Comprehensive Budget Overview and Financial Health Report FINAL UPRC... · Comprehensive Budget...

Comprehensive Budget Overviewand

Financial Health Report

University Planning and Resources Council

January 29, 2020

1

• Develop a more complete and systemic picture of the University’s budget:

− Important step in financial planning and strategy

− Identify levers for revenue growth to advance University priorities

• Enhance budget projections and understanding

• Support decision making

• Make the planning and budget process more comprehensive and responsive to student growth and strategic opportunities

• Communicate current financial health and promote innovative thinking

WESTERN WASHINGTON UNIVERSITY 2

Presentation Purpose

Revenues



FY20 Estimated Revenue by Source - $366.6M


Tuition Operating Fees$92,365,100

25.2% of total revenue budget

State Appropriations$90,534,000


Administrative Services Assessment$4,783,861


Includes net tuition operating fee revenue, state appropriations, and reimbursement for auxiliary enterprises and selected dedicated local funds

FY20 State/Tuition Funds - $190.1M


Percent Share of State Appropriations vs. Net Tuition Operating Fees


Aspirational Peer ComparisonFY17 State Appropriation per Student

FY20 Auxiliary Enterprises Budget - $75M

8

Housing & Dining ServicesAssociated Students Bookstore

Student Recreation CenterAssociated Students Athletics (portion)Parking Services

Other Auxiliaries(includes some fees)

Exist to furnish goods or services to students, faculty, staff, other institutional departments, or the general public at a fee directly related to cost of goods or services. Auxiliaries are managed to operate as self-supporting activities.

WESTERN WASHINGTON UNIVERSITY

Auxiliary Enterprises

9WESTERN WASHINGTON UNIVERSITY

FY20 Dedicated Local Funds Budget - $48.9M

10

Outreach & Continuing Education ProgramsSummer Session

Student Mandatory FeesCourse Fees

Special Fees(examples include: application, enrollment, orientation, registration, and many others)

Non-state or state tuition dollars generated locally and used for a dedicated, but unrestricted purpose


Dedicated Local Funds


FY19 Grants and Contracts - $52.6M

12

Research GrantsService Contracts

Financial Aid

Restricted funds for a specific purpose designated by federal, state, or local government or contracting agency


Grants and Contracts Revenue


Expenditures


15

State Supported Operating Budget by Division


State Supported Operating Budget by Division


Aspirational Peer ComparisonFY17 Program Expenses as a Percent of Total Expense


Expenses by NACUBO Program Classification


Financial Health Report


Viability

Ratio

Return on Net

Position Ratio

Operating

Margin Ratio

Primary

Reserve Ratio

Measuring Financial Health

20

Resource Sufficiency &

Flexibility

Operating Results

Financial Asset

Performance

DebtManagement


Primary Reserve Ratio w/o GASB 68 & 75

21

Primary Reserve Ratio is Expendable Net Assets (excluding Capital Projects) divided by Total Adjusted Expenses (Operating Expenses plus Interest Expense).The red line indicates Strategic Financial Analysis for Higher Education recommends a ratio of 0.40X is advisable to give the University flexibility to transform an enterprise over the long-term while keeping adequate reserves to cover unforeseen expenses.


0.45

0.33

0.240.21

0.16

0.13

0.57

0.44

0.33 0.33

0.210.19

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

2014 2015 2016 2017 2018 2019

WWU WWU w/Foundation

Operating Margin Ratio

22

Operating Margin Ratio indicates the excess margin (or deficit) by which annual operating revenues cover operating expenses. To put in simple terms, the operating margin ratio tells the profitability from Western’s operations; i.e., excluding capital revenue. The ratio is a comparison, in percentage form, of the margin (or profits/deficits) from operations compared to total revenue received.

Formula = Adjusted total unrestricted revenue (adjustments including limiting investment income to 5% average of the prior three years cash and investments), less total unrestricted operating expenses, divided by adjusted total unrestricted revenues.


-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

2014 2015 2016 2017 2018 2019

WWU Consolidated WWU w/o Auxiliary

Viability Ratio w/o GASB 68 & 75

23

Viability Ratio is Expendable Net Assets (excluding Capital Projects) divided by Debt (excluding state-paid debt). The red line indicates Strategic Financial Analysis for Higher Education recommends a ratio of 1.25X or greater. This indicates existing debt could be repaid from expendable resources available today.

1.58

1.27

1.09

0.94

0.540.48

2.09

1.77

1.581.53

0.73 0.71

0.00

0.50

1.00

1.50

2.00

2.50

2014 2015 2016 2017 2018 2019

WWU With Foundation


Return on Net Position w/o GASB 68 & 75

24

Return on Net Position Ratio is the change in Net Position divided by Total Net Position. The red line is based on the Higher Education Price Index plus a Real Rate of Return, (HEPI) 5 year average of 2.40% as recommended by NACUBO.

