UNIVERSITY OF MINNESOTA

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UNIVERSITY OF MINNESOTA Financial Overview
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University of MinnesotaFinancial Management
Organization
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Fiscal Year 2007-08Total Operating Budget
What is the amount of the Universitys annual
budget? Current Non-Sponsored Expenditures 2,515
,519,819 Mandatory Transfers Current Sponsored
Expenditures 534,000,000 Total Current Fund
Operating Budget 3,049,519,819
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All-Funds Budget Structure
Non-Sponsored Funds 2.5 Billion
Sponsored Funds 534 Million
Centrally Allocated Attributed1.462 Billion
Local Unit Generated Revenues1.053 Billion
State O M/Other Misc.
795 Million Clinical Income Restricted
Income Grants Contracts Business
Industry Sales Services Fees Endowment Income
258 Million Auxiliary Operations
State Specials
Tuition
University Fee
Indirect Cost Recovery
Central Reserves
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Fiscal Year 2007-08 Operating Budget All Funds
(Including Sponsored) 3.0 Billion
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University of Minnesota Revenue Sources All
Funds FY2007
Capital Grants/Gifts/Appropriations 3
Gifts 4
Tuition and Fees 19
Educational Sales/Contract Activity 11
Auxiliary Enterprises 11
State Appropriation 26
Federal/State/Other Grants and Contracts 26
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University of Minnesota Revenue Sources All
Funds FY 2007
Capital Grants/Gifts/Appropriations 3
Gifts 4
Educational Sales/Contract Activity 11
Tuition and Fees 19
Auxiliary Enterprises 11
State Appropriation 26
Federal/State/Other Grants and Contracts 26
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FY 200708 Revenues 1.2 billion
Student Tuition and Fees
Why Are These Revenues So Important?

• 70 of total spending on instruction
• 77 of total spending on student services
• 72 of total spending on faculty compensation
• 93 of the total budget of CLA
• 78 of the total budget of IT
• 75 of the total budget of CFANS

StateAppro-priations
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Two Budget Processes

• Biennial Budget Request to the State
• - completed every two years
• Annual Budget Process
• - conducted every year

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Where the Money GoesState of Minnesota General
Fund Budget / 34.58 Billion2010-11 Biennium

• 77 of State Budget
• K-12 Education
• Property Tax Aids Credits
• Health Human Services

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Legislative Outcome
2007-08 2008-09 Request 58,900
,000 64,500,000 Actual 67,447,000 14,310,
000 Difference 8,547,000
(50,190,000)
Biennial Math Request 182,300,000 Actua
l 149,204,000 Difference ( 33,096,000)
Excludes 25,000,000 onetime U/Mayo Partnership
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Current Non-Sponsored Funds Fiscal Year 2006-07
Expenditures / 2.2 Billion
By Object of Expenditure
By Function
Academic Support Student Services
Student Aid
Institutional Support
Public Service
All Other
Research
Salaries Fringe
Supplies Services
Op. Maint. of Plant
Utilities
Instruction
Equip. Capital Assets
All Other
Consultants/ Purchased Personnel
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State of MinnesotaFinancial Context FY2008/09
FY2010/11
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Historical Annual Incremental Investment
Framework 80.0 M
Safety and contractual obligations 3.0M or 3
100
Student aid 5.0M or 6
Infrastructure investments and support 7.0M or
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Facility operations 12.0M or 15
Programmatic investments 18.0M or 22
Employee compensation 35.0M or 45
0
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DRAFT FOR DISCUSSION ONLY2010-2011 Biennial
BudgetConceptual Framework
University Responsibility Tuition and Internal
Funds
State Responsibility
Compensation 75 State Share
Compensation 25 U of M Share
Research Enhancement Program
Core Academic Support (cost pools, etc.)
Educational Instructional Programs
Student Aid
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Biennial Budget Request
Increase over FY09 Increase over FY10 2010-2011 Biennium
FY2010 FY2011 (Biennial Math)
State Request
Core Compensation (State Share) 36,500,000 22,200,000 95,200,000
Middle Income Scholarship 8,000,000 0 16,000,000
Research Enhancement Fund 10,000,000 10,000,000 30,000,000
New State Appropriation 54,500,000 32,200,000 141,200,000
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Biennial Budget Timeline
Complete Entry of Biennial Budget Information
into State System
DOF Budget Instructions
Finish Principles, Prel. Write Ups Financial
Plan For September BOR Review
Present Biennial Request to Board of
Regents Review
Present Biennial Request to Board of
Regents Approval
Establish Conceptual Framework
July August Sept. Oct. Nov.
BOR Docket Deadline 8-24-08
BOR Docket Deadline 9-28-08 UMD Meeting
Agency Plans Due to MN Legislature Nov 30, 2008
Preliminary Cost Estimates
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Three critical economic issues

• The Universitys biennial request funds
• Compensation for University faculty and staff.
• Middle income scholarships for Minnesota students
  and their families.
• Research enhancements to meet growing demand for
  capacity and evolving statewide needs.

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Compensation for faculty and staff

• Request
• 3 annual compensation pool increase 95.2M for
  biennium
• Rationale
• Higher education is people-intensive and highly
  competitive.
• Nearly two-thirds of the Us annual operating
  budget is compensation.
• Minnesotans have seen prices rise by 5.6 since
  July 2007.
• Top faculty are highly sought-after making them
  challenging to recruit and retain.

