Outline of

Provost Phelps’ report to the Faculty Senate of October 15, 1996

John R. Marcellus

Eastman School of Music

Questions:

1) How can faculty get more involved in the budget process….start at the departmental level

2) Capital Funding- priorities from Deans, Directors…costs-benefits analysis

3) Is there money to support X? Goes through department and division

Outline of Budget Process-by Chuck Phelps, Oct. 15, 1996, outline by John R. Marcellus

I. Budget Issues

A. Division budgets, capital budgets, central administration budget(generally ¾ of costs, from other sources, JRM)

II. Division Budgets

1. Revenue-tuition, grants, gifts, endowment

2. Expenses-

a. Faculty and Staff salaries/benefits

b. Amortization of Capital expenditures-buildings, etc (fixed)

c. Equipment/Supplies

d. Allocated Costs from Administration

e. Travel-variable cost

f. Libraries/Facilities(Operation and Maintenance)

III. Budget Process

A. President/staff, Board of Trustees(BOT)-decisions made on:

1. Draw on endowment

2. Wage/salary programs (faculty/staff)

3. Tuition/Room/Board Charges(differential increase across schools)

4. Benefit rates

5. Allocated costs from administration

B. Budget Steps

1. Recommendation of Deans, Directors-prediction of numbers enrolled, gifts, faculty changes

2. Capital additions and costs

3. Discretionary costs, one time projects, wages/salary beyond “base”

4. Budgets presented to Provost/VP Budget/Planning-Paprocki

5. Budget presented to Board of Trustees

C. Endowments

1. Restricted

a. School of Medicine/Denistry

b. Eastman School

c. Simon School

d. Warner School

e. The College

2. Unrestricted

D. Function of Central Administration

1. Preparation and approval of Budgets of Division and Recommendation to BOT

IV. Capital Budgets-recommendations come from Divisions

A. Renewal(refurbishing) and Replacement of existing buildings and for new use

B. New Buildings and Equipment (establish link between “investment and subsequent pay off)

C. Cost-Benefits Analysis of Capital Budget projects (revenue vs. cost analysis)

1. Direct Gifts (includes O&M)

2. Other revenue sources-research grants, contracts

3. New tuition revenue-if project supports a new program

4. Costs amortized

a. Ability of Division to bear “mortgage” in the future

D. Debt Considerations-borrowing

1. State Law:..university can borrow up to $150 million(tax exempt bonds)

a. Exceeding Cap of $150 mil. Changes effect for entire university

b. Credit Ratings-reliant upon credit worthiness, i.e. Moody ratings

V. Allocated Costs

A. Central Administration/officers and staff-this office does not have a “big bag of gold” to spend freely and easy

B. Operational and Maintenance

C. Allocation of Costs

1. When functions do not have a direct revenue stream available to cover their costs: i.e. housekeeping services-allocated per sq. feet of space; Admission/Financial Aid-allocated per student; Payroll and Benefits allocated per employee costs across university.

VI. How the Faculty can get involved in the Budget Process

A. Get involved in departmental level budget process

B. Indirect and direct effects on revenue

1. New programs, sponsored research, new gifts