Financial Outlook 2013/14

1. Financial Outlook 2013/14 Tom Wale - PRAS Helen Knight - Finance

2. What this presentation will cover • Budgeting process and timeline • JRAM allocations for 2013/14 – informed by: • HEFCE grant for 2013/14 • Fee income for 2013/14 • Services’ budgets for 2013/14 • Infrastructure Charge allocations for 2013/14 • Historic trends • The budget in a wider context

3. Planning and budgeting timeline • Autumn 2012 • PRAC agreed new integrated planning and budgeting process • PRAC approved budget targets for services for 2013/14 • PRAC approved initial budget targets for divisions for 2013/14 – transitional year • February • Service costs for 2013/14 agreed by PRAC and divisional 123 charge allocations for 2013/14calculated • March • HEFCE grant letter received and JRAM allocations for 2013/14 calculated • April • PRAC agreed final budget targets • May/June • Budgets and plans submitted • Budget review meetings • Planning review meetings • June • Final 2013/14 budget agreed

4. Integrated planning and budgeting process – new this year

5. What this has meant for you • Divisional 5 year plans submitted in May along with the budget, rather than in January. • Greater involvement of departments. • Financial projections worksheet in budget template. • Plans submitted in May will be used to produce divisional budget targets the following Autumn • Based on final 2013/14 budget • Known before Christmas • Updated in March / April for final JRAM, infrastructure and capital charges • This year – combined Q2 / budget template

6. JRAM Overview • The Joint Resource Allocation Method is the way of distributing funds across the collegiate University • Sums allocated across academic divisions, OUDCE & Colleges

7. HEFCE Grant Allocations 2013/14 • Teaching changes in line with move to new fee regime – offset by fees • 2012/13 includes additional £778k as at March 2013 (not in JRAM 1213iya) • PGR volume up – bigger share of national pot • Mainstream research – Charities & Business QR increased volumes • rates down but bigger share of national pot

8. HEFCE Grant Allocations 2013/14Teaching • Additional HEFCE funding of £778k for 2012/13 not included in 1213 iya • Announced after JRAM 1213 iya • Divisional portion will be allocated as part of 2013/14 budgets (most +ve)

9. HEFCE Grant Allocations 2013/14Research • PGR Funding updated for numbers (2011-12 HESA data) • Increase due to rise in numbers, subject weightings unchanged • Mainstream QR Funding unchanged • Charities & Business QR – rates down but volume up

10. University & College Fees 2013/14 • Forecast is based on this year’s students undertaking next year’s activity • e.g. year 2 students become new fee regime for 2013/14 • Informed by work on Student Number Planning • Much of the increase is due to the transition to new fee regime on UG • But also changes to student numbers

11. Resource Levels • Based on FTEs • Must consider fees and other sources of funding (mainly HEFCE) • HEFCE funding split into five price groups according to activity • Price group D is classroom-based – no additional funding • Price group A is clinical medicine – highest levels of additional funding • UK/EU UG decreases in HEFCE funding more than offset by increases in fees • UK/EU PGT decreases not automatically balanced by HEFCE funding • Fees + other sources of student funding distributed via JRAM • Split of resources between departments & Colleges • Some targeted streams distributed outside JRAM

12. Resource LevelsUK/EU Undergraduate • New regime fee increase is a result of fee waivers being higher in year 1 • 2013/14 has year 1 and 2 students on new fee regime • Note differential between Band D and Band B is much reduced in new fee regime – but overall resource is increased for both • Amounts are before allocation between departments and Colleges

13. Change in JRAM Allocations for 2013/14Comparison of 1314 i with 1213 iya

14. Change in JRAM Allocations for 2013/14Comparison of 1314 i with 1213 i & 1213 iya

15. Services budget 2013/14

16. 123 Infrastructure charge for 2013/14 • Total 123 charge for 2013/14 is £5.7m higher than the total for 2012/13 • Although this has increased, the charge rate as a percentage of divisional income has not

17. 123 Infrastructure charge for 2013/14

18. Capital charge for 2013/14 • Band weightings and costs are unchanged • Increase is due to increase in space

19. Budget v Actuals – historic trends

20. Looking back at 2011/12 • Budget - £22.5m • Actuals - £52.3m. • Difference £29.8m • £13.1m of this arose in the divisions and services – mainly Medical Sciences and Social Sciences. • £16.7m arose in Central Costs & Adjustments • Current indications are that the 2012/13 budget is much more realistic – Q2 forecast is in line with budget

21. Why has our position improved? • Higher fee income • More money from OUP • Increased investment income • Flat staffing levels – impact of the recruitment protocol • Low pay awards

22. Russell Group Surpluses / Deficits 2011/12

23. Surplus/ Deficit as % of Income Oxford 5.1%

24. Setting the budget 2013/14 Note – figures include £2m transfer from Medical Sciences to Humanities

25. Why do we need to make a surplus? • To fund capital investment • New buildings • Maintenance of existing buildings • IT • Equipment funding • To fund restructuring activities • Staff development

26. Threats to future surpluses • OUP funding may reduce • Increased pay awards • Cost of maintaining existing estate • Expansion of estate size – ROQ, Medical Sciences • Reduce funding from Research Councils • Move towards EU and other research funders • Desire of surplus departments to invest for the future

27. EBITDA ProjectionsDue to increase in staff costs, sustainability gap widens in later years

29. Any questions? Further information Tom Wale Head of Resource Allocation http://www.admin.ox.ac.uk/pras/resource/ thomas.wale@admin.ox.ac.uk (01865 2) 70067 Helen Knight Financial Planner http://www.admin.ox.ac.uk/finance/processes/planning_reporting/ helen.knight@admin.ox.ac.uk (01865 6) 16151