Financial Outlook 2013/14

Tom Wale - PRAS

Helen Knight - Finance

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

Page 2 S

Page 3 S

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

Integrated planning and budgeting process – new this year

Page 4

Divisions can start to address key planning issues

Budget preparation begins

PRAC approves budget targets

Budgets & plans submitted and reviewed

Budget approved by Council

PRAC receives three-year

financial forecast

Resolution of tension between

divisional investment &

central surpluses

Divisional spending plans

approved

H

T

M

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

Page 5

JRAM Overview

The Joint Resource Allocation Method is the way of distributing funds across the collegiate University

Sums allocated across academic divisions, OUDCE & Colleges

Page 6

/£m

HEFCE Teaching (including Research students) 45.8

Fees 192.8

HEFCE Research Support 118.0

Other elements 0.4

Total allocation in JRAM 357.0

HEFCE Grant Allocations 2013/14

All sums in £m

2012/13 (March 13)

2013/14(March 13)

Variance Sums Proportion

Total 181.9 173.6 -8.3 -4.6%

Teaching 44.2 33.6 -10.6 -24.0%

Research for PGRs 13.7 13.9 0.2 1.3%

Mainstream Research (not PGR) 115.9 118.0 2.2 1.9%

Other (Libraries, Museums, HEIF) 8.1 8.1 0.0 0.0%

Page 7 T

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

HEFCE Grant Allocations 2013/14Teaching

All sums in £m

JRAM1213 iya

JRAM1314 i

Variance Sums Proportion

Total Teaching Funding 43.5 33.6 -9.9 -23%

New Regime UG 2.6 5.3 2.7 104%

Old Regime UG 35.2 23.4 -11.8 -34%

New Regime PGT 1.1 1.4 0.3 27%

Old Regime PGT 0.5 0.1 -0.4 -80%

Specific Funding Streams 2.2 1.7 -0.5 -23%

Allocated outside JRAM 1.9 1.7 -0.2 -11%

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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)

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

Page 9 T

All sums in £m

JRAM1213 iya

JRAM1314 i

Variance Sums Proportion

Research Students 13.7 13.9 0.2 1.3%

Mainstream QR 77.3 77.3 0.0 0.0%

Charities QR 31.5 32.8 1.3 4.2%

Business QR 7.2 8.0 0.8 11.6%

Total 129.6 132.0 2.2 1.7%

University & College Fees 2013/14

All sums in £m

JRAM1213 iya

JRAM1314 i

Variance Sums Proportion

Total 170.7 192.8 22.1 13%

Undergraduate UK/EU 49.9 65.1 15.2 31%

Undergraduate Overseas 21.8 23.3 1.5 7%

Postgraduate UK/EU 35.5 37.9 2.3 7%

Postgraduate Overseas 63.6 66.6 3.0 5%

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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

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

Page 11 T

Resource LevelsUK/EU Undergraduate

All sums in £Old Regime

1213 iya 1314 iNew Regime

1213 iya 1314 i

HEFCE funding Band D 2,988 3,012 379 383

University Fee 3,465 3,465 8,500 8,688

Total Band D 6,453 6,477 8,879 9,071

Add’l HEFCE Funding Band B 2,746 2,790 1,473 1,488

Total Band B 9,199 9,267 10,352 10,559

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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

