BUDGET DEVELOPMENT AND MANAGEMENT

1. BUDGET DEVELOPMENT AND MANAGEMENT Frank Goldberg, PhD Vice Provost for Resource Planning & Management Heather J. Haberaecker, PhD Executive Assistant Vice President for Business & Finance

2. Health Care Tuition GRF Research Innovation GRF GRF ICR

3. FY 2013

4. Budget Decision Principles: • Ensure fiscal integrity – decentralized responsibility and decentralized accountability • Ensure good decision making – assign decision making authority to appropriate entity • Maximize use of resources – include financial, physical and human resources • Balance priorities – balance support for instructional, research, patient care, economic development and service missions of the Campus • Maintain quality – reduce and redirect budgets in a manner that best preserves quality

5. 2012 BRINGING ADMINISTRATORS TOGETHER CONFERENCE Funds flow diagram: ICR GRANT AWARD INDIRECT COSTS PROJECTS 12.5% $1.00 DIRECT COSTS OTHER 32.3% COLLEGE 47.5% VCR 7.7% DIRECT RESEARCH EXPENDITURES CAMPUS RESEARCH GOALS COLLEGE RESEARCH GOALS COSTS CAMPUS RESEARCH COSTS

6. FY 2005 ICR Formulaic Allocations & Commitments(Shown as a percentage of the College’s total F&A earnings) $ in Millions 55.4% 70.8% 46.0% 65.9% 116.2% N/A 53.9% 55.8% 36.5% 55.6% 36.5% 57.4% 36.8%

7. Changes in ICR AllocationsFY 2005 – FY 2013

8. How the Funds FlowICRFY 2013

9. UIC Budget Model GRF Tuition Revenue Reallocation UIC Budget Model Budget Units Tuition Distribution Salary Program (Admin) Strategic Initiatives Hold Harmless Space Economy Space Costs State Budget Reductions UA Central Costs

10. 2012 BRINGING ADMINISTRATORS TOGETHER CONFERENCE GRADUATE TUITION Funds flow diagram: Tuition DIFFERENTIAL TUITION 60% BY CREDITS 75% TO COLLEGES UNDER- GRADUATE TUITION 15% BY HEADCOUNT 15% TO PROVOST 25% TO PROVOST 10% TO FIN AID DIFFERENTIAL TUITION 75% TO COLLEGE 15% TO PROVOST 25% TO PROVOST 10% TO FIN AID 75% TO COLLEGES By Headcount 25% TO PROVOST 85% TO COLLEGE 15% TO PROVOST 85% TO COLLEGES By Headcount PROFESSIONAL TUITION 15% TO PROVOST

11. Comparison of State Appropriations and Tuition Revenue FY 2007 FY 2013

12. How Tuition is Distributed

15. ACCOUNTING FOR YOUR FUNDS • What is a C-FOAP? • It is a 25 digit number used to identify transactions for your department (similar to how one would use a bank account number). • We are going to focus on the 3 most important – the C – F - O • C – Chart is a one digit code for a campus (Chicago = 2) 1 digit # 6 digit # 3 or 6 digit # 6 digit # 6 digit # ORGANIZATION O ACCOUNT A CHART C PROGRAM P FUND F 15

16. ACCOUNTING FOR YOUR FUNDS (cont..) • A Fund provides a cumulative record of the sources and uses of monies. • Examples of Funds (types are designated by the first digit of the 6-digit fund number): 1 = State 2 = ICR and other types of unrestricted funds 3 = Self-supporting activities 4 = Grants (federal) 5 = Grants (state, local and private) 6 = Gifts, endowments, service plans (medical, nursing, dental) • Your organization code is 6 digits of which the first 3 digits are your department code • Your department code is the most frequently used number

17. DISTRIBUTION OF INDIRECT COST RECOVERY (ICR) • Indirect Cost Recovery (ICR) Revenue (also referred to as Facilities & Administrative (F&A) Revenue) refers to funds generated from the recovery of general infrastructure and other costs that cannot be directly charged when performing extramurally funded research. • Typical Standard ICR Distribution • 30% of the 47.5% is governed by the Sponsored Programs Proposal Approval Form (PAF) with a standard 10% college and 20% department split. The 30% may be shared with other departments and colleges based on the contributions of multiple researchers. The other 17.5% is distributed to the college administering the grant.

18. UIC DEFICIT REDUCTION POLICY • Deficits are a serious drain on the campus’ financial flexibility and should be avoided. • A usage charge is assessed on all non-state funds (excluding grants and contracts) with a deficit of $10,000 or greater • Financial reports are sent to Deans and College Academic Fiscal Officers (AFO’s) at the end of 2nd and 3rd quarters and the month of May to allow departments to review and initiate actions to address any potential reportable deficits

19. UIC DEFICIT REDUCTION POLICY (cont.) If a deficit remains at the end of fiscal year you will need to submit a deficit reduction plan as follows: • $10,000 - $149,999 – Completion of a simple form outlining the cause and planned resolution of the deficit • $150,000 - $499,999 - Completion of a three year action plan for resolution of the deficit • $500,000 and above - Completion of a five year plan and a meeting to discuss the proposed plan All plans will be reviewed and ultimately approved/disapproved by the Provost. If the plan is not approved, the unit will be assessed a higher usage charge (currently 3% versus 1% for a deficit with an approved deficit reduction plan).

20. MONTHLY FINANCIAL REPORTS There are three monthly financial reports you should review with your respective business manager to make sure you do not have any deficits: • Detail Operating Ledger Statement • Operating Ledger Transaction Statement Chart 2  • Payroll Labor Distribution Report

21. IMPORTANT BUDGET MANAGEMENT PRINCIPLES TO REMEMBER • Avoid deficits • Review your department’s financial status monthly • Allocate salaries to grants as soon as they are received so your monthly fund balances are accurate • Allocate faculty and staff salaries to C-FOP’s based on the person’s effort (grants, serviceplans, self-supporting, etc.) • Recover the full costs of providing departmental goods or services on self-supporting funds. • Charge expenses to the correct C-FOP (e.g. only related charges on a specific grant fund)

22. QUESTIONS