1. Budget Briefing 2011/12 Catherine Whalley - PRAS Stephen Purbrick - Finance

2. What this presentation will cover  Budgeting process – timeline  JRAM allocations for 2011/12 – informed by:  HEFCE grant for 2011/12  Fee income for 2011/12  Services’ budgets for 2011/12  Infrastructure Charge allocations for 2011/12  Setting the 2011/12 budget  Future challenges and the University’s response Page 2S

3. Page 3S Budgeting Process  October 2010  Academic divisions tasked with identifying non pay savings of 5%  Services tasked with delivering year 2 of agreed 3-year savings targets  January 2011  Divisions and services plans reviewed  February  Service costs for 2011/12 agreed by PRAC and divisional 123 charge allocations for 2011/12 calculated  March  HEFCE grant letter received and JRAM allocations for 2011/12 calculated  April  Budget targets agreed by PRAC  June  Budget review meetings  July  Final 2011/12 budget agreed

4. Page 4C HEFCE grant allocations for 2011/12 (1) 2010/11 (March 2010) 2010/11 (March 2011) 2011/12 (March 2011) difference between 2011/12 and 2010/11 (March 2011 figures) £m £% TOTAL189.6184.8187.32.61.4% mainstream T grant58.255.653.1-2.5-4.5% mainstream R grant123.8121.7127.15.44.5% Other (WP, Libraries, Museums etc) * 7.67.57.1-0.4-5.3% * Not including HEIF

5. HEFCE grant allocations for 2011/12 (2) Teaching funding  Continued reductions in T funding. Research funding  QR: concentration through movement of weightings (for 4* – 3* – 2* – 1* – unclass) from 9 – 3 – 1 – 0 – 0 to 9 – 3 – 0.294 – 0 – 0  Charity support stream: Drop in rate per £ but our volume has increased faster than the sector’s volume.  Business support stream: EU & Overseas volume now included in HEFCE calculations.  PGR funding: the rate of funding per PGR FTE has fallen again. Page 5C

6. Fee income for 2011/12 (1)  Fee income for 2011/12 is currently forecast to be £11.6m (8.9%) more than that budgeted for 2010/11.  Some of this has already fed through in the JRAM 2010/11 in-year update (£3.3m above budget), the rest arrives in the 2011/12 initial JRAM allocations.  Current forecasts for 2011/12 are based on current student numbers and next year’s fee levels.  Informed by new SNP forecast intake figures from divisions, PRAS will model fee income for 2011/12 based on next year’s projected student numbers. Page 6C

7. Fee income for 2011/12 (2)  Student FTEs grew approximately 2% from 2009/10 to 2010/11.  Very broadly, 35% of students generate 70% of fee income, and it is these students who are growing in number.  Many fee rates are increasing 4% from 2010/11 to 2011/12 and new bespoke fee rates are kicking in too, noticeably for Humanities PGT students.  Fee rates for HEU PG students are rising more than they normally would, to compensate for the loss of Roberts funding. Page 7C

8. Page 8 C JRAM allocations for 2011/12 (1):

9. JRAM allocations for 2011/12 (2): comparing 2010/11 in-year update allocations with 2011/12 initial allocations Page 9C CHANGE in £mMSDSSDMPLSHumOUDCECollegesTOTAL HEFCE T (including RDP) & TDA-£0.4-£0.1-£0.6-£0.4-£0.0-£1.0-£2.5 UG fees£0.3£0.1£0.2 £0.0£0.9£2.0 PGT fees£0.0£2.2£0.1£1.1£0.1£0.2£3.7 PGR fees£0.5£0.9£0.7£0.3£0.0£0.4£2.6 PGT realignment trans funding£0.5-£0.5£0.3-£0.2-£0.0 £0.0 Total T and related streams£0.8£2.6£0.8£1.0-£0.0£0.4£5.8 R - QR£0.5£0.2£0.1 £0.0£0.1£0.9 R - Charity£1.5£0.0£0.3£0.2£0.0 £2.1 R - Business£2.6£0.2-£0.3-£0.0£0.0 £2.6 QR trans funding£0.5£0.4£0.5-£0.4£0.0-£0.9-£0.0 Total R and related streams£5.1£0.8£0.6-£0.1£0.0-£0.7£5.5 TOTAL£5.9£3.4£1.4£0.9-£0.0-£0.3£11.3

