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UNB Budget May 31, 2017 Town Hall
UNB Budget
May 31, 2017 Town Hall
Budget AuthorityOverview of UNBBudget Oversight
Board of Governors
Finance Committee
President
President’s Executive Team
FBAC(Fredericton BudgetAdvisory Committee)
UBAC(University Budget
Advisory Committee)
SJBC(Saint John
Budget Committee)
July‐Sept Model Next Year
Budget (Build using prior year
Oct – DecMeet, analyze,
finalize assumptions
Jan‐MarDevelop
AprilApproval
May – JuneFinalize
2016‐17 Results Variance Analysis
Budget Cycle
UNB Budget • Medium term goal is for a balanced operating budget by 2019-
20 and ongoing financial sustainability
• 2017-18 is a deficit budget
• 2017-18 budget process was consultative, unit-by-unit approach (not across the board cuts)
• Attempt to minimize affect on operations
• Added sustainability items to base budget
• Use pro-forma statements to identify trends in the future
• Changed format of budget document and added some detail
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DefinitionStructural deficit• When revenues that are expected (budgeted) to be
received year after year are insufficient to cover expenses that are expected (budgeted) to be incurred each year
• Not the same as a cyclical or periodic deficit where specific, unique circumstances result in a deficit
• Actual results will differ from the budget – differences are referred to as budget variances. When items are believed to represent ongoing changes to expected revenues or expenses, future budgets are adjusted
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Examples
A Structural deficit
Net pay $ 1,000
Rent (500)
Groceries (200)
Utilities (200)
Personal (100)
Car payment (250)
Deficit $ (250)
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B Cyclical or periodic deficit
Net pay $ 1,000
Rent (500)
Groceries (200)
Utilities (250)
Personal (100)
Deficit $ (50)
Average utility costs are budgeted at $200 per month but in winter months the bill is higher – creating a cyclical deficit but it is expected to even out over the year
DefinitionOngoing items• The university budgets for ongoing revenues and
expenses which include things like provincial operating grant, salaries for continuing positions, tuition revenue based on stable or predictable enrolments, and utility costs
• The objective is to cover ongoing expenses from ongoing revenues
• Actual experience related to these items will almost always differ from budget, creating budget variances but the expense or revenue stream itself is expected to exist year after year
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Definition
One-time items• Revenues or expenses that happen once (or for a
limited time) and are not expected to recur
• We include these items, when known, in the budget as one-time (sometimes referred to as “below the line”) items
• One-time expenses are normally paid for from one-time sources of funds – this could be short term revenue sources or from prior savings (reserves)
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Examples
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Month 1 One time transfer to savings
Net pay $ 1,000
Rent (500)
Groceries (200)
Utilities (150)
Personal (50)
Surplus 100
Transfer to Savings (100)
Net surplus $ 0
Month 2 One time use of Savings
Net pay $ 1,000
Rent (500)
Groceries (200)
Utilities (200)
Personal ‐
Surplus 100
Transfer from savings 100
Furniture purchase (200)
Net surplus $ 0
DefinitionSustainability Items• Expenses we have been incurring year after year but
are not provided for in the budget
• The activity supported is critical to delivering on the University mission
Examples in 2016-17 budget• Student recruitment Note all 3 added to base • Library acquisitions budget in 2017-18• Enterprise-wide software licenses
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2017-18 Operating Budget
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2017‐18 2016‐17Revenue (grant, tuition and other) 190.0$ 188.7$ Expense
Academic and research 142.4 140.0 Administration and support services 54.1 52.8
Total operating expense 196.5 192.8 Ancillaries 1.1 1.2 Contingency ‐ 1.5 Salary savings (3.8) (3.7) Priority allocations 1.0 1.0
Total expense 194.8 192.8 Structural deficit (4.8) (4.1) One time sources (uses)
Transfers from reserves 6.6 9.5 Why UNB Project (4.1) (4.0) Tuition rebate ‐ (0.9) Sustainability items ‐ (2.8) Strategic initiative (SJ) ‐ (0.3)
Net one‐time items 2.5 1.5 Net operating deficit (2.3)$ (2.6)$
($ millions)
Structural deficit –excess of ongoing expenses over ongoing revenues
Sustainability items (included in the budget as ongoing expenses in 2017‐18)
Ongoing items
One‐time items
Forecast Variance2016‐17 2016‐17$ 184.7 $ (4.0)
138.8 1.2 52.1 0.7 190.9 1.9 1.2 ‐1.5 ‐(4.6) 0.9 1.0 ‐
190.0 2.8 (5.3) (1.2)
9.5 ‐(3.7) 0.3 (0.9) ‐(2.8) ‐(0.3) ‐1.8 0.3
$ (3.5) $ (0.9)
Reconcile Pro-forma Budget from Nov to Final
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($ millions)
November (8.0)$
Reduce Expenses 6.0
Add Sustainability (2.9)
Hockey & PhD Awards (0.5)
Grant (1% increase) 1.1
Tuition (change from 3% to 2%) (0.5)
(4.8)$
Comments on 2017-18 Operating Budget
