You are the administrator of the Adult Education Department at Blooming Park University, the largest university in the Twin Cities metro area. You will be creating the budget for your d
You are the administrator of the Adult Education Department at Blooming Park University, the largest university in the Twin Cities metro area. You will be creating the budget for your department. To prepare, you have to go to a budget meeting for the overall university, where you'll hear about the current fiscal year — and how reality is corresponding to the assumptions in the budget.
QUESTION:
What Can You Do?
Now that you understand the financial position facing the university, try your hand at making budget adjustments. Not every field is something you can change, of course – state appropriations, for example, are beyond your control. Typically, salaries and tuition are also fixed, or at least subject to either legislative (if a public university) or Board of Directors (in a private university) approval. You cannot count on that.
Modify what you can after considering the impact such a modification will have on operations and other fields. Remember, decreasing spending on sports, for example, will likely affect sport scholarships and, thus, possibly enrollment. Keep track of your reasoning for each change and, when finished, draft a memo outlining your recommended changes and the affects you envision. You must cut 5%.
Summary P1
| Blooming Park University | ||
| FY 2018-19 Budget | ||
| FY 2018-19 | % TOTAL | |
| ESTIMATED REVENUES: | ||
| TUITION & FEES | 78,687,272 | 45.72% |
| STATE APPROPRIATIONS | 66,955,599 | 38.90% |
| GIFTS, GRANTS, AND CONTRACTS | 1,644,180 | 0.96% |
| INVESTMENT INCOME | 0 | 0.00% |
| SALES AND SERVICES | 797,323 | 0.46% |
| OTHER SOURCES | 804,746 | 0.47% |
| TOTAL E&G | 148,889,120 | 86.50% |
| AUXILIARY SERVICES | 23,229,355 | 13.50% |
| TOTAL ESTIMATED REVENUES | 172,118,475 | 100.00% |
| BUDGET ALLOCATIONS: | ||
| INSTRUCTION | 56,671,199 | 32.93% |
| RESEARCH | 4,645,527 | 2.70% |
| PUBLIC SERVICE | 2,854,863 | 1.66% |
| ACADEMIC SUPPORT | 21,239,470 | 12.34% |
| STUDENT SERVICES | 8,033,435 | 4.67% |
| INSTITUTIONAL SUPPORT | 15,870,163 | 9.22% |
| PHYSICAL PLANT | 11,058,294 | 6.42% |
| SCHOLARSHIPS & FELLOWSHIPS | 16,496,449 | 9.58% |
| MANDATORY TRANSFERS | 5,632,375 | 3.27% |
| NON-MANDATORY TRANSFERS & RESERVES | 6,387,345 | 3.71% |
| TOTAL E&G | 148,889,120 | 86.50% |
| AUXILIARY SERVICES | 23,229,355 | 13.50% |
| TOTAL BUDGET ALLOCATIONS | 172,118,475 | 100.00% |
Page S-1
Summary P2
| Allocations FY 2018-19 | |||||||
| Fringe | |||||||
| Salaries/Wages | Benefits | Maintenance | Debt | Other | Total | ||
| BUDGET ALLOCATIONS: | |||||||
| INSTRUCTION | 41,935,285 | 9,486,944 | 4,111,399 | 55,533,628 | |||
| RESEARCH | 2,856,420 | 566,905 | 658,256 | 4,081,581 | |||
| PUBLIC SERVICE | 2,348,831 | 606,792 | 496,816 | 3,452,439 | |||
| ACADEMIC SUPPORT | 8,748,566 | 1,948,809 | 5,931,127 | 3,636,915 | 20,265,417 | ||
| STUDENT SERVICES | 5,192,255 | 1,384,846 | 1,411,982 | 7,989,083 | |||
| INSTITUTIONAL SUPPORT | 14,005,609 | 4,585,990 | 4,263,235 | (3,636,915) | 19,217,919 | ||
| PHYSICAL PLANT | 4,175,294 | 1,256,029 | 4,155,841 | 9,587,164 | |||
| SCHOLARSHIPS & FELLOWSHIPS | 16,026,524 | 16,026,524 | |||||
| MANDATORY TRANSFERS | 7,541,660 | 7,541,660 | |||||
| NON-MANDATORY TRANSFERS | (4,119,694) | (1,150,987) | 297,006 | 11,558,064 | 6,584,389 | ||
| TOTAL E&G | 75,142,566 | 18,685,328 | 21,325,662 | 7,541,660 | 27,584,588 | 150,279,804 | |
| AUXILIARY SERVICES | 5,361,273 | 1,311,352 | 9,336,826 | 3,926,919 | 3,112,372 | 23,048,742 | |
| TOTAL BUDGET ALLOCATIONS | 80,503,839 | 19,996,680 | 30,662,488 | 11,468,579 | 30,696,960 | 173,328,546 |
Page S-2
Adult Education
| Adult Education Program | |
| FY 2018-19 | |
| Salaries | 1,964,149 |
| Maintenance | 44,203 |
| Student Teaching Fee | 28,472 |
| Student Teaching Lab | 8,500 |
| Practicum Fee | 17,000 |
| Reserve | 1,017,348 |
| Technology Fee | 400,069 |
| TOTAL | 3,079,672 |
Page S-&P
E&G General Income
| Unrestricted E&G FY 2018-19 | |
| TUITION | |
| General Registration – Fall | 29,275,000 |
| General Registration – Spring | 26,010,500 |
| General Registration – Summer | 3,365,500 |
| Tuition Remission/Waivers | (1,600,000) |
| TOTAL TUITION | 57,051,000 |
| FEES | |
| Facilities Fee | 2,068,172 |
| General Fee | 3,355,418 |
| General Fee Student Activities | (507,847) |
| Health Services Fee | 630,000 |
| Infrastructure Fee | 476,500 |
| Technology Fee | 810,000 |
| Safety Fee | 485,000 |
| Commencement Fee | 10,000 |
