FUND MANAGEMENT A-Z

1. FUND MANAGEMENT A-Z SESSION X BUDGET PROCESS – B BUDGET DEVELOPMENT INTRODUCTION Gene Hasegawa Assistant Dean for Administration & Finance UCSD Health Sciences – School of Medicine

2. FUND MANAGEMENT A-Z OUTLINE

3. OUTLINE • Recap • Health Sciences Overview • Budget Process Overview • Budgeting Introduction • Funds Flow • Sources & Uses • Basic Budget Assumptions • Concluding Remarks

4. RECAP HEALTH SCIENCES OVERVIEW

5. RECAP HEALTH SCIENCES OVERVIEW UCSD ADMINISTRATIVE ORGANIZATION

6. RECAP HEALTH SCIENCES OVERVIEW HEALTH SCIENCES ORGANIZATION (w/ Medical Group) Medical Group (Faculty Practice) ACADEMIC HEALTH SCIENCES

7. RECAP HEALTH SCIENCES OVERVIEW

8. RECAP HEALTH SCIENCES OVERVIEW

9. RECAP BUDGET PROCESS OVERVIEW

10. RECAP BUDGET PROCESS OVERVIEW

11. RECAP BUDGET PROCESS OVERVIEW Key Players • VCHS/Dean SOM Office • Medical Center CEO • Healthcare Physician-in-Chief • Medical Group • Departments

12. RECAP BUDGET PROCESS OVERVIEW

13. RECAP BUDGET PROCESS OVERVIEW Clinical Revenue Faculty Salary/Benefit Expenses Budget Non-Clinical Revenue Non-Faculty Salary/Benefit, Supplies & Other Expenses Budget SalPro All Funds Budget Module Budget Template Corporate Statement

14. RECAP BUDGET PROCESS OVERVIEW Budget Templates (Excel) Corporate Statement (Database) Academic/Other Academic/Other Clinical Fund Sources Clinical Fund Sources Research Research

15. RECAP BUDGET PROCESS OVERVIEW

16. BUDGETING INTRODUCTION FUNDS FLOW

17. BUDGETING INTRODUCTION FUNDS FLOW ACADEMIC HEALTH SCIENCES MISSIONS FINANCIALS Teaching Academic/Other Research Clinical Research Clinical Fund Sources

18. BUDGETING INTRODUCTION FUNDS FLOW

19. BUDGETING INTRODUCTION FUNDS FLOW DISTRIBUTION: Academic/Other • State and UC Appropriations, e.g., • 19900A (Permanent & Current Year Funding) • IER, Professional School Fee, etc. • Non-Research Gifts & Endowments, Royalty Fees • VC/Dean Transactions • Commitment Allocations • Assessments

20. BUDGETING INTRODUCTION FUNDS FLOW DISTRIBUTION: Academic/Other (continued) • Non-Clinical Service Agreements • Self-Supporting Facility Income (Recharge & External)

21. BUDGETING INTRODUCTION FUNDS FLOW Academic/Other – Central Office Contacts • Campus Budget Office • Office of Post-Award Financial Services • General Accounting • UC Foundation, External Relations • Technology Transfer and Intellectual Property Services • VCHS/Dean SOM Office

22. BUDGETING INTRODUCTION FUNDS FLOW

23. BUDGETING INTRODUCTION FUNDS FLOW DISTRIBUTION: Research • Sponsored Research, e.g., • NIH, Other Federal • Non-Federal (Private, Non-Profit, Federal Flow-thru) • Commercial Clinical Trials • Research Gifts & Endowments

24. BUDGETING INTRODUCTION FUNDS FLOW DISTRIBUTION: Research (continued) • Indirect Cost Recovery • 19933A (from Federal – UC General Fund) • 69750A (from Federal – Off-the-Top) • 07427A (from Federal – Opportunity Fund) • 05397A (from Private, Non-Profit) • 75014A (from Commercial Clinical Trials)

25. BUDGETING INTRODUCTION FUNDS FLOW Research – Central Office Contacts • Campus Budget Office • Office of Post-Award Financial Services • Office of Contract & Grant Administration • General Accounting • External Relations • Academic Senate • VCHS/Dean SOM Office