Structural deficit includes:• Small enrolment growth UNBF, continued enrolment
decline UNBSJ, 2% domestic tuition increase / 5% international
• Grant increase 1% over 2016-17
• $6 million in budget reductions
• Non-salary expense freeze
• Sustainability items from 2016-17 totaling $2.8 million added to expenses
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Saint John Reductions – total $1 million
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• Philosophy• Limit the impact to units as well as student learning experience• Achieve approximately $1 million in budget reductions in order to become financially
sustainable in the longer term
• Faculties and Department Costs• No faculty complement reductions• Increased level of annual ongoing salary and turnover savings based on experience• Reduction of mostly unused stipends
• Academic and Student Support and non-Academic units• Eliminated vacant positons – no lay-offs• Reduction of non salary
• Administration and Development• Eliminated vacant positons – no lay-offs
• Maintenance and Utilities• Reduction mostly in non salary
Fredericton & UW Reductions - total $5 million• Philosophy
• Limit the impact to units• Achieve significant budget reductions in order to become financially
sustainable in the longer term
• Faculties and Department Costs• No faculty complement reductions• Agreement re interpretation of Nursing extra seat grant - $1.1million
• Academic and Student Support and Non-Academic Units• Eliminated vacant positions - no lay-offs
• Other Reductions in Fredericton• Eliminated annual contingency $1.5 million• Early retirement program fully funded – eliminated $1.2 million annual
funding requirement from the operating account
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Comments on 2017-18 Operating Budget
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One Time Items include:
• Why UNB project continues as one-time
• Transfer from reserves to fund Why UNB project
• Transfer from reserves to reduce net operating deficit
Sustainability items identified in 2016-17 have been added as ongoing budget items
Why UNB Project
• 2017-18 is 3rd year of project
• Includes 3 areas • Marketing office• Communications funding• Recruitment marketing campaign (advertising)
• Paid for with on one-time funds from reserves
• Not yet approved as an ongoing budget item
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Proforma Statements
• A projection of the financial picture into the future assuming we continue to operate as we currently are
• A dynamic planning tool used to identify the level of financial change required to be financially sustainable. Updated and refined as information becomes available
• NOT multi-year projections or future budgets
• A pro-forma will NEVER be reality
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Future Budget Strategy• Pro-formas show increasing deficit
• Assume a steady state with no action taken
• Dynamic planning tool
• Academic plan, admin review and tuition reset will guide actual budget decisions
• Currently working on MOU with the Province• Tuition review and reset is part of the discussion
• Predictable operating funding
• Predictable tuition
• Have modelled scenarios for a balanced budget • Requires further expense reductions
• Focus must be on revenue growth (enrolment, tuition, other sources)
• Assume tuition review will result in a tuition reset
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2017-18 Capital Budget
• Capital Budget is developed based on funding sources
• SIF projects are included • Kinesiology $26.0 M • Greenhouse $0.8 M
• $37.8 M in 2017-18
• Projects are submitted and approved by committees on both campuses
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2017-18 Capital BudgetFunding Sources
Funding Source UNBF UNBSJ Total
Alteration and Renovation Grant $2.1 $0.3 $2.4
Facilities Improvement Fee/Infrastructure Fee 1.2 0.4 1.6
Land and Lease Revenue/Operating Budget 1.6 1.6
University Deferred Maintenance Program 0.8 0.2 1.0
Strategic Infrastructure Fund 26.0 0.8 26.8
Energy Management Program 0.8 0.8
Residence System 0.8 0.8
Operating account 0.1 0.1
Non‐Space Grant 1.9 0.3 2.2
Student Technology Fee 0.4 0.1 0.5
Capital Funds Available $35.6 $2.2 $37.8
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$ Millions
2017-18 Capital BudgetFunding Allocation
Capital Spending UNBF UNBSJ Total
Building and Spaces $33.3 $1.8 $35.1
Equipment and Technology 2.3 0.4 2.7
Total $35.6 $2.2 $37.8
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$ Millions
2017-18 Endowment Budget
• Endowment spending rate is recommended by Investments Committee
• Long term spending rate 4.0%
• Approval of additional 0.25% from endowment spending reserves for 2017-18
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2017-18 Endowment Budget
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• Total scholarship and award spending $10.4 M
• $4.0 M from operating account
• $6.4 M from endowment earnings and backstop funds
38.5%
61.5%
Operating Budget Endowments and Other Donations
University of New BrunswickTotal Spending on Scholarships and Student Aid – 2017/18
Discussion/Questions
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