2014 2015 Consolidated Resource Plan€¦ · 3 Presentation Objectives •Provide a summary of the...

2014 – 2015 Consolidated Resource Plan

For Presentation:

Budget information can be found at: http://www.viu.ca/budget/index.asp

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February 5, 2014 - To President’s Council

February 12, 2014 - To Planning and Priorities Committee

March 6, 2014 - Planning and Priorities Committee Reports to Senate

March 11, 2014 - To the Finance Committee of the Board of Governors

March 27, 2014 - Finance Committee presents to the Board of Governors for Final Approval

Where are we in the budget process?

• September/October communicated updated Financial Forecast to budget holders

• September to October budget holders finalize their submissions • Early November budget holders present their Strategic Resource Plans • Late November/early December Senior Management Deliberations • December Decisions • January memos to budget holders • February/March Draft Consolidated Resource Plan for presentation and

approval

Jan 2014 – Budget holders have already started planning for subsequent years (2015-2016 forward)

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Presentation Objectives

• Provide a summary of the Consolidated Resource Plan (CRP) document

• Increase the understanding of the budget intake process and budget development processes within the context of Integrated Planning

The Academic Plan…frames our future

The Academic Plan, is the expression of VIU’s strategic thinking and the foundation of the University’s integrated plans that guide our future.

Our focus remains the five Academic Plan objectives: student learning, engagement and success; academic community; program quality; community engagement; and institutional effectiveness.

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5 The VIU Landscape…Consolidated Revenue

2009-2010 – marks the end of 25+ years of double digit growth

Pre 2009: Provincial Funding increases key driver

Post 2009: Provincial Funding: No new funded FTE; ACA reduction; base slowly declining

Off Grant: Driver of growth

CRP page 10, 11

Tuition Policy Freeze

Block

University

**Due to change to PSAB this includes $1.4M related to external entities not consolidated in the past (High School and Milner Gardens & Woodland Society) Note: 2011 & 2012 Adjusted for Timing for Revenue Recognition due to Job Action

5,900 6,443 6,208 6,090 6,009

1,282

1,252 1,159

1,018 1,157

909

1,011 1,143

1,039 1,200

8,091

8,705 8,510

8,148 8,366

-

2,000

4,000

6,000

8,000

2008-09 2009-10 2010-11 2011-12 2012-13

International

ITA

Domestic Ministry-Countable

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Enrolment…FTEs…Ministry--Countable, ITA, and International

CRP pages 7- 10

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Ministry Countable:

• 2011 job action decline likely halted

• 2103-2014 target not met

International:

• Recovered from impacts of job action

• Growth

ITA :

• Recovered from impacts of job action

• Status quo

FTE Numbers based upon University Planning Forecast and Financial Numbers based upon 2013-2014 Q3 Report

The VIU Landscape …Enrolment

CRP pages 7 - 10

FORECAST $ BUDGET $

5,820 27,193,047$ 28,743,047$

982 1,542,556 1,392,556

1,313 20,043,300 18,043,300

48,778,903$ 48,178,903$ University

8,115 1,272,123 1,272,123 Controlled Entities

50,051,026$ 49,451,026$

6,678

87%

2013-2014 EstimateJan. 28, 2014

FTE extract

Tuition and Student fees

CONSOLIDATED

(schedule 1)

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Consolidated Resource Plan

The University’s consolidated resource plan presented in Schedule 1, reflects the entire enterprise and controlled entities. The consolidated resource plan is the budget plan, cited by the Ministry.

Controlled entities include: the Vancouver Island University Foundation; Western Student Housing Ltd; Milner Gardens and Woodlands Society; The International High School at VIU and The High School at VIU.

CRP page 2, 29

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2014-2015…Consolidated Resource Plan

VIU is responsible for the financial stewardship of approximately $134m in total annual revenue and on a consolidated basis is proposing a balanced budget for 2014-2015.

The consolidated budget for 2014-2015, is projected to increase by $2.94m or 2.25% to $133.6m from $130.7m in 2013-2014.

CRP pages 2, 10-26, 29

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2014-2015 Primary Sources of…Revenue Change

$0.72m increase in provincial grants related to related to cost recovery programs; and

$2.79m increase related to increasing enrolment within controlled entities and cost recovery programs and contract areas ($2.1m coming from international).

$3.51m growth

$0.16m decrease in Provincial Government grants;

$1.28m decrease in Federal Government Grants and other contracts;

$0.87m increase related to fee increases in tuition policy and cost recovery programs.

$0.57m = $2.94m -

CRP: Page 2

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2014-2015 Primary Sources of…Expenditure Change

Salary and benefit expenses: Investing in people:

$1.9m investments related to increased capacity; and

$1.2m by supporting: annualized impact of wage increases, provision for increments; grid and increase in benefit costs.

