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Administrative and Fiscal Officers Meeting

Administrative and Fiscal Officers Meeting. November 20, 2009. Administrative and Fiscal Officers Meeting. Welcome and Opening Remarks Terry Stone, Executive Vice President and Treasurer Budget Planning Update – Fiscal Year 2011 Rafael Reif , Provost

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Administrative and Fiscal Officers Meeting

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  1. Administrative and Fiscal Officers Meeting November 20, 2009

  2. Administrative and Fiscal Officers Meeting • Welcome and Opening Remarks • Terry Stone, Executive Vice President and Treasurer • Budget Planning Update – Fiscal Year 2011 • Rafael Reif, Provost • Institute-wide Planning Task Force – Update • Israel Ruiz, Vice President for Finance • Member of Task Force Coordinating Team • Acting on Task Force Ideas – Sourcing, Travel and Procurement Services • Leo McInerney, Director of Sourcing • What's New in Your 401(k) Plan Investment Options • Alison Alden, Vice President for Human Resources • Census 2010 – MIT’s Responsibilities and Challenges • Lydia Snover, Director of Institutional Research • MIT’s Written Information Security Program (WISP) • Allison Dolan, Program Director

  3. Terry Stone, Executive Vice President & Treasurer Welcome and Opening Remarks

  4. Fiscal 2009 - Summary • Despite economy, MIT steadily navigated the challenges of FY09 • Entered the year with expected consolidated operating surplus and balanced budget • Monitored expenses and liquidity carefully • Achieved operating surplus in line with plan • Secured long-term financing to complete major capital program • $610.0M in new, tax-exempt debt; $203.0M used to replace line of credit financing • Put plans in place to operate with fewer financial resources • Financial planning tools readied to guide required adjustments

  5. Rafael Reif, Provost Budget Planning Update – Fiscal Year 2011

  6. FY2009 and 2010 Budget Highlights • FY09 GIB achieved balanced budget • Operating results include $35M for future task force investments & contingencies • FY10 budget achieves reductions in GIB operating expenses of $58.3M • Endowment payout the same as that for FY09 • Includes $27M for future task force investments and contingencies

  7. Budget Planning Update • FY11 budget plan objectives • Absorb most of the effects of endowment decline in FY11 • Cut endowment payout to achieve distribution rates in the 5-5.25% range • Modeled reduction of 18.0% from FY10 levels • Reduce GIB by $60-70M through a combination of: • Task force-related recommendations • Academic and administrative budget reductions • Additional task force recommendations expected to yield further revenues/savings beyond FY11

  8. Budget Model Update • Budget model update & assumptions • FY11-FY20 projections use FY09 figures and FY10 budget expectations • Assumptions for FY11 and beyond: • Endowment distribution reduced by 18% in FY11; smoothing distribution rule thereafter • Tuition increase = 4.0% per year, up from 3.8% in FY10 • MTDC increase = 3.0% per year • Utilities increase = 5.0% per year • Gifts to GIB = $9.0M per year • Gifts increase to endowment = 1.0% per year

  9. Budget Model Update – Before Budget Cuts • Planning model demonstrates the effect of the following factors: • Impact of FY10 budget cuts • FY11 and beyond actions not yet incorporated • 18% payout reduction in FY11 with smoothing rule thereafter

  10. Budget Model Update – After Budget Cuts $61M Budget Cuts • Planning model demonstrates the effect of the following factors: • Impact of FY10 budget cuts • FY11 budget cuts = 61M • 18% payout reduction in FY11 with smoothing rule thereafter

  11. Budget Reductions & Task Force Initiatives Preliminary Estimates *Compensation reduction in FY11 also recommended by Institute-wide Planning Task Force **GIB only; does not include effect of projected decreased Pool A payout

  12. Israel Ruiz, Vice President for Finance, Member of Task Force Coordinating Team Institute-wide Planning Task Force – Update

  13. Task Force Process – To Date • The Working Groups (February-June) • Working Groups met weekly to • Review Idea Bank • Gather background and data (interviews, data group requests) • Draft working group report on their ‘ideas’ • The Preliminary Report (June-July) • Coordinators synthesized the working group reports into a preliminary report with a set of recommendations for further action on each idea • The Comment Phase (August-October) • Preliminary report released to the community • Idea Bank re-purposed for soliciting input • Coordinator ‘Road Show’

  14. Task Force Process – Comment Phase • Communication efforts • Institute-wide events and forums to disseminate the report’s ideas and themes • Targeted presentations to different stakeholder groups • Collected many comments and feedback from the community • Very thoughtful responses from several groups • Feedback: Main areas • Increasing undergraduate enrollment • Housing and educational policies (i.e., 4-year housing, capacity, add/drop date) • HR/Benefits recommendations • Retirement benefits; details and assumptions • Provision for existing populations (i.e., “Grandfathering”) • “Softening” of faculty salaries • Reduction of choice at the expense of MIT cultural values • Criteria for deciding on which ideas to recommend and/or invest in • Ensure transparency and inclusiveness