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

All sums in £m MSD SSD MPLS Hum OUDCE Colleges Other Total

HEFCE T incl PGR -0.8 -0.6 -2.2 -1.5 -0.1 -4.0 0.0 -9.2

UG Fees 1.4 1.3 3.7 2.6 0.0 7.7 0.0 16.8

PG Fees -0.6 3.4 1.0 0.6 0.3 0.6 0.0 5.3

Other T 0.0 -0.1 -0.0 -0.2 -0.4 -0.0 0.0 -0.7

Total T & related 0.0 3.9 2.6 1.5 -0.2 4.3 0.0 12.2

QR Mainstream 0.0 -0.1 0.0 0.0 0.0 0.0 0.0 -0.1

QR Charity 1.4 -0.0 -0.1 0.1 0.0 0.0 1.3 2.6

QR Business 0.7 -0.1 0.2 0.0 0.0 0.0 0.8 1.7

Other R 0.0 0.0 0.0 0.0 0.0 -0.1 0.0 -0.1

Total R & Related 2.0 -0.2 0.1 0.1 0.0 -0.1 2.2 4.1

Total Funding 2.1 3.7 2.7 1.6 -0.2 4.2 2.2 16.3

2.4% 6.1% 3.6% 4.3% -5.1% 5.6% 8.0% 4.2%

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

1213 i 1213 iya 1314 i 1213 i 1213 iya 1314 i 1213 i 1213 iya 1314 i 1213 i 1213 iya 1314 i 1213 i 1213 iya 1314 iMSD MSD MSD SSD SSD SSD MPLS MPLS MPLS Hum Hum Hum OUDCE OUDCE OUDCE

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Charities & Business QR

Mainstream QR

Fees

HEFCE T & related

£m

Page 14 T

Services budget 2013/14

Page 15 H

ASUC £'m

UAS £'m

Estates £'m

Total £'m

2012/13 budget 25.0 57.3 30.9 113.1Inflation 0.5 1.3 0.5 2.2Growth in size of University estate 1.2 1.2Expansion of Development Office 0.9 0.9Other changes 0.4 0.4 0.4 1.22013/14 budget target 25.8 59.9 33.0 118.7

Change 0.9 2.6 2.1 5.6% change 3.4% 4.6% 6.9% 4.9%

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123 Infrastructure charge for 2013/14

  £m

Services budget target 118.7

Other costs charged via the 123 model but not in the services: e.g. insurance 2.8

TOTAL 123 charge for 2013/14 121.5

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

2011/12 2012/13 2013/14

Total charge as % of divisional income 21.2% 20.9% 20.2%

123 Infrastructure charge for 2013/14

Page 17 T

£m MSD SSD MPLS Hum OUDCE colleges Other TOTAL

2013/14 -32.3 -16.7 -27.3 -15.5 -1.6 -2.4 -25.6 -121.4

2012/13 -29.7 -16.2 -26.2 -14.8 -1.6 -2.3 -25.0 -115.8

difference -2.6 -0.5 -1.1 -0.7 0.0 -0.1 -0.6 -5.6

MSD SSD MPLS Hum OUDCE colleges Other

-35

-30

-25

-20

-15

-10

-5

0

2012/13

2013/14

Page 18 T

Capital charge for 2013/14

Band weightings and costs are unchanged Increase is due to increase in space

£m MSD SSD MPLS Hum OUDCE TOTAL

2013/14 -3.7 -0.9 -4.8 -0.6 -0.2 -10.2

2012/13 -3.2 -0.9 -4.4 -0.6 -0.2 -9.3

difference -0.5 0.0 -0.4 0.0 0.0 -0.9

  Band 1 Band 2 Band 3 Band 4 Band 5 Band 6

Weightings 2.5 2 1.5 1 0.5 0.5

£ per sqm £95 £76 £57 £38 £19 £19

Budget v Actuals – historic trends

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(20.0)

(10.0)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

£'m

Budget

Actual

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

Page 20

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

Page 21

Russell Group Surpluses / Deficits 2011/12

Page 22

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

£'000

Russell Group surpluses 2011/12

Surplus/ Deficit as % of Income

Page 23

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%Oxford 5.1%

Setting the budget 2013/14

Page 24

Note – figures include £2m transfer from Medical Sciences to Humanities

Division

Budget target

£'mMedical Sciences 9.0 Social Sciences 5.1 MPLS 3.7 Humanities (1.4)Continuing Education 0.6 Services 1.6 Central Costs & Adjustments 12.5 Target 2013/14 31.1

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

Page 25

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

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

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0

20

40

60

80

100

12020

06/0

7

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

2014

/15

2015

/16

2016

/17

2017

/18

2018

/19

2019

/20

2020

/21

2021

/22

Surp

lus £

'm

EBITDA surplus

Target EBITDA surplus

£88m = 7.3%

£45m = 3.7%

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reconcile

Developing the capital plan

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debt

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PRAS OUESFinance

£ £

Estimate demand Estimate supply

Capital planning due to complete in Michaelmas

Strategic financing plans now being developed

Any questions?

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Further informationTom 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