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Non-Salary expenses:

$0.16m net decrease in all non-

salary and benefit expenditure categories .

CRP: Page 2

$3.1m - $0.16m = $2.94m

12 The VIU Landscape…Sources Revenue

Two main sources of Revenue

Provincial Funding (43%)

diminishing as a % of total due to:

• Funding in Dollars declining

•ACA funding lost

•2013-2014 & 2014-2015 decreases

•Inflation adjusted fees

Student Fees (40%)

increasing as a % of total due to:

• Growth!!!

• 12/13 +High Schools

• Controlled fee changes

Note: Job action affected results in 2010-2011

2012-2013 consolidation of the High School at VIU and the International High School at VIU increased the tuition percentage

CRP: Page 10

13 Assumptions and Risks Provincial Government Funding

No government funding to support wage increases related to last round of bargaining. Risk or Opportunity: neither

Year two of three, post-secondary sector funding envelope reductions. 2014-2015 $50m (1%), based upon an assumption of an across the board implementation. Risk and Opportunity: Consequence: insignificant and Likelihood:

Rare

CRP pages 2 - 4

14 Assumptions and Risks Provincial Government Funding…cont'd

No assumption has been made for either revenue or expenditures related to potential one-time grants that have not been confirmed.

Risk or Opportunity: neither

ITA funding assumed status quo (consistent with 2013-2014)

Risk or Opportunity: neither

Annual Capital Allowance assumed to be zero. Receipt of grants not included will be offset by related expenditures.

Risk or Opportunity: neither

CRP pages 2 - 4

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Province of BC Grants $57.5 million includes $0.55 million increase

CRP page 11 & 12

The proportion of government funding as a percentage of total revenue has been steadily declining by 10% per decade: starting at + 80% in the 1980s; expected to be at 43% for 2014-2015 and if the current trend continues, the proportion of provincial grant as a percent of total revenue will likely be 40% by the end of this decade.

Province of BC Grants for 2014-2015 $57.5 million Increase by $0.55 million: 96% in Operating Fund (base grant);

Base grant slowly declining Cost Recovery Programs and contracts generate increase.

CONSOLIDATED Province of British Columbia grants

% OF

TOTAL

2014-2015

AMOUNT

% OF

TOTAL

2013-2014

AMOUNT

Change

AMOUNT

%

Change

Operating 96% 54,942,642$ 97% 55,098,645$ (156,003)$ 0%

Cost Recovery Programs & Contracts 4% 2,461,351 3% 1,743,461 717,890 41%

Controlled Entities 0% 47,242 0% 53,362 (6,120) -11%

TOTAL CONSOLIDATED Province of British Columbia grants Schedule 1 100% 57,451,235$ 100% 56,895,468$ 555,767$ 1%

16 Assumptions and Risks Enrolment Increase enrolment in AVED programs to achieve greater than 95% delivery. Risk: Planned AVED supported program enrolment is lower than planned

generating below budget tuition revenue.

Consequence: $1.6m negative Likelihood: 50%

Risk: Performance target not achieved and the Province reduces our grant. Consequence: Significant over the long run. Likelihood: Unlikely

Net Potential Impact: $0.8m negative

Increase enrolment in cost recovery areas including an approx. 8% increase in International. Opportunity: International enrolment higher than planned generating

above budget tuition revenue. Consequence: $1.0m positive Likelihood: 75%

Risk: International enrolment falls below planned levels.

Consequence: $4.0m negative Likelihood: 5%

Net Potential Impact: $0.55m Positive

CRP page 4-5

17 Assumptions and Risks Tuition and Student Fees

Fee increases consistent with the tuition fee policy (2%). Risk: Rate change lower than planned.

Consequence: $0.41m negative Likelihood: 25%

Risk: Rate change not approved.

Consequence: Significant over the long run. Likelihood: Low

Net Potential Impact: $0.1m negative

International revenue includes annualized impact of Sept 2013 increases.

Risk or Opportunity: neither

CRP page 4

Tuition and Student Fees … $53.5 million includes $4.02 million increase

Operating $0.98m increase: $0.41m increase relates to 2% fee

increase; $0.21m increase relates to annualized

impact of prior year changes and $0.35m reallocation from other

revenue.

No increase related to growth

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Cost Recovery $2.9million increase:

$2.65m attributed to increased enrolment, of which 80% is international; and

$0.25m attributed to annualized impact of Sept. 2013 fee changes.

Controlled Entities $ 0.14m increase Enrolment growth in The High Schools.