0.83%

-0.02% -0.01%

4.91%

-2.09%

-3.29%

2014, 2.37%

2015, 1.63%

2016, 0.59%

2017, 6.00%

2018, -0.54%2019, -1.07%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

2014 2015 2016 2017 2018 2019

WWU With Foundation


WESTERN WASHINGTON UNIVERSITY | MAKE WAVES. 25

26

Statement of Financial Position


Non-Capital Capital Total

Assets

Current Assets 54,057,008 10,260,314 64,317,322

Non-Current Assets 71,222,547 494,194,059 565,416,606

Total Assets 125,279,555 504,454,373 629,733,928

Deferred Outflows 17,069,312 1,086,663 18,155,975

Liabilities

Current Liabilities 31,024,202 6,979,229 38,003,431

Non-Current Liabilities 147,100,453 87,824,383 234,924,836

Total Liabilities 178,124,655 94,803,612 272,928,267

Deferred Inflows 46,400,063 46,400,063

Net Position

Restricted 14,424,036 410,737,424 425,161,460

Unrestricted (96,599,887) (96,599,887)

Total Net Position (82,175,851) 410,737,424 328,561,573

2019 Consolidated WWU Total

Summary Statement of Revenue and ExpensesConsolidated WWU Total

27

*In FY17 net position was reduced by an accumulative Other Post-Employment Benefits (OPEB) liability of $99M due to the adoption of GASB 75

FY15 FY16 FY17* FY18 FY19

Operating Revenue 206,969,515 211,303,451 203,869,360 212,896,791 223,053,939

Operating Expenses (278,397,101) (311,372,470) (310,071,636) (330,097,445) (338,697,570)

Net (Loss) from Operations (71,427,586) (100,069,019) (106,202,276) (117,200,654) (115,643,631)

Non-Operating Revenue/(Expenses) 62,972,504 75,689,222 91,096,472 95,416,065 93,936,266

Other Revenue 9,782,285 25,915,312 37,496,749 8,279,646 7,082,839

Increase/(Decrease) in Net Position 1,327,203 1,535,515 (76,297,050) (13,504,943) (14,624,526)


28

Fund Balance by Fund Type

Adjustments:

In FY19, Academic Affairs transferred $2,875,397 of expenditures from State to Dedicated Local Funds for the FY18 deficit. Also, $813,081 in expenditures were transferred from Academic Affairs to Institutional Reserves. Adjustments made in this table reflect the expenditures in the year they occurred.

In FY19, $1.99M in expenditures were moved from Capital to Institutional Reserves for the Multi-Cultural Center and $300,000 in Marketing expenses from divisional carryforward to Institutional Reserves for prior year commitments.

FY15 FY16 FY17 FY18 FY19

Change in

Position

FY15 to 16

Change in

Position

FY16 to 17

Change in

Position

FY17 to 18

Change in

Position

FY18 to 19

Auxiliary 15,051,238 14,231,861 14,630,102 16,388,214 16,893,435 (819,377) 398,241 1,758,113 505,221

Capital 376,216,388 394,538,586 421,222,133 424,023,776 422,159,036 18,322,198 26,683,547 2,801,643 (1,864,740)

Grants/Contracts/Financial

Aid/Endowments 29,042,420 27,765,142 29,956,466 28,910,552 21,750,863 (1,277,278) 2,191,324 (1,045,915) (7,159,689)

Long-Term Liability (50,418,973) (66,118,672) (165,364,972) (168,619,404) (168,243,170) (15,699,699) (99,246,299) (3,254,432) 376,234

Dedicated Local 19,040,826 19,245,522 18,018,248 12,756,317 9,747,359 204,696 (1,227,274) (5,261,931) (3,008,958)

State/Tuition/Reserves 42,520,609 43,325,584 38,229,065 29,726,643 26,254,049 804,975 (5,096,518) (8,502,422) (3,472,594)

Total Net Position 431,452,508 432,988,022 356,691,042 343,186,098 328,561,573 1,535,514 (76,296,980) (13,504,944) (14,624,526)


Fund Balance by Fund Type Trend

29

0

5

10

15

20

25

30

35

40

45

50


Mill

ion

s

Auxiliary Grants/Contracts/Fin Aid/Endow Dedicated Local State/Tuition/Reserves

*Does not include capital or long-term liabilities category


Dedicated Local Fund Balance

30

In FY19, a transfer of $2,875,397 in expenditures was made from Academic Affairs divisional reserves from Special Fees for the FY18 deficit. Adjustments made in this table reflect the expenditures in the year they occurred.