26. BUDGETING INTRODUCTION FUNDS FLOW

27. BUDGETING INTRODUCTION FUNDS FLOW DISTRIBUTION: Clinical Fund Sources • Transfer from Ambulatory Care • Net professional fee income from Medical Group • Medical Center Administrative Service Components • Support for services directly related to Medical Center operations • Other Revenue • Clinical Service and Affiliation Agreements • Consult/Witness

28. BUDGETING INTRODUCTION FUNDS FLOW DISTRIBUTION: Clinical Fund Sources (continued) • Interdepartment Transfers: • VC/Dean’s Tax (4%) • Clinical Enterprise Development Fund • Academic Enrichment Fund

29. BUDGETING INTRODUCTION FUNDS FLOW Clinical Fund Sources – Central Office Contacts • Medical Center CEO • Healthcare Physician-in-Chief • Medical Group • VCHS/Dean SOM Office

30. BUDGETING INTRODUCTION SOURCES & USES

31. BUDGETING INTRODUCTION SOURCES & USES • Mission-based Management • Recognizes: • Resources continue to be a challenge • Trend of reductions in permanent budget • Goal: • Mission-driven organizational decision making • Internal accountability • Align distribution of resources with organization-wide goals

32. BUDGETING INTRODUCTION SOURCES & USES • Core Features for Success: • Integrating school financial statements • Measuring faculty and departmental activities and contributions to mission • Building organizational support for reporting tools and metrics

33. BUDGETING INTRODUCTION SOURCES & USES • Core Features for Success (continued): • Guiding the dynamics of leadership • Holding faculty and department and institutional leaders accountable • Building trust and institutional perspective

34. BUDGETING INTRODUCTION SOURCES & USES Integrated Financial Statements Corporate Financial Statements (SOM/SSPPS) Dept/Faculty Measures Clinical Productivity Metrics Effort Distribution Reporting Support for Metrics and Reporting AAMC Benchmarking Data NIH Ranking Data Comparison 8/26 Rankings

35. BUDGETING INTRODUCTION SOURCES & USES Leadership Dynamics Guidance Still challenging due to the sensitive nature of faculty performance Accountability at all Levels VCHS/Dean Review Dept Chair Reviews/Incentives Faculty Reviews/Incentives Management Reviews/Incentives Trust/Institutional Perspective At its best ever, but still evolving

36. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS

37. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Budget Highlights • Annual task • Itemized estimate of expected income and expenses • Outline organization's financial and operational goals • Approved budget is the basis for comparison to actual performance throughout the coming fiscal year • Goal is to break even at a minimum

38. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS

39. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS

40. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS

41. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS GOAL: BREAK EVEN AT A MINIMUM

42. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Budget Revenue Expenses Balance (Net Income) Interdepartment Transfers Net Balance after Transfers $517.7M $538.2M ($ 20.5M) $ 21.8M $ 1.3M

43. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS REVENUE EXPENSE TRANSFER

44. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS • Identify Ongoing/Continuing Activity • Core Revenue • Core Expenses • Identify Ad Hoc Funding/Expenses • One-time • Sunsetting • Identify Incremental Activity

45. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Ongoing/Continuing Activity • Academic/Other, e.g., • Permanent Budget • VCHS/Dean’s Annual Allocations/Assessments • Annual non-Clinical Service Agreement Income • Annual Gift/Endowment Allocations • Annual Self-Supporting Income

46. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Ongoing/Continuing Activity (continued) • Research, e.g., • Continuation Year Sponsored Project Funding • Annual IDCR Allocation

47. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Ongoing/Continuing Activity (continued) • Clinical Fund Sources, e.g., • Baseline Faculty Practice Income • Baseline ASC Funding • Continuing Clinical Service Agreement Income • Continuing Consulting and Witness Income

48. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Ad Hoc Activity • All Funding Distributions, e.g., • Recruitment Startup Support and Expenses • Retention Support and Expenses • Bridge Funding • Practice Ramp Up Support

49. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Incremental Activity • All Funding Distributions, e.g., • October Range Adjustments • Other Salary/Benefits Increases • IDCR Increase • New Sponsored Projects

50. BUDGETING INTRODUCTION BASIC BUDGET ASSUMPTIONS Incremental Activity (continued) • All Funding Distributions, e.g., • New Gifts/Endowments • Additional ASC Support • Faculty Practice Growth • Assessments…unfortunately…