CRP page 1-2, 4 & 12-14

CONSOLIDATED TUITION & STUDENT FEES

% OF

TOTAL

2014-2015

AMOUNT

% OF

TOTAL

2013-2014

AMOUNT

Change

AMOUNT

%

Change

Operating 45% 24,224,279$ 47% 23,247,214$ 977,065$ 4%

Cost Recovery Programs & Contracts 52% 27,836,445 50% 24,931,689 2,904,756 12%

Controlled Entities 3% 1,413,030 3% 1,272,123 140,907 11%

TOTAL CONSOLIDATED TUITION & STUDENT FEES Schedule 1 100% 53,473,754$ 100% 49,451,026$ 4,022,728$ 8%

Cost Recovery…Tuition and Student Fees

Increases in: Education; International; Social Sciences; and Trades.

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CRP page 14

Government of Canada Grants and Other Grants and Contracts $4.75 million includes a $1.28 million decrease

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Comprise 3.6% of consolidated revenue. $0.13m decrease is relates to Government of Canada grants and $1.15m of the decrease relates to Other grants and contracts.

Fluctuations in both streams are normal and reflect the impacts of market or political forces; Government of Canada grants primarily relate to research and Other Grants and contracts occur in most areas and relate to programs or other activities.

Assumption: Estimated by using known grants or estimates where grants are very likely to be approved. Risk or Opportunity: neither

CRP page 4 & 14

21 Assumptions and Risks – Salaries and Benefits The vacancy trend remains at 4% and budget holders only utilize part of the capacity generated by the vacancy savings on other initiatives.

Opportunity: Salary expenditures are lower than planned.

Consequence: $3.93m Positive Likelihood: 50%

Net Potential Impact: $1.96m Positive

The University has three collective agreements which expire during 2014-2015 and Western Student Housing Ltd has one collective agreement which expired April 30, 2011. No assumption has been incorporated related to settlements which may occur during 2014-2015. The only settlement which would impact 2014-2015 is Western Student Housing Ltd.

Risk: Western Student Housing settle their agreement.

Consequence: $0.027m negative Likelihood: 75%

Net Potential Impact: $0.02m negative

CRP page 5

Investing in People $98.1 million includes $3.1 million increase Consolidated Salaries and Benefits Expenditures…

$3.1m investment in people: $1.9m to support increased capacity and $1.2m increased costs

$1.9m increase to support increased capacity, 60% in the operating fund and 40% in cost recovery.

$1.2m increase includes provisions for: the residual related to the last round of bargaining; modest benefit adjustments and final amount to lift all regular positions to top of scale. Of the $1.2m, approx. 79% allocated in the operating fund; 19% in Cost Recovery areas and the residual 2% between ancillary and controlled entities

Area operating budgets were increased to support these investments, while cost recovery, ancillary, and controlled entities absorb these costs within their operations.

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CRP page 16 -18

2014-2015 2013-2014 Change % Change

Operating 75,312,685$ 73,230,175$ 2,082,510$ 2.8%

Cost Recovery Programs & Contracts 19,194,903 18,197,853 997,050 5.5%

Ancillary Operations 2,218,996 2,063,827 155,169 7.5%

Controlled Entities 1,400,150 1,540,222 (140,072) -9.1%

Total Schedule 1 98,126,734$ 95,032,077$ 3,094,657$ 3.3%

Consolidated Non-Salary Expenditures $35.5 million includes a $0.16 million decrease

Make up 26% of the consolidated expenditures. Overall decrease is a result of the need to relocate resources to support investment in people

$0.37m increase in fees and purchased service. Significant decreases due to loss of grant revenue or realignment . Significant increases: International, regional office; Information Technology, licensing and Facilities, janitorial.

$0.9 million decrease in travel and training. Net reduction primarily from realignment made in International, of which $0.5m was to support capital investment.

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CRP pages 18-19

Non-Salary Expenditures…cont'd.

$0.1m increase in scholarships and bursaries reflects modest increase in support. Transfer reflects change in presentation.

$0.22m increase in equipment rental and maintenance, primary source of increase is planned maintenance at Western Student Housing.

$0.25m increase utilities, insurance and taxes primarily due to inflationary costs related to utilities and increased space.

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CRP pages 18-19

Non-Salary Expenditures…cont'd.

$0.05m increase in material and supplies. Increase of $0.36m within operating is offset by decreases in cost recovery and ancillary and controlled entities of $0.22m and $0.09m respectively. Key driver of operating increases: software licencing in Library and IT and support for athletics in Student Affairs. Removal of the 2013 Sturgeon conference in Science and Technology key driver of Cost recovery decrease.

Changes in amortization of capital and cost of goods sold are offset by corresponding revenue categories.

