1. BUDGETING – CRADLE TO BOARD AT THE UNIVERSITY OF OTTAWA CAUBO – Pre-conference June 23, 2007

2. Budgeting - Cradle to Board Agenda Budgeting at the University of Ottawa Total enterprise budget Operating fund - Budget process and calendar - Revenues - Expenses - Faculty budget allocations - Challenges of the new formula - Monitoring Ancillary fund Research and trust funds Capital fund Engaging the Board Challenges of the budget process 2

3. Budgeting - Cradle to Board Budgeting at the University of Ottawa Total enterprise includes four funds: - Operating - Ancillary services - Research and Trust - Capital Board approves the operating fund and ancillary annually Research and Trust budget for information purposes Capital fund budget approved annually, and each project over $500,000 is approved The total budget includes all funds A complete budget document is prepared annually 3

4. Budgeting - Cradle to Board Operating Fund Planning and budgeting Vision 2010 Strategic Plan - Faculty and services plans Resource Allocation is driven by Vision 2010. Multi-year budgeting: - Three year operating budget reflecting priorities of Vision 2010 - Annual budget and revised projections Budgeting Principles: - Cash basis - Annual allocations to faculties and services - Year-end carry forward of faculty and service net results - Concept of base budget versus one time only funds - Maintenance of base budget and effective budget 4

5. Budgeting - Cradle to Board Funding of expenditures Expenses paid centrally - Employee benefits - Annual economic salary increases - 50% of faculty and services renovation costs -Utilities and maintenance -Software licenses -Scholarships and bursaries Expenses paid by faculties and services -PTR portion of salary increases -50% of renovation costs -Retiring allowances -All other costs ie. salaries, supplies, books, equipment, travel 5

6. Budgeting - Cradle to Board Operating Fund Budget Calendar 2007-2008 Strategy and assumptions – Administrative Committee Preliminary University budget preparation – Financial Planning Submission of faculty & services plans: - requests for funds for new initiatives - Academic/support staff hiring plans - Space optimization and renovations - Preparation of budget target envelopes November/December 2006 Presentation of preliminary budgets to the AC, Deans and Directors January 2007 Development of budget target envelopes by faculty and services March 2007 Preparation of budget document April 2007 Final budget – Board approval May 2007 Projections for 2007-08 results Projections and variances Fall 07 & Winter 08 Budget adjustments (On-going) 6

7. Budgeting - Cradle to Board Preliminary budget preparation Prepared centrally by the Financial Planning Service: –Works closely with Institutional Planning, Finance, Treasury, Physical Plant, Computing Services, Human resources, and Faculties and services Information on major revenues and expenses are gathered Revenue and centrally financed expense projections are prepared and analyzed 7

8. Budgeting - Cradle to Board Operating fund Revenue projections 8 1. Provincial Assistance 2. Tuition fees - Increase in tuition fees 2007-08 & 2008-09 - Enrolments 3. Other revenue - Investment revenue - Indirect cost of research - Rental of space - Donations

9. Budgeting - Cradle to Board Operating fund Expense projections 9 1. Salaries 2. Employee benefits 3. Other expenses a) Fixed costs for Physical resources b) Fixed costs for Computing c) Undergraduate scholarships and financial aid d) Graduate scholarships e) Insurances f) Additional revenue allocations to faculties

10. Budgeting - Cradle to Board Budget preparation Budget envelopes for faculty and services from the prior year reviewed Budget scenario with projections and current budget envelopes is prepared Envelope for new initiatives is calculated and identified Administrative committee approves all new budget allocations based on our Strategic Plan – Vision 2010: –Major priorities are set –Most new budget allocations are analyzed by the Financial Planning service before approval Budget scenarios are prepared and discussed 10

11. Budgeting - Cradle to Board Faculty budget allocations In 2005-2006 - Ontario government Reaching Higher Plan: –Provide opportunity to review Faculty budget allocations Maintained Faculty budgets prior to 2005-2006 as a base – no budgets were reduced Budget/Generated Revenue ratios per faculty were reviewed –Generated revenue includes Government funding and tuition fees –Ratios ranged from 49% to 72% –Student/faculty ratios ranged from 17 to 30, average 23.9 –Objective was to reduce class sizes and improve student/faculty ratio –After budget adjustments reduced average student/faculty ratios to 22.1 11

12. Budgeting - Cradle to Board Faculty Budget Allocations Analysis of University indirect versus direct costs Indirect costs include all non-Faculty costs: All centrally funded services : - Computing - Library - Registrar - Financial Services - Human Resources - Physical Plant - Protection etc. All indirect costs represent 55% of total Government grants and tuition fees 12

