes in allocations of revenue?
The 50-basis point endowment administration fee will be allocated to the endowment owner.
Foundation support in cash and other forms (including in-kind) must be reported as a source by each school.
Other revenue (gifts, sales, services, transfers, etc.) is allocated to the school that receives it.
ETF credits equal to direct expenditures in the same category are included in school revenue totals.

21. at the University of Virginia How Do We Allocate Revenues?
New Financial Model
at the University of Virginia
How Do We Allocate Revenues?
Important issue for Central Service Providers: Are you affected by changes in allocations of revenue?
Unrestricted state funding, unrestricted gifts and unrestricted endowment distribution will be retained by the President and deployed in ways that include the following:
To maintain a program that will provide supplemental funding in such forms as short-term strategic support or longer-term base operating support from a central pool to ensure that all schools sustain excellence.
To invest in the University’s highest priorities as identified by the strategic planning process.

22. New Financial Model at the University of Virginia
BACKGROUND INFORMATION:
Total Academic Division Operating Expenditure Budget
$1.36 Billion Dollars

23. Sources

24. Uses

25. at the University of Virginia
New Financial Model
at the University of Virginia
Website:
Chip German