January 9, 2017

Bi-Campus Budget Conversation

AGENDA

• Financial Update• 2015-16 results• 2016-17 update• 2017-18 budget

• Update from Campus Vice-Presidents

• Conversation/Discussion/Questions

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2015-16 Year-end Results

Key Items From 2015-16 External Financial Audit

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Clean audit opinion

No significant items in auditors’ management letter

Unrestricted operating account deficit $3.1M for the year

Key Items From 2015-16 Financial Audit

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Accumulated unrestricted operating surplus now a deficit of $3.1M

Statements reflect planned transfer from internally restricted funds

2015-16 Operating Results

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Budget Actual

Approved budgeted deficit before one‐time items $      (7.8) M (7.3) M

One‐time outreach revenue 1.9  M 2.0  M

Net Transfer from reserves 6.5  6.4  M

Why UNB Campaign (4.2) M (4.2) M

Approved budgeted deficit after one‐time items $      (3.6) M $     (3.1) M

Variance equivalent to 0.2% of budgeted revenue

2015-16 Operating Results

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Key Highlights

Main Drivers of Variance

‐ Tuition Revenue Shortfall (1.6)$    M‐ Additional Salary Savings 1.9 M‐ Other 0.2 M

0.5$      M

Budgeted Use of Internally Restricted Net Assets

Source of the Funds

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Use of the FundsCategory & Description $ MillionsCapital Ward Chipman Library 2.4

Risk Reserve for future revenue declines 5.8 Various others 0.1

Strategic Priorities Released from Endowment Backstop 2.3 Operating surplus not yet allocated 3.8 Reserve for strategic priorities 0.8 Various others 0.4

Specific Projects Various others 0.3Total amounts used or transferred 15.9

Transfer and Use of Funds $ Millions15-16 Use of Funds Deficit reduction 2.2 Why UNB Campaign 4.3

Transfer to Specific Projects for use in 2016-17 Deficit reduction 4.2 Enterprise Software License 0.3 Library acquisitions 1.3 Recruitment 1.2 Why UNB Campaign 2.2 One-time Strategic Initiative 0.2Total amounts used or transferred 15.9

2016-17 OUTLOOK

2016-17 Outlook – A First Look

• At this stage of the cycle, the following 3 areas have been identified as likely variances:

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‐ Grant (0.4)$    M‐ Tuition (2.2) M‐ One‐time Item 1.4 M

● Early indications are (1.2)$    M  worse than budget

2017-18 BUDGET PROCESS & STRATEGY

2017-18 Budget Process

Planning/Strategy

‐ Update and run preliminary financial models

‐ Agree on key assumptions

‐ Budget Committees meet to review and advise

‐ Establish high‐level strategy

Decisions/Assembly

‐ Meetings with portfolio managers to gain information and establish individual unit targets

‐ Detailed budget preparation

‐ Present Budget to UBAC, PET

‐ Budget status update to Finance Committee

‐ Budget Campus Conversation

Oversight Dates

Mar 2 – Finance Committeereceives status update

Mar 22 – PET receives draft budget

Nov 21 – Finance Committee reviewed strategy

Dec 8 – Board receives update

Apr 4 – Budget presented to Finance Committee for approval

Apr 20 – Budget to Board for approval

Completion/Approval

‐ Budget finalized in draft for presentation to Finance

‐ Finance approves

‐ Board approves

‐ Budget release

‐ Budget Town Hall

Phase 1September ‐ December

Phase 2December ‐March

Phase 3March ‐ April

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Budget Oversight

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Overview of UNBBudget Oversight

Board of Governors

Finance Committee

President

President’s ExecutiveTeam

UBAC

University Budget AdvisoryCommittee

Saint John Campus

Budget Committee

FBAC

Fredericton BudgetAdvisory Committee

Budget Strategy

• Balanced budget by the 2019-20 fiscal year• Deficits will continue but reduce in each of 2017-18 and 2018-19

• Use internally restricted net assets to reduce structural deficits as a transitional measure

• Move some ongoing sustainability items into base budget

• Integrate budget with academic plans and results of admin review• Resource allocations based on priorities, plans

• Consider investments in strategic areas aligned with academic plans

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2017-18 BudgetPro-forma Assumptions – Before budget decisions/actions

Provincial grant frozen

3% increase in tuition rate

Enrolment levels from Registrars• Based on 2016-17 fall enrolment, demographics, history

• Includes increases related to recruitment and marketing

initiatives

• Pro-forma outlook is a 0.6% decline from the 2016-17

projected enrolment

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2017-18 BudgetPro-forma Assumptions – Before budget decisions/actions

0% increase in non-salary budget items

Wage increases in accordance with signed collective agreements

Faculty and staff complements remain largely the same as 2016-17

Results is pro-forma structural deficit $8 million 2017-18

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2018-19 and 2019-20 Budgets

UNB prepares and the Board approves budgets annually

Modelling multi-years for planning and strategy development purposes

Level of uncertainty re assumptions increases in future years

Multi-year pro-formas will be recast to reflect 2017-18 budget decisions

Enrolment forecasts as they are refined with new information

Key assumption change is provincial grant funding - 2% increase in those years

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Update from Vice President Saint John

Update from Vice-President Saint John Fall 2016: Saint John Campus Budget Committee

established(composition of committee includes: Vice-President’s Senior Advisory Committee, plus a representative from each faculty and a representative from the Department of Information Services and Systems)

Meetings held in November and December: 1) reviewed assumptions for 2017-18 budget

2) reviewed 2015-16 budget year, and 2016-17 year to date

3) discussed budget process and timelines for capital, non-space, cost recovery, ancillary and operating budgets

4) discussed budget strategy for 2017-18

Upcoming Budget Meetings in January and February: 1) Non-Space budget rankings and Operating budget strategy discussion

2) Cost-Recovery, Capital, and Ancillary budgets discussion

3) Finalize Cost-Recovery, Capital and Ancillary budgets

4) Finalize Operating Budget for Saint John Campus

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Update from Vice President Academic (Fredericton)

Update from Vice-President Academic (Fredericton) Fall 2016: Resource Planning and Budgeting meets with unit

(including Deans) across campus First time preliminary discussions have been undertaken

Twofold intention: 1) Discovery: improve understanding of units budgeting practice in RPB

2) Reductions: any budget reductions to units will be mutually agreed upon and known prior to budget release

RPB has also met with central budget units Largest share of any Fredericton reductions will be central, not Faculties or academic

Academic financial decisions in 2016-2017 informed by 2016 Fredericton LCC report Academic Planning Stage II: opportunities analysis building on 2015-2016 LCC work

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Discussion / Questions