What Is Budgeting?

Dr. Richard L. Brown, Jr.

Executive Vice Chancellor

Making Decisions that Distribute Resources to Enable Actions

The Budget

• The budget is the device by which an organization:

• Carries out its plans

• Signals its priorities

• The primary mechanism to create incentive for positive

change.

• Planning is typically conducted at the strategic level.

• Budgeting is typically focused at the operational level.

Approach to Strategic Budgeting

• Develop a stronger “student-centered” approach.

• Become more responsive to employer needs.

• Address the particular needs of underserved clients:

• Minorities

• Geographically remote areas

• Academically poorly prepared

• Improve retention and graduation rates.

• Focus on organizational mission.

Linking the Budget to the Strategic Plan

• The budget structure should explicitly reflect the areas of

responsibility of strategic level decision makers.

• Base/Continuation Expenditures – Adjusted for Inflation

• Strategic Planning Initiatives

• Contingency Reserve Funds

• Cost Going Forward Items

• Asset Maintenance Funds

• Revenue Creation/Deletion – Changes in asset structure

• The budget process requires established guidelines to each

component prior to initiating unit level budget building.

Evaluation of the Budget

To evaluate the budget, ask the following questions:

• What about changes in the revenue and operational

structure?

• How will staffing patterns change?

• How will materials acquisitions be affected?

• How will the stock of instructional and operating

equipment change?

Evaluation of the Budget

What about asset/plant maintenance?

• What is the relationship between current expenditures and

renovation and renewal of the physical plant?

• What is the replacement value of plant?

• What is rate of replacement of equipment?

• What about energy management?

• Capital Expenditures

• Master Planning

Evaluation of the Budget

What about operating expenditures?

• Do you have a viable compensation plan?

• What is the ratio of personnel development – market

value and equity – to compensation?

• What is trend in expenditures on curriculum development

and program expansion?

• What level of financial reserves is being maintained?

• How effective is the institutional investment in student

financial aid and scholarships?

Evaluation of the Budget

To further evaluate the budget, ask questions regarding:

• What is the evidence state/system priorities are being

achieved?

• What is the evidence institutional priorities are being

achieved?

• Is the institution fulfilling its mission?

• What about the contingency fund?

• How large is the contingency fund relative to the operations

budget?

The Focus of Budget Decisions

Assets

• What kinds will we have/own?

• In what quantities/how many?

• Of what quality?

• At what prices?

• What are assumptions about levels of utilization?

Consumables – Utilities, insurance, supplies, etc.

• In what quantities?

• At what prices?

Revenues – Diversification of funding stream

• In what amounts?

• From what sources?

Budget Allocations

• To which units?

• To what ends? The basis of accountability.

Strategic Planning Priorities & Themes

Characteristics

• Generally, are broad institutional issues that cannot be

addressed by a single unit.

• Are long-term and cannot be resolved in a single year.

• Require responses through basic institutional processes

and are not programmatic “add-ons.”

• Require broad based participation.

Strategic Planning Priorities & Themes

Planning

• Making decisions about organizational priorities that

specify what changes in intentions, competencies, or

behavior the organization will pursue. It is the mechanism

through which organizational values and methods of

identifying them are affirmed.

• Aligns resources to decisions.

• Ensures efficiency and effectiveness.

• Planning must result in decisions.

• Planning is fundamentally a change process.

Basic Mission Basic purposes of the enterprise and

its guiding principles for behavior.

Clientele Target audiences of the institution.

Program/Service Mix Program offerings and priorities of

the institution.

Comparative Advantage/ v.

Competitive Advantage

“Differential advantage” sought over

other organizations engaged in

similar activities.

Assets Changes needed in human, physical,

information or intangible assets of the

enterprise.

Objectives What the organization must

accomplish in order to move from the

existing to desired state of affairs.

