1. Plant Operations Facilities Users Network - FUN Facilities Users Network - FUNon Recharge Methodology

2. Accounting Model Accounting Model Calculation Calculation Components Components What’s Customer Pay/What’s General Fund What’s Customer Pay/What’s General Fund

3. Accounting Model Plant Operations is run like a business with multiple customers Plant Operations is run like a business with multiple customers Customers include Auxiliaries, B&F Departments, Construction Projects, Schools, Colleges and Institutes. Customers include Auxiliaries, B&F Departments, Construction Projects, Schools, Colleges and Institutes. The Biggest Customer is the General Fund The Biggest Customer is the General Fund

4. Accounting Model Each Department within Plant Operations operates an Enterprise Operation Each Department within Plant Operations operates an Enterprise Operation All the costs that Plant Operations incurs are rolled into the establishment of a set of rates for work performed. All the costs that Plant Operations incurs are rolled into the establishment of a set of rates for work performed. Customers including the General Fund are Billed with these rates. Customers including the General Fund are Billed with these rates.

5. Accounting Model

6. Calculation Unit Cost $/Unit = Unit Costs + OH Unit Cost $/Unit = Unit Costs + OH Available Units Units can be Person- Hours or Material Items Units can be Person- Hours or Material Items

7. Calculation – Numerator Costs included Costs included 1. Wages [Classification based] 2. Benefits [Standard HR package] 3. Tools and Equipment [shop tools, trucks, consumables, uniforms] 4. Overheads [supervision, payroll, HR, GC, Administration]

8. Calculation – Denominator Available Units Available Units 1. 2080 hours per year 2. Subtract vacation, holidays, average lost time 3. Resultant is approximately 1750 Hours per year available hours per person

9. Sample Worksheet

10. Calculation for Material’s OH Material OH is only applied to Construction Services. Material OH is only applied to Construction Services. All costs to obtain materials are summed up and divided by the expected dollar volume for the coming year. All costs to obtain materials are summed up and divided by the expected dollar volume for the coming year. Typical Cost include, expeditor cost, stocking cost, distribution including vehicles. Typical Cost include, expeditor cost, stocking cost, distribution including vehicles.

11. What’s Customer Pay vs. GF There will shortly be a Service guide posted on the Plant Operations Web Page. There will shortly be a Service guide posted on the Plant Operations Web Page. Generally speaking components attached to a GF building when it was constructed or acquired are included as a General Fund repair items. Generally speaking components attached to a GF building when it was constructed or acquired are included as a General Fund repair items. Because the University has a $700+ million deferred maintenance need low priority items are not likely to be repaired any time soon. Because the University has a $700+ million deferred maintenance need low priority items are not likely to be repaired any time soon.

13. Plant Operations Planned Budget Control Strategies

14. Plant General Fund

15. Background Plant Operations Plant Operations Facilities Maint. Facilities Maint. Building Services Building Services Construction Services Construction Services Grounds & Waste Mgmt. Grounds & Waste Mgmt. Work Control Work Control Administrative Services Administrative Services

16. Assumptions Plant Operations is a business enterprise that provides multiple services to the U of M community Plant Operations is a business enterprise that provides multiple services to the U of M community A 5% base budget reduction is required in the present situation. This equates to $2,300,000 on a $46.7M PGF budget. A 5% base budget reduction is required in the present situation. This equates to $2,300,000 on a $46.7M PGF budget.

17. Assumptions There are no excess funds in the Plant General Fund (PGF) Budget There are no excess funds in the Plant General Fund (PGF) Budget All resources are used in the care and maintenance of U of M GF facilities All resources are used in the care and maintenance of U of M GF facilities The Customer Pay (CP) work load will remain stable over next three years The Customer Pay (CP) work load will remain stable over next three years (We are also modeling a decrease in CP work)

18. Assumptions Personnel can be transferred from PGF to CP work to control spending levels on general fund. Personnel can be transferred from PGF to CP work to control spending levels on general fund. Natural attrition can provide flexibility to balance any unexpected reduction in customer pay work [beyond 2-3 years out] should it occur. Natural attrition can provide flexibility to balance any unexpected reduction in customer pay work [beyond 2-3 years out] should it occur.

19. Assumptions We can balance sources of revenue to still serve the community during times of budget scarcity We can balance sources of revenue to still serve the community during times of budget scarcity Striving to include an FY 2004 salary program in our reductions. Ultimate decision rests with Provost. Striving to include an FY 2004 salary program in our reductions. Ultimate decision rests with Provost.

20. Specifics 1. Reduce Overhead Where Possible Open Positions Seek to consolidate duties of open overhead positions Seek to consolidate duties of open overhead positions Consider upcoming retirements and consolidate duties where opportunities exist Consider upcoming retirements and consolidate duties where opportunities exist Transfer one supervisor to Hospital contract Transfer one supervisor to Hospital contract

21. Specifics 1. Reduce Overhead Where Possible Travel & Misc Reduce travel related to training and conferences Reduce travel related to training and conferences Reduce on-call coverage Reduce on-call coverage Reduce the number of business and service vehicles Reduce the number of business and service vehicles Reduce hosting for in-house events costs Reduce hosting for in-house events costs

22. Specifics 2. Redefine Base Level Services Lengthen Intervals Lengthen intervals of Custodial cycles. Lengthen intervals of Custodial cycles. Lengthen intervals Grounds cycles. Lengthen intervals Grounds cycles.

23. Specifics 2. Re-define Base Level Services Eliminate Some Services Divert Skilled trades positions from PGF to Customer Pay Work Divert Skilled trades positions from PGF to Customer Pay Work Reduce volume of >$5,000 project on PGF Reduce volume of >$5,000 project on PGF Reduce number of Grounds’ Student Positions Reduce number of Grounds’ Student Positions

24. Specifics 2. Redefine Base Level Services Make Some Services Customer Pay Shade and Blind Cleaning Shade and Blind Cleaning Indoor plant maintenance Indoor plant maintenance Non-emergency overtime Non-emergency overtime

25. Conclusions The strategies outlined will result in PGF savings of $2.3M. The strategies outlined will result in PGF savings of $2.3M. Savings are sufficient to carry Plant Operations through budget crunch. Savings are sufficient to carry Plant Operations through budget crunch. Additional options continue to be evaluated. Additional options continue to be evaluated.

26. Conclusions A FY2004 Salary program is planned in the analysis, but ultimate decision rests with Provost. A FY2004 Salary program is planned in the analysis, but ultimate decision rests with Provost. Continuity of service to the community is altered but maintained. Continuity of service to the community is altered but maintained. Safety as an ongoing concern is not compromised Safety as an ongoing concern is not compromised