10. Services budget 2011/12 (1) Page 10S

11.  Savings – split roughly evenly across:  savings in staff costs across UAS and ASUC£1.1m  savings in non-staff costs across UAS and ASUC£1.1m  higher external income generation£1.1m  Other (including charges to colleges)£0.6m  Unavoidable costs – heavily challenged by BSC:  license and staffing costs for agreed IT developments£0.9m  Investment for REF and impact of lost income streams£0.8m  increase in Library materials budget£0.3m  additional resource to cover transfer of R&M responsibilities from academic depts to OUED£1.0m Page 11S Services budget 2011/12 (2)

12. Page 12C 123 Infrastructure charge for 2011/12 (1) £m Services budget target108.9 Services surpluses to reserves (e.g. Graduate Accommodation)1.1 Costs in the 123 model not in the services: e.g. insurance2.6 Costs in the 123 model from academic divisions: OSC0.6 TOTAL 123 charge for 2011/12113.1

13. 123 Infrastructure Charge for 2011/12 (2) Page 13C £mMSDSSDMPLSHumOUDCE collegesother TOTAL 2011/12 123 charge27.415.526.715.21.62.424.4113.1 2010/11 123 charge27.315.625.815.51.62.624.3112.7 difference0.1-0.10.8-0.30.0-0.20.10.4  The total 123 charge for 2010/11 was £112.7m.  Without the addition of the Oxford Super-computer, the 123 Infrastructure charge would be lower in 2011/12 than in 2010/11.

14. Setting the budget 2011/12 – high level Page 14 £m Budget surplus 2010/20110.3 HEFCE and fee changes via JRAM11.6 OUP transfer interest7.7 PRAC non-pay saving targets4.6 OMIS savings1.3 Services improvements0.8 Increased utility costs(1.9) Other (central adjustments)(4.3) Sub-total20.1 PRAC adjustments(6.3) Target surplus 2011/201213.8

15. Setting the budget 2011/12 – divisions Page 15 £m InitialHEFCE charitable PRAC adjusts Budget target Medical Sciences13.0(1.0)(3.0)9.0 Social Sciences6.0(2.0)4.0 MPLS0.5(0.3)0.2 Humanities(2.1)(0.2)(2.3) C Education(0.1)0.20.1 Services1.6 Central costs & adjusts1.2 Target 2011/201220.1(1.5)4.813.8 Note – figures include £2m transfer from Medical Sciences to Humanities, and £0.8m transfer to the Colleges, under the 2010 ‘SPRIG’ proposals.

16. Page 16S Looking ahead Major changes to funding streams  Reduction in HEFCE teaching funding and introduction of higher student fees from 2012/13  Significant cuts in HEFCE capital funding  Reduction in Research Council funding

17. Overall impact of £9k fees (after reduction in HEFCE teaching grant) Page 17S £m Additional income (allowing for loss of teaching capital) 10.0 Fee waivers and bursaries(5.5) Access, outreach and student support(1.5) Income to be shared between University and Colleges 3.0

18. HEFCE Capital Investment Fund 73% reduction Page 18S

19. Research Council Savings 2011/12 – 2014/15  £428m from HEIs & RC Institutes & Facilities  Oxford to reduce its FEC indirect charge by 2% (5 bands for savings up to 5%)  Inflation reduced to zero  Savings applied to existing and future awards  Future equipment funding needs matched- funding from HEIs (50% +?)  Impact on Oxford unknown Page 19S

20. Page 20S 5 year forecasts – key assumptions  HEFCE teaching grant falls significantly, by up to 33% pa.  HEFCE research grant remains static, on the back of high quality research  £9k fees for HEU undergraduates and above inflation increases for overseas and post-graduates  Falling research overheads, largely as a result of the RCUK savings  No growth in University funded staff & modest pay awards.  University funded capital expenditure capped at £50m pa on average

21. 5 year forecast - results Page 21 S

22. Strategies for dealing with the funding environment (1)  Pay costs  Continue with the recruitment protocol  Continue with pensions reforms (USS & OSPS)  Contain pay inflation  Deliver full 10% Service savings  Non-pay costs  New VFM approach  IT & Science purchasing groups  Continue to develop Small Research Facilities  Shared services Page 22S

23. Strategies for dealing with the funding environment (2)  Capital  Focus remaining HEFCE CIF on existing space, sustainability and carbon management  Focus capital as much as possible on endowment to generate income to cover existing costs (£60m teaching fund and £192.5m OUP endowment)  Diversify sources of research income …… Page 23S

24. Sources of research income Page 24S Sponsor type Aug to Jan awards 09/10 £m Aug to Jan awards 10/11 £m Change from previous year % Research councils52.041.9-19 UK Charities51.4116.4127 UK Government17.511.5-34 EU Government5.117.3238 UK & Overseas Industry7.9123.81468 Other7.216.4128 Total141.1327.4132

25. Any questions? Page 25