Change in

Position

FY15 to FY16

Change in

Position

FY16 to FY17

Change in

Position

FY17 to FY18

Change in

Position

FY18 to FY19

Outreach & Extended Education (272,881) (610,402) (1,519,913) (2,308,778) (2,896,941) (337,520) (909,512) (788,864) (588,163)

Other 12,579,396 13,321,089 12,508,817 11,422,137 9,093,113 741,694 (812,272) (1,086,681) (2,329,023)

Special Fees 4,395,415 3,694,833 3,918,962 616,825 3,418,661 (700,583) 224,129 (3,302,137) 2,801,836

Summer Session 2,338,896 2,840,001 3,110,382 3,026,134 132,527 501,105 270,381 (84,248) (2,893,607)

Total 19,040,826 19,245,522 18,018,248 12,756,317 9,747,359 204,696 (1,227,274) (5,261,931) (3,008,958)

Dedicated Local Fund Balance Trend

31

*For simplicity, does not include Gifts from WWU Foundation or Mandatory Fees


(5)

0

5

10

15

20

25


Mill

ions

Outreach & Extended Education Other Special Fees Summer Session Total

State/Tuition/Reserves Fund Balance

32

Adjustments:

In FY19, Academic Affairs transferred $2,875,397 of expenditures from State to Dedicated Local Funds for the FY18 deficit. Also, $813,081 in expenditures were transferred from Academic Affairs to Institutional Reserves. Adjustments made in this table reflect the expenditures in the year they occurred.

In FY19, $1.99M in expenditures were moved from Capital to Institutional Reserves for the Multi-Cultural Center and $300,000 in Marketing expenses from divisional carryforward to Institutional Reserves for prior year commitments.



Change in

Position

FY15 to FY16

Change in

Position

FY16 to FY17

Change in

Position

FY17 to FY18

Change in

Position FY18

to FY19

Division Carryforward 14,399,011 11,437,468 6,772,433 3,887,148 2,495,736 (2,961,543) (4,665,035) (2,885,285) (1,391,412)

Institutional 28,121,598 31,888,116 31,456,633 25,839,495 23,758,313 3,766,518 (431,483) (5,617,137) (2,081,182)

Total 42,520,609 43,325,584 38,229,065 29,726,643 26,254,049 804,975 (5,096,518) (8,502,422) (3,472,594)

Uncommitted Institutional Reserves 24,823,199 23,191,498 23,124,169 18,177,257 17,986,268 (1,631,701) (67,329) (4,946,912) (190,989)

State/Tuition/Reserves Fund Balance Trend

33

0

5

10

15

20

25

30

35


Mill

ions

Division Carryforward Institutional Uncommitted Institutional Reserves


34

Institutional Reserve


Notes:1. Prior to FY15, commitments were not tracked against Institutional Reserves2. Increase in FY20 is due to $700K in unspent FY19 contingency funds which will be used to partially cover FY20 operating budget

deficit and $1M in State funds received for Carver3. Future projections assume achievement of enrollment targets and associated tuition revenues

13.8%

17.5%

21.0%

22.1% 21.8% 21.5% 20.3%

17.4%17.2%

17.1%16.5%

16.3%16.3%

16.3%

8.0%8.8% 8.7%

12.9%

17.4%

19.4%

15.3% 14.6%

10.8% 10.1%10.4%

9.4% 8.6% 8.1%

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Projection of Uncommitted ReservesAs a Percentage of the Annual Operating Budget

10% of State/Tuition Operating Budget (Lower Bound)

One Quarter's Tuition (Upper Bound)

Uncommitted Institutional Reserves

Institutional Reserve – Growth Period


Contingency FundChanges to Budgeted Amount


2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Beginning Balance 3,201,664$ 4,926,679$ 2,984,679$ 5,434,195$ 4,459,195$ 3,963,195$ 1,268,675$ 1,268,675$ 1,268,675$ 1,268,675$

Budgeted Increase 1,725,015$ 575,000$ 575,000$

Classified Furloughs (2,517,000)$ 2,517,000$

Allocated to Divisions (642,484)$ (975,000)$ (496,000)$ (2,694,520)$

Annual Change to Contingency

Fund via Sources and Uses 1,725,015$ (1,942,000)$ 2,449,516$ (975,000)$ (496,000)$ (2,694,520)$ -$ -$ -$ -$

Ending Balance 4,926,679$ 2,984,679$ 5,434,195$ 4,459,195$ 3,963,195$ 1,268,675$ 1,268,675$ 1,268,675$ 1,268,675$ 1,268,675$