13. Budgeting - Cradle to Board New funding formula New funding formula for Faculties is approved: –After 2005-2006, Faculties will receive 45% of the revenue they generate 80% of additional revenue must be used to hire permanent professors –If revenues generated decreases, the amounts are decreased from their budget according to the new formula –Importance of generating realistic projections of number of student in each program and Faculty 13

14. Budgeting - Cradle to Board Challenges of new formula Projections of number of students per Faculty and per program Projections of tuition fees: –Differential fees per year of program Graduate student enrolment projections Monitoring the hiring of professors to ensure objectives are met Working with the Faculties that have decreased projections of students Confirmation of government grants and tuition fee increases Adapting the formula to changing environments 14

15. Budgeting - Cradle to Board Budget Monitoring Faculty and Service budgets are monitored centrally in the Fall and in the Winter –Salary budgets cannot be used for other expenses –Budget transfers must be made and approved Projections to the current year-end are up-dated with actual data available and presented to the Administrative Committee Position control system closely monitored to ensure salary data is accurate Work closely with Faculties and Services that have budget challenges Base budget and Effective budget are maintained Effective budget used for projections Financial Planning office includes 7 staff 15

16. Budgeting - Cradle to Board Ancillary Services Budget Process: -Includes mostly self supporting services, ie. Parking, food services, housing, community life and conventions -All costs are charged, including utilities, staff benefits etc. -Reserves are used to finance renovations and improvements -Budgets are prepared by each area, projecting their revenue and expense objectives 16

17. Budgeting - Cradle to Board Research and Trust Budget Process: –Info from Research services, TTBE, GRIP –Includes all externally restricted funds –Projections of revenues by major granting agencies –All grants and contracts are received one by one, throughout the year –Concept of matching revenues and expenses –Does not include revenues and expenses from affiliated hospitals and research institutes –Budget is for information purposes only 17

18. Budgeting - Cradle to Board Capital Fund Budget process: -Includes capital construction projects and acquisitions -All renovation requests from faculties and services are submitted to Physical Resources service by November 15 annually -Space optimization and deferred maintenance budgets approved by the Executive committee of the Board in February annually to ensure work can be planned for the summer -All projects are approved by the Board 18

19. Budgeting - Cradle to Board Engaging the Board Board approved the University Strategic Plan – Vision 2010 and the University Balanced Scorecard Action plans were developed following Vision 2010 Annually measure and report the progression of the action plans and the Balanced Scorecard Presentation to the Board prior to the approval meeting on the budget process at the University Presentation to the Board of the total enterprise budget with an emphasis on the operating budget and priorities –Provide budget document and approve the operating budget Once in the fall and once in the winter provide new budget projections to the current year-end Annual financial statements approved by the Board 19

20. Budgeting - Cradle to Board Challenges of budget process Receiving information on a timely basis ie. Government funding, salary increases, tuition fee increases, projections of number student The reliability of the projections, ie: number of students, scholarships, salaries, utilities etc. The Operating Budget is prepared by Financial Planning Service with the cooperation of many other University Faculty and Services –Communication of requirements, process and timelines Regular communications of budget issues arising during the year Knowledge required to prepare the budget Quality of documentation of approvals and changes Quality of spreadsheets and organization of documents Research, Ancillary and Capital budgets are prepared by Financial Services 20

21. Budgeting - Cradle to Board Documentation Web reference http://www.uottawa.ca/services/planfin/bdgt/bdgt08-e.htmhttp://www.uottawa.ca/services/planfin/bdgt/bdgt08-e.htm Table of contents A.Budget 2007-2008 – Total enterprise B.Operating Fund 1.2007-2008 Operating Budget 2.Budget by Major Function 3.Budget by Faculty/Service 4.Analysis of Grants – 2003-2008 5.Tuition Fees – University of Ottawa 2006-2008 6.Five-Year Analysis of Revenue Sources 7.Enrolment projections in FTE’s & BIU’s by Faculty – 2006-2010 8.Analysis of Scholarships and Bursaries – 2003-2008 9.Other Expenses C.Ancillary Services 1.Actual & Budget D.Research and Trust Fund 1.Grants and Contracts by Category 2.Research Highlights E.Capital Fund Appendix Strategic Areas of Development Loan Default Rate 21

22. Budgeting - Cradle to Board QUESTIONS? 22