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Middle income scholarship program

• Request
• Middle-income scholarships to reduce tuition by
  5 to 40 depending on income 16M for biennium
  (8M recurring)
• Rationale
• Many middle-income students receive little
  scholarship support.
• Middle-class Minnesota families are struggling
  with rising costs.
• Low-income students already attend the U with
  free tuition.
• Its time to provide ongoing scholarship support
  for middle-income students.

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Research enhancement program

• Request
• New investments to enhance research capacity
  30M for biennium
• Rationale
• The U creates new knowledge that fuels the
  economy.
• Investment in research is critical to job
  creation and economic growth.
• The U competes to win 600M in research funding
  each year.
• Our research capacity is leveraged by the state,
  business and industry, and other colleges and
  universities.

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University-funded components
Funding sources 4.5 tuition increase per year 1
reallocation per year University
obligations The Us share of the compensation
pool increase Essential academic investment and
support Debt service, utilities, leases, new
building operations, safety and contractual
obligations
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FY2010 2011 Biennial budget request
Increase over FY09 Increase over FY10 2010-2011 Biennium
FY2010 FY2011 (Biennial Math)
State Request
Core Compensation (State Share) 36,500,000 22,200,000 95,200,000
Middle Income Scholarship 8,000,000 0 16,000,000
Research Enhancement Fund 10,000,000 10,000,000 30,000,000
New State Appropriation 54,500,000 32,200,000 141,200,000
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Budget Development Activities
IMG Shared Responsibility Or Common
Good Phase
Earned Income Full Cost Model Phase
Pre IMG Infante Phase
IMG Install Phase
1992 ------1997
1998 ------1999
2006 ------ ????
2000 ------ 2005
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Reforming Resource AllocationModels for Revenue
Distribution
Previous Model
Current Model
Tuition Revenue
Indirect Cost Recovery
State Appropriations
State Appropriations
Tuition Revenue
Indirect Cost Recovery
50.5
Central Funds
Central Funds
49.5
100
Allocations to Academic Support Units
Allocations to Academic Units
Allocations to Support Units
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Reforming Resource AllocationWhy Institutional
Revenue Sharing?
The challenge of funding institutional common
goods and academic priorities
Local Unit Generated Revenues
Centrally Distributed Revenues
IRS recognition that all units should share in
providing resources for meeting
institutional needs budgetary responsibilities.
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Institutional Revenue SharingFiscal Year 2004-05
Approved Budget
Academic Institutional Revenue Sharing Total
Revenues X 8.5
Part 2 Subtract 3.75 Sales Services
Assessment from 8.5 IRS and collect remaining
assessment from collegiate/campus units
Part 1 Calculate revenue yield _at_ 3.75 of
Sales Services Revenue Includes Central
Support Units
Estimated FY05 Yield 11.9 m
Estimated FY05 Yield 87.3 m
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Why Build Upon the IMG Model?

• IMG Largely A Success - However

Transparency Simplicity/Fewer Levers All-Funds/All
Costs Analysis Accountability Units
Leadership
NEED MORE
Internal Assessment Base / - Methodology
NEED LESS
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Minnesotas Budget Development Story
Earned Income-Full Cost
Earned Revenues Tuition ICR FeesGifts Sales Etc.
Allocated Costs Utilities Facilities
Ops Debt Leases Libraries Research Technology Stud
ent Serv. Classrooms Administration
Academic Units
Allocated State Appropriation
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9 Cost Allocation Pools

• Facilities Operations Maintenance
• (ASF/Space Data Base/Twin Cities/Standard
  Service Levels)
• Utilities - (Consumption by Building/Buildings
  Metered/Monthly Bill)
• Debt Leases - (Occupancy/General Purpose
  Classrooms)
• Office of Information Technology
• (Centrally Allocated/Unweighted
  Headcount/Tiered)
• Administrative Service Units - (Total
  Expenditures/Tiered)
• Research
• (Sponsored Services/3 Yr. Rolling Avg.
  Sponsored Expenditures)
• Libraries - (Weighted Student Faculty
  Headcount/Law Library Nuance)
• Student Services
• (3 buckets/Primarily Student Headcounts/Aid
  Programs Included)
• General Purpose Classrooms
• (Student Course Registrations/Future Incentive
  Refinements)

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Summary of Cost Allocation RecommendationsX
Primary type assignment
Utilities Facilities OM Debt Leases Tech Admn Serv Libraries Research Student Serv Gen. Purpose Class-rooms
Consumption Based Cost Allocation X X
Cost-Driver Based Cost Allocation X X X X X X
Common Good Based Cost Allocation X
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Medical School
College of Biological Sciences
College of Liberal Arts
Carlson School of Management
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6-Year Capital Improvement Plan
Board of Regents Policy directs the
administration to develop a capital budget with
a 6 year time horizon, updated annually
6-Year Capital Improvement Plan
Part One May/June Capital Improvement
Budget Year 1
Part Two Oct./Nov. Capital Improvement
Plan Years 2 - 6
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Operating Capital Budget Development
Board of Regents
Board Meetings

• Review/Action/Discussion
• Policy
• Background/context
• Oversight
• Strategic positioning

• Key Tools
• State Biennial Request even years
• Annual Operating Budget every year
• State Capital Request odd years
• Six Year Capital Plan every year
• Annual Capital Budget every year

Committees
Work sessions
Oversight Approval
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Contacts for Budget and Financial Information
Budget Office Web Site www.budget.umn.edu Budget
Office Phone [phone] Controllers Org
Phone [phone] Institutional Research
Reporting Web Site www.irr.umn.edu
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