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Monday, November 21, 2016

Budget Basics for UGE

CLA Undergraduate Education is a big unit with a big budget. There seems to be a lot of mystery, folklore, and curiosity about our budget, and CLA budgeting more generally, so here is a brief introduction to the budget in CLA and UGE.
Every year, CLA has a projected amount of revenue. This includes state operations and maintenance funding (O&M), tuition, student fees, indirect cost recovery from grants (ICR), and so on. CLA also has a carry forward balance; this is essentially money in the bank that the college has saved over time. These are the college’s resources. The college submits a “printed” budget to the university finance office. This is the budget that should balance with the projected revenue from tuition, O&M, and fees. If actual expenses exceed actual revenue, we must cover the shortfall from the carry forward balance. If revenue exceeds expenses, our carry forward balance will grow.

In addition to the printed budget there is a “soft” budget. We know that every year there will be some money that was budgeted but does not get spent. For example, some departments underspend their instructional funds (instructional fund balances will get swept back into the college), some faculty will go on unpaid leave or resign unexpectedly, and some other expected budgeted expenses will not, in fact, happen. We cannot predict where these savings will arise, but we can predict pretty well how much savings there will be that are swept back into the college. These funds support the soft budget.

Every year the college gets budget instructions from the central finance office. These instructions usually contain both good news and bad news. The bad news takes the form of “reallocations,” or budget cuts in ordinary terminology. For example, the college might be instructed to detail how it would cut some fraction of its budget amounting to, say, $1.2 million. The college needs to say how it will make those cuts. The good news usually includes a statement that central will provide enough funding to support merit increases at some level, say 2%. The potential good news is that the college is usually allowed to request funding for specific proposals. Sometimes the total funding we receive more or less matches the reallocations we contributed, and the net effect is to move funding around between activities in the college. Sometimes we get more than we contributed, and sometimes it’s less. Note, however, that a roughly constant budget in the context of increasing salaries means fewer employees.

It is impossible to overstate how well UGE has been treated in the last three budgets. It is simply extraordinary. In FY15 UGE received $500,000 recurring (i.e., the funding will be there in future years); this supported the expansion of Career Services and learning abroad, among other things. In FY16, UGE received $300,000 recurring to expand the Dean’s Freshman Research and Creative Scholars program and $500,000 for the Career Readiness Initiative. In FY17 we received $600,000 for incremental advisors; this was a student fee increase rather than an allocation from central, but it had to go through the same request and approval process. (And let’s not forget the several hundred thousand that the college contributed to support the equity adjustment for advising salaries.) That is a streak of luck for the record books and indicates a recognition of the key nature of UGE’s work by both Dean Coleman and central administration.

CLA UGE has five department IDs, called DeptIDs. These are 10932 (UGE administration), 10936 (Student Services), 10938 (MLK/PES), 10939 (CLA Advising), and 10940 (Career Services). Les Opatz and those reporting up to Les appear on the 10936 and 10939 budgets. Those reporting to Leah Milojevic appear on the 10938 budget. Those reporting to Paul Timmins appear on the 10940 budget, and everyone else is on the 10932 budget. (Note: A year ago, you could not predict who would appear on what budget; we cleaned that up this year.) The 10936, 10938, 10939, and 10940 budgets are all student-facing activities. The 10932 budget is for administration and the non-student-facing activities. Most UGE employees are supported on what is called 1000-fund money; this fund is tuition and support from the state. Some UGE employees, mostly advisors, are supported on student fees (the so-called 1026-fund), and a couple are supported by endowments.

Every DeptID has its own printed budget, and three of the DeptIDs have soft budgets as well. The total of the five printed budgets is $9,031,722, and the total of the three soft budgets is $584,392. The vast majority of our total budget is for salaries ($8,502,253, or 88.4%), and the vast majority of salaries are on the printed budget. (I think there are salaries for two employees on the soft budget, but who cares, the money is still green.) UGE is big enough that we run our own internal soft budget. There is at least one UGE employee who does not appear on any of our budgets. History has shown that we always have some vacancies, and we spend some of those salary savings preemptively on another position.

So what isn’t salaries? Here are the major categories:

Category Amount
Supplies, equipment, and expenses (SEE) $82,040
Commencement $100,000
Recruitment $100,000
Student Ambassadors $12,000
Associate Dean’s Discretionary $35,000
Dean’s Freshman Research and Creative program $350,000
K-12 Outreach $12,000
Other Career Readiness funding (could become salary) $338,000
CLA Student Board $24,000
Career Services programming  $41,821
MLK Experiential programming  $19,000
Total  $1,113,861

I offer a few comments on this budget.
  1. We vastly overspend our SEE budget, by perhaps 100%.
  2. The Commencement budget was $60,000 until this year, and we just had to find the remaining $40,000 somewhere.
  3. We have some leeway on how we spend that unallocated Career Readiness funding, but it must be for Career Readiness-related things.
  4. The only actual discretionary funding in the whole budget is $35,000, or about 0.36% of the total budget.
  5. There is no budget for computer replacements, furniture, space upgrades, travel to conferences, food at all-UGE meetings or any other form of hospitality, polo shirts, workshops, or any other item not specifically listed above.
Think about #5. In fiscal year 2015-16 we spent over $25,000 on computers, about $75,000 on Heller space, thousands of dollars on food, $2,000 on polo shirts, and so on. How did we do that? The simple fact is that all of those expenses are paid from salary savings due to vacant positions. If we ever get to the point that we are fully staffed and remain fully staffed, we will need to dramatically curtail our non-salary spending. For example, I chose not to refill Chris Kearns’ assistant dean position and instead decided to redeploy those funds into advising. We have only just filled those vacant lines, so all of those salary savings will be a thing of the past. That means that this year we will not have the kind of “discretionary” money we spent in the last couple of years.

One last thing: UGE is generally not allowed to save. Any positive balance that we have at the end of the fiscal year is (almost always) swept back into the college carry forward balance.

If you are interested in learning more about the budget, Brent Gustafson wrote a great set of explanations last year http://intranet.cla.umn.edu/fiscal/documents/CLAFiscalOverview.pdf