The Management Cycle in a Public Institution

FY 15 E&G Original Budget - Revenue

Tuition & Fees, $98,598,645, 69%

State Appropriations,

$38,443,181, 27%

Grants & Contracts, $453,856, 0%

Sales & Services, $4,787,672, 4%

Other Sources, $237,200, 0%

Total

$142,520,554

FY 15 E&G Original Budget - Expense

Instruction, $62,041,250, 44%

Research, $1,890,428, 1%

Public Service, $2,310,559, 2%

Academic Support, $9,817,880, 7%

Student Services, $22,053,970, 15%

Institutional Support,

$11,070,543, 8%

Op/Maint Physical Plant, $18,996,112,

13%

Scholarships & Fellowships,

$12,322,509, 9%

Mandatory Transfers, $774,165,

0%

Non-Mandatory Transfers,

$1,176,558, 1%

Total

$142,453,974

FY 09-15 New Recurring Budget Allocations

Chancellor's Office, $398,128 , 2%

Academic Affairs, $11,353,361 , 52%

FOIT, $2,133,555 ,

10%

Student Development, $617,426 , 3%

Athletics, $161,672 , 1% Comm & Marketing,

$467,664 , 2%

Institutional, $6,424,822 , 30%

Total

$21,556,628

Allocations don’t include ATB pay raises, automatic scholarship increases, new fee revenue or non-recurring funds.

FY 09-15 Enrollment Growth Allocations

In addition to the above, funds have also offset base budget reductions and scholarship cost since FY 2009.

$3,258,750

$169,348 $150,000$25,000 $50,000

$1,856,917

$504,114 $549,049

$0 $0 $0

$288,666

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

AcademicAffairs

FOIT StudentDevelopment

Athletics Comm &Marketing

Institutional

Recurring Non-Recurring

Total

$6,851,844

FY 08-15 Undergraduate Tuition & Fees

$5,062 $5,310 $5,656 $6,040 $6,718 $7,212 $7,555 $8,138

$15,024 $15,870

$16,954 $18,298

$20,251 $21,558

$22,762 $24,256

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2008 2009 2010 2011 2012 2013 2014 2015In-State Out-of-State

FY 08-15 Graduate Tuition & Fees

$5,854 $6,150 $6,554 $7,014 $7,793 $8,350 $8,762 $9,416

$15,816 $16,710

$17,852 $19,272

$21,326 $22,696

$23,967 $25,534

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2008 2009 2010 2011 2012 2013 2014 2015

In-State Out-of-State

FY 08-13 Expense Per Student

$12,606 $12,307 $12,333

$13,157 $12,452

$12,789

$5,755 $5,137 $5,036 $5,207

$3,563 $3,549

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2008 2009 2010 2011 2012 2013

Expense Per Student (E&G Total) Expense Per Student (State Appr. Only)

FY 08-14 E&G Fund Balance

$3,874,488

$4,374,488

$5,389,367 $5,549,743

$5,339,000

$5,700,000

$6,100,001

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

2008 2009 2010 2011 2012 2013 2014

FY 08-14 Notes & Bonds Payable

$39,136,683

$47,205,924 $46,895,157 $47,392,967 $47,843,238 $46,067,087

$48,380,824

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

2008 2009 2010 2011 2012 2013 2014

FY 08-15 Faculty Count

400.00 414.00 422.00403.00

454.00 461.00478.00

0.00

296.00 309.00 296.00314.00 308.00

334.00315.00

0.00

474.15 465.78

510.42531.43 538.95

571.92 560.46

0.000.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

2008 2009 2010 2011 2012 2013 2014 2015

Full-time Faculty (HC) Part-time Faculty (HC) Full-Time Equivalent (FT & PT)

FY 08-15 Staff Count

107.35

81.47 79.93 84.31 87.36 91.59 98.98108.67

124.94 128.78 131.06 132.30141.98

156.96173.77 177.03

288.00 281.50 279.00 274.00 275.00 271.25288.00

305.00

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

2008 2009 2010 2011 2012 2013 2014 2015

Administrator Professional Clerical/Tech/Maint.

FY 08-14 Physical Plant Square Footage

2,244,541

2,364,919 2,364,919

2,407,655 2,407,655

2,466,872

2,652,604

2,000,000

2,100,000

2,200,000

2,300,000

2,400,000

2,500,000

2,600,000

2,700,000

2008 2009 2010 2011 2012 2013 2014

FY 08-14 Residence Hall Occupancy Rates

2801 2801 28462949 2979

3146 3146

2747 2779 28462957 2979

3090 3090

0 0147

38 65 36126

0

500

1000

1500

2000

2500

3000

3500

2008 2009 2010 2011 2012 2013 2014

Capacity Occupancy Overflow Housing