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CRP pages 18-19

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Assumptions and Risks…Other Institutional contribution represents the amount allocated to off grant activity, ancillary operations and controlled entities to reflect the indirect costs related to centralized costs. The operating and capital funds’ net deficit prior to transfer of institutional contribution for 2014-2015 is $(8.91)m. Risk or Opportunity: Both or neither Potential Impact: Immaterial

Institutional contingency provides minimal protection for unforeseen elements as it remains at $0.5m, less than 0.37% of the total budget. Risk: Unplanned expenditure that produces negative variances. Consequence: $1.0m negative Likelihood: 5% Net Potential Impact: $0.05m negative

CRP page 6 - 7

27 Assumptions and Risks…Other cont'd.

Debt recovery is an overbooking strategy which allows the University to support innovation and entrepreneurship. An area’s current year budget is not increased to compensate for debt recovery plans. The amount supported in 2014 – 2015 is $1.36m, $0.4m in operating, $0.9m in cost recovery and $0.06m in ancillary. Risk: Projects that proceed in year will produce negative variances. Consequence: $1.36m negative Likelihood: 75% Potential Impact: $1.02m negative

Carry forwards: The expenditure of prior year carry forwards is not reflected in the current year budget plan and as such should spending proceed within the year, a negative variance would result. Risk: Projects that proceed in year will produce negative variances. Consequence: $1.0m negative Likelihood: 50% Net Potential Impact: $0.5m negative

CRP pages 6 - 7

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Leveraging the Budget…Risk Capacity

The 2014-2015 plans includes assumptions and associated risks or opportunities. The University is prepared to take some risk in order to leverage its resources, as long as the combined potential negative impact of all the expected risks can be offset by the combined potential positive impact of opportunities, such that the University will close the year on a consolidated basis without incurring a deficit. For 2014-2015 it is felt that the overall consolidated resource plan has the capacity to absorb the potential risks. The assumed capacity identified from opportunities is $2.51m an amount adequate to offset the potential $2.49m negative impact from identified risk.

CRP pages 7

29 Operating Capital Maintenance

Rely on Ministry funding to support capital maintenance projects.

Operating capital maintenance are projects:

• to complete an item’s useful life by extending the life of components;

• prevent accelerated deterioration and obsolescence;

• increase campus life: safety and security, disabled access, or reduce greenhouse gas emissions.

2012-2013 the base grant eliminated and replaced with one-time envelope funding. 2013-2014 received $0.44m one time operating capital grant. No funding has been incorporated for 2014-2015.

CRP page 23

30 Capital The “no deficit, on an all-funds basis” directive nullifies the accepted accounting treatment and forces VIU to generate a surplus in alternate funds equal to the depreciated amount that is already funded by the capital reserve.

The “opportunity loss” from mitigating the impact of the capital deficit is used to support a major (>$5,000) capital budget of equivalent value.

2014-2015 Plan includes $2.36 million in capital commitments: • $2.02m in Operating (Schedule 2 for details) • $0.31m in cost recovery (Schedule 2 for details) •$0.03m in ancillary and controlled entities.

Amortization of capital expense includes impact of above planned capital.

CRP pages 21-22

Long Term Risks Constrained government funding and tuition policy;

Sustainable budget: need strong and diversified revenue streams;

Dependency on International and Cost Recovery Activity currently 26.4% or $35.4m of total, many factors outside our control can affect this activity stream;

Ability to remain flexible and nimble in future activities;

Deferred maintenance: a number of academic programs reside in aging buildings that are over 30 years old;

Several structures are not adaptable to current teaching methods and are expensive to operate; and

Outdated Information Technology infrastructure.

CRP page 26 – 27

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Schedule 1: Consolidated Budget Statement

CRP page 29

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Other Schedules and Appendices

Schedule 2: 2014-2015 Statement of Operating and Cost Recovery

Combined Budget CRP page 30

Schedule 3: 2014-2015 Budget Statement of Operations for Ancillary

Operations CRP page 31

Schedule 4: 2014-2015 Budget Statement of Operations for

Controlled Entities CRP page 32

Appendices 1 – 33: Budget Statement of Operations for each Area of

Responsibility CRP page 33 to 67

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34 Planning and Budgeting Cycle Example - Intakes for Budgeting

Integrated

Planning

Academ

ic P

lan

Regional Action Plan

Enrolment Management Plan

Information Technology Plan

Program

Review

Summative

Program

Assessments

Provost

Council

Review &

Recommend

to P & P

Senate Recommend

to the Board Implementation

January November

Budget Intake and Preparation

June February March

INTA

KE

CONSULTATION LEADING TO APPROVAL if required.

INF

OR

MS

INF

OR

MS

CRP pages 27, 28

Tasks

from

Integrated

Plans

Sept/Oct

The Academic Plan….…framing our future and staying the course

Enrolment

Retention

Provincial trends

National or Global Trends

Employee Demographics

Catchment Area Demographics

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