Contingency FundBudgeted Amount by Fiscal Year

37

$3,201,664

$4,926,679

$2,984,679

$5,434,195

$4,459,195

$3,963,195

$1,268,675$1,268,675 $1,268,675 $1,268,675 $1,268,675

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


38

$754,081 $644,264

$12,048,913

$24,282,896

$1,632,956 $1,804,995

$61,788,063$64,692,359

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

2012 2013 2014 2015 2016 2017 2018 2019

Net Tuition Revenue by Student Type

NR GR NR UG R GR R UG

Institutional Reserve GrowthNet Tuition Revenue


39

Institutional Reserves


Notes:1. Prior to FY15, commitments were not tracked against Institutional Reserves2. Increase in FY20 is due to $700K in unspent FY19 contingency funds which will be used to partially cover FY20 operating budget

deficit and $1M in State funds received for Carver3. Future projections assume achievement of enrollment targets and associated tuition revenues

13.8%

17.5%

21.0%

22.1% 21.8% 21.5% 20.3%

17.4%17.2%

17.1%16.5%

16.3%16.3%

16.3%

8.0%8.8% 8.7%

12.9%

17.4%

19.4%

15.3% 14.6%

10.8% 10.1%10.4%

9.4%8.6% 8.1%

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Projection of Uncommitted ReservesAs a Percentage of the Annual Operating Budget

10% of State/Tuition Operating Budget (Lower Bound)One Quarter's Tuition (Upper Bound)Uncommitted Institutional ReservesUncommitted Institutional Reserves (with Scenario 1 Investments & Supplemental Retirement Plan Cost Increase)

40

FY2019-21 State Operating Budget, Sources and Uses Table

FY19-20 FY20-21 FY19-21 Total

Items recommended and decided subsequent to May 2018 826,074 1,652,148

Tuition Increases: (FY19 = 2.4% RUG, 5.0% NRUG, 4.5% RG & NRG) 2,710,330 2,806,205 8,226,865

Tuition Revenue Increase due to current enrollment changes 10,739 143,168 164,646

Tuition Revenue Increase due to projected enrollment changes* 1,652,433 1,652,433

Recurring Administrative Services Assessment 55,105 367,139 477,349

State appropriation for Compensation and Benefits 2,978,000 2,842,000 8,798,000

Inflation on Tuition Backfill 490,000 342,000 1,322,000

Funding for STEM enrollments 1,713,000 3,426,000

Maintenance and Operations for new capital projects 133,000 266,000

Opioid Overdose Medication funding 45,000 -20,000 70,000

One-Time Funds* 2,405,424 607,717 5,418,565

Total New Sources 11,366,672 8,740,662 31,474,006

Items recommended and decided subsequent to May 2018 2,602,611 144,000 5,349,222

Total Compensation and Benefits increases 5,808,061 4,816,662 16,432,784

Maintenance and Operations for new capital projects 133,000 266,000

Opioid Overdose Medication funding 45,000 -20,000 70,000

Funding for STEM enrollments 1,713,000 3,426,000

IT Networking Needs 500,000 500,000

TA Stipends 100,000 100,000 300,000

AA Operational Gap 715,000 3,200,000 4,630,000

Enrollment Recruitment/Marketing 250,000 500,000

Annual Structural Deficit 2,405,424 3,013,141 5,418,565

Total New Uses

Internal Funding

New Appropriations

*Update from May 2019. FY21 tuition revenue increase due to projected enrollment changes reduced by

$328,838 due to revised International student enrollment forecast. One-time funds are increased accordingly.

SOURCES

USES

Institutional

Directed by the State

WWU Policy Decisions

Supplemental Retirement Plan

Refer to the Benefit Director's Guide to Supplemental Retirement Plan Benefit Payment Projections for key information.

Scenario Best Estimate

Salary Scale 3.50%

CREF Return 6.75%

WWU Projected SRP Benefit Payments - Best Estimate


42

Supplemental Retirement Plan

FY15-35 increase:$1,545,000 to base, recurring

FY20-25 increase:$574,000 to base, recurring


43

Scenario #1 ‐ 2020‐21 Operating Budget + Future Strategic Investments


Next Steps


New Information:

• March 12: End of legislative session – state funding

• May 1: National College Decision Day – Fall 2020 enrollment figures

FY21-23 Budget Process:

• Feb 19: Decision packages due to Budget & Financial Planning

• Feb 24: Decision package PowerPoints due

• March 4: Presentations to UPRC

Emergent Budget Process:

• January 29: Instructions and UPRC-approved criteria sent to VPs

• March 11: Emergent proposals due to Budget & Financial Planning

• April 13: Emergent proposal PowerPoints due

• April 15: Presentations to UPRC (Plan A)


Key Dates

45

1. Urgent unforeseeable items that have arisen since the FY19-21 budget build process

2. Items calling for prompt action that are so critical they cannot wait until the FY21-23 biennial budget build process

3. Items that have arisen as a consequence of changed conditions, such as, but not limited to:

a. Additional enrollments

b. State or federal policy changes

4. Time-sensitive strategic opportunities that advance the University toward strategic plan fulfillment and are of the highest priority


FY21 Emergent Proposal Criteria for Approval

46

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