  15. Task Force – The Final Report • The Final Report Phase (October-November) • Will incorporate community input received from multiple channels • Working Groups just submitted final versions of their reports • Coordinators working to synthesize feedback and finalize the final report • Structure of the Final Report • Final report structure largely unchanged • Will update individual ideas to recognize feedback or further consideration • Will organize ideas around five themes • New Revenue Enhancement and Educational Opportunities for MIT • Framework for Accountability and Transparency • Gaining Efficiencies and Supporting Standards • Process Modernization—Digital MIT • Modern Workforce Policies and Practices • Will include recommendations for acting on each of the ideas • Will contain appendices with all the ideas, summarized feedback and the reports of the working groups

  16. Task Force – Roadmap for Action • Roadmap for Action • Recommendations for action, investment and prioritization on the ideas included in the Final Report will come from the Task Force Leadership • The Task Force Coordinating Team has been charged with: • Requesting execution plans from appropriate unit leaders with assigned ideas • Coordinating recommendations and implementation plans with operating unit leaders, project teams and study teams • Reporting progress assessment to Senior Leadership • Working closely with co-chairs of working groups, now acting in advisory capacity, during the implementation phase • Many ideas assigned to units in the Preliminary Report are being actively explored for implementation potential by their respective units

  17. Leo McInerney, Director of Sourcing Acting on Task Force IdeasSourcing, Travel and Procurement Services

  18. Themes • Evolving our Services • Acting on Task Force Initiatives • Community Engagement

  19. Evolving Our Services

  20. Acting on Task Force Ideas • Review and analysis of 36 Task Force ideas • Ongoing meticulous evaluation of cost/benefit of each proposed change/idea • Task Force ideas divided into two main types: • Process Improvement • Strategic Sourcing Opportunities List of Task Force Ideas >>

  21. Acting on Task Force Ideas Spend Distribution >>

  22. Acting on Task Force Ideas Redeploying resources to the categories identified in the Task Force ideas Developed strategic category templates for eight initial categories Developing a strategic sourcing implementation plan for each of the categories Engaging you to work with us

  23. Community Engagement • Reaching out • Awareness • Collaboration • Leverage • Service • Feedback

  24. Community Engagement

  25. Acting on Task Force Ideas – Category Mgmt Process In Process Not Started Complete

  26. Example: Travel Market Overview

  27. MIT Early Travel Initiatives • Contracts: * - New Supplier Contract FinalizedContract in Negotiation

  28. Modernizing MIT Travel Pilot program now underway • 45 travel credit card holders, their travel arrangers and approvers • Planning: On-line booking tool (integrated with expense reporting system) • Payment: Travel credit cards (credit card expenses feed to Concur) • Expense reporting: Automated (electronic workflow for approvals) • Reimbursement: Out-of-pocket expenses via direct deposit (available spring) • Training: In-person, on-line training portal, drop-in sessions • Early feedback is positive! • Pilot will continue through January • We will work closely with you • As we prepare for the Institute-wide rollout • Throughout the implementation phase

  29. Alison Alden, Vice President for Human Resources What's New in Your 401(k) Plan Investment Options

  30. New Investment Plan Options • More Choice • Life Cycle Funds: Automatically adjust the stock/bond mix over time • New for participants who don’t select investments • Index Funds: Typically structured to mirror the performance of, for example, the S&P 500 • Replaced underperforming funds • Most of the current choices remain • Added funds with lower expense for participants • Fidelity remains the administrator of our plan • What you should do • Review where your 401(k) is invested • Understand the new options http://hrweb.mit.edu/benefits

  31. Lydia Snover, Director of Institutional Research Census 2010 – MIT’s Responsibilities and Challenges

  32. Allison Dolan, Program Director MIT’s Written Information Security Program (WISP)

  33. Sensitive Data • Massachusetts requires notification if an individual’s SSN, person credit card # or other financial account, or driver’s license info is lost or stolen • New category of sensitive data: PIRN (“personal information requiring notification”)

  34. Data Protection • Massachusetts requires anyone with “PIRN” to have a “Written Information Security Program” (WISP), with administrative, technical and physical safeguards • MIT will introduce a WISP in early 2010

  35. Immediate Steps • If you don’t have it, you can’t lose it => know when you need it, and ask questions if you aren’t clear about the reason. • If you don’t need it, securely destroy it.

  36. Contacts • Questions/comments? • Contact Allison Dolan adolan@mit.edu • Potential breach? • Email infoprotect@mit.edu

  37. Additional Sourcing information Appendices

  38. Task Force Ideas Back >>

  39. Spend Distribution $273M in Spend 21 Categories Task Force SPI’s $205M – 75% Other $68M – 25% Back >>

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