| International Student Fee | 152,896 |
| Music Fee | 18,940 |
| Art Studio Materials Fee | 34,824 |
| Clinical Nursing Fee | 321,780 |
| Performance Arts Production Fees | 61,488 |
| Application Fee – Undergrad | 250,000 |
| Application Fee – Grad | 75,000 |
| Installment Payment Plan Fee | 180,000 |
| Student Late Payment Fee | 240,000 |
| Student Teaching Lab Fees | 32,170 |
| Experiential Learning Fee | 26,520 |
| SUBTOTAL FEES | 8,720,861 |
| TOTAL TUITION AND FEES | 65,771,861 |
| STATE APPROPRIATIONS | |
| State Appropriations | 57,067,263 |
| Educational Promotion | 5,505,847 |
| TOTAL STATE APPROPRIATIONS | 62,573,110 |
| GIFTS AND GRANTS | |
| Indirect Cost Recovery – Federal | 960,883 |
| Indirect Cost Recovery – State | 530,000 |
| Indirect Cost Recovery – Other | 50,000 |
| State Extension Services | 105,646 |
| Technology Networks & Maintenance | 2,059 |
| TOTAL GIFTS AND GRANTS | 1,648,588 |
| SALES AND SERVICES | |
| Intensive English Language Program | 649,045 |
| Theater Productions | 24,300 |
| Gifted Programs | 81,938 |
| TOTAL SALES AND SERVICES | 755,283 |
| OTHER SOURCES | |
| Transcript Fees | 70,000 |
| Returned Check Fee | 3,100 |
| Sales Tax Rebate | 55,000 |
| Miscellaneous Income | 120,000 |
| Faculty/Staff Parking Fee | 100,000 |
| Parking Deck/Meters | 85,000 |
| Student Parking Fees | 20,000 |
| Traffic Violations | 60,000 |
| SUBTOTAL OTHER SOURCES | 513,100 |
| TOTAL ESTIMATED REVENUES | 131,261,942 |
Page S-&P
Aux Income
| Unrestricted Auxillary Revenue | |
| FY 2018-20 | |
| Athletics | 8,861,031 |
| Student Organizations | 457,514 |
| Housing | 9,803,029 |
| Copy Center | 931,978 |
| Contracts | 14,475 |
| Student Center | 2,201,592 |
| TOTAL | 22,269,619 |
Page S-&P
,
You are the administrator of the Adult Education Department at Blooming Park University, the largest university in the Twin Cities metro area. You will be creating the budget for your department. To prepare, you have to go to a budget meeting for the overall university, where you'll hear about the current fiscal year — and how reality is corresponding to the assumptions in the budget.
Owen Welch, CFO: Hi, everyone. Thanks for coming. We've got some important numbers to go through and a big challenge to respond to, so I think we better get started.
Carla Neustadt, Vice Chancellor of Operations: That sounds ominous.
Owen Welch: Not really, Carla. Well…let's get started. Okay, everybody take a look at the budget for the current year. We'll get to the year-to-date numbers in a minute, but for now I want to focus on the whole-year budget.
Christopher Hewitt, Vice Chancellor of Student Support: Well, can we at least get an idea of how we're doing year-to-date before you go to the 40,000-foot level?
Owen Welch: I think you might need to hear this first. Here's the situation: The university has to cut operating expenses by 5 percent for next fiscal year.
George Fink, Director of Operations: I'm sorry, did you say 5 percent? Operating expenses?
Owen Welch: That's right.
George Fink: That's a big ask. We're already operating awfully lean.
Owen Welch: Agreed. But it's the situation we're in. I'll get to the reasons, but based on what I'm going to go over, I just want everyone to keep in mind that we can't make assumptions we were making before. So let me give you an overview of the budget and the year-to-date numbers, and I think you'll see why we're going to have to make those cuts. Now, last year, for the entire university, we assumed that we would see $62,852,000 in student tuition. But as you can see, for half the year, we've only hit $29,275,000. By this point in the year, we should be at $31,175,000. So already in terms of total tuition, we've got a deficit of $8,519 that we didn't expect. The problem is made worse when we see that state operating revenue is also under budget by $1,100,000. Our operating expenses are fairly close to target so far this year, but given the situation with declining revenue, we will need to try to find some additional cost savings opportunities.
Christopher Hewitt: Wow. Well, okay, so that's the reality. What's the timeline? How long do we have to make these cuts?
Owen Welch: Well, implementation is obviously by June 30 since the next fiscal year starts July 1. The board will approve the new budget probably by mid-June, but all the negotiation at the unit and department level will be going on in April. Our first official budget committee meeting is in February. So I'd suggest getting your ducks in a row by then.
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