Administrative Cost RatioFebruary 19, 2013

Financial Area Representatives

What is the Administrative Cost Ratio ?

Institutional Support Expenditures divided by

Total Operating Expense - Auxiliary Exp.

According to the Legislative Budget Board: “provides an indicator of the proportion of operating budget being spent on administrative costs.”

Institutional Support Expenditures divided by

Total Operating Expense - Auxiliary Exp.

According to the Legislative Budget Board: “provides an indicator of the proportion of operating budget being spent on administrative costs.”

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What is counted as Institutional Support?

Institutional Support is a functional expense classification defined by NACUBO (National Association College & University Business Officers) used to allocate costs between higher education activities. As reported on the AFR, it tells the reader “why” an expense was incurred as opposed to “what” was purchased.

Institutional Support is a functional expense classification defined by NACUBO (National Association College & University Business Officers) used to allocate costs between higher education activities. As reported on the AFR, it tells the reader “why” an expense was incurred as opposed to “what” was purchased.

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What is counted as Institutional Support?

Institutional Support includes: Executive Management – President, VPs &

their staff including operations related to planning & legal

Fiscal Operations – Accounting, Bursar and bad debt expense from loans but not from receivables

General Administration– HR, Purchasing, etc. Administrative Information Technology Public Relations/Development

Institutional Support includes: Executive Management – President, VPs &

their staff including operations related to planning & legal

Fiscal Operations – Accounting, Bursar and bad debt expense from loans but not from receivables

General Administration– HR, Purchasing, etc. Administrative Information Technology Public Relations/Development

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Other NACUBO Functional Programs

Instruction – costs directly related to instructional mission (includes department chairs).

Academic Support – includes dean’s offices & library, museums, academic computing & advising.

Research– includes expenses for activities specifically organized to produce research whether internal (separately budgeted) or externally funded. Includes institutes and research centers.

Public Service – non instructional activities to external groups. Includes conferences, institutes, consulting & general advisory services.

Instruction – costs directly related to instructional mission (includes department chairs).

Academic Support – includes dean’s offices & library, museums, academic computing & advising.

Research– includes expenses for activities specifically organized to produce research whether internal (separately budgeted) or externally funded. Includes institutes and research centers.

Public Service – non instructional activities to external groups. Includes conferences, institutes, consulting & general advisory services.

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NACUBO Functional Programs

Student Services – costs that have the primary purpose of contributing to students’ emotional and physical well being and intellectual, cultural & social development (outside the context of the formal instructional program.) Includes admissions & records, student IT, student health, counseling & career guidance, student activities, financial aid administration.

Does not include intercollegiate athletics programs as those must be identified as an Auxiliary Enterprise by Texas law.

Student Services – costs that have the primary purpose of contributing to students’ emotional and physical well being and intellectual, cultural & social development (outside the context of the formal instructional program.) Includes admissions & records, student IT, student health, counseling & career guidance, student activities, financial aid administration.

Does not include intercollegiate athletics programs as those must be identified as an Auxiliary Enterprise by Texas law.

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NACUBO Functional Programs Operation & Maintenance of Plant – includes

administrative costs, building maintenance, custodial, utilities, landscape / grounds, repair & renovation, security & safety (police, disaster preparedness, environmental health & safety, etc.), logistical services (central receiving, stores) and facilities related IT.

Scholarships & Fellowships Auxiliary Enterprises– self supporting entities to

furnish goods or services to students, faculty, staff or incidentally to the general public; includes food services, athletics, residence halls and all related administrative expenses.

Operation & Maintenance of Plant – includes administrative costs, building maintenance, custodial, utilities, landscape / grounds, repair & renovation, security & safety (police, disaster preparedness, environmental health & safety, etc.), logistical services (central receiving, stores) and facilities related IT.

Scholarships & Fellowships Auxiliary Enterprises– self supporting entities to

furnish goods or services to students, faculty, staff or incidentally to the general public; includes food services, athletics, residence halls and all related administrative expenses.

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UTSA 5 Year Administrative Cost Trend

UTSA 5 Year Administrative Cost Trend

AFR 2008 AFR 2009 AFR 2010 AFR 2011 AFR 2012

31,505,000 40,816,000 42,556,783 45,217,799 37,597,797

328,230,000 363,087,000 396,938,707 418,830,437 420,454,872

11.2% 11.2% 10.7% 10.8% 8.9%

FY03 (11.2%) FY04 (11.7%) FY05 (11.3%) FY06 (11.9%) FY07 (10.3%)

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How is the Administrative Cost Ratio computed?

Institutional Support Expenditures Total Operating Expense – Auxiliary Exp.

We have lowered the rate by 1.86%

Source: FY12 Annual Financial Report

Institutional Support Expenditures Total Operating Expense – Auxiliary Exp.

We have lowered the rate by 1.86%

Source: FY12 Annual Financial Report

$ 37,597,797____________ = 8.94%

$420,454,872

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What we did to improve UTSA’s Administrative Cost Ratio

Evaluated opportunities to ‘spread’ costs coded to Institutional Support as allowed by NACUBO $4.4M in IT expenditures allocated to Academic

Support

Corrected coding, $3.0MCapitalized PeopleSoft project team salaries,

$965K- moved the expense to O&M of PlantAdministrative Overhead, $895K - moved the

expense to Auxiliaries

Evaluated opportunities to ‘spread’ costs coded to Institutional Support as allowed by NACUBO $4.4M in IT expenditures allocated to Academic

Support

Corrected coding, $3.0MCapitalized PeopleSoft project team salaries,

$965K- moved the expense to O&M of PlantAdministrative Overhead, $895K - moved the

expense to Auxiliaries

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Comparative Administrative Cost Trends

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AFR 2008

AFR 2009

AFR 2010

AFR 2011

AFR 2012

UT Tyler 12.7% 11.6% 11.8% 12.0% 12.6%

UT Permian Basin 9.3 9.7 8.2 6.8 11.1

UT Dallas 9.8 9.1 8.9 10.2 9.3

UT San Antonio 11.2 11.2 10.7 10.8 8.9

UT Pan Am 9.6 10.9 9.4 8.9 8.9

UT Brownsville 7.9 7.9 7.9 6.9 7.9

UT El Paso 7.7 7.7 7.8 7.7 7.6

UT Arlington 8.0 8.4 9.3 12.1 7.6

UT Austin 5.1 5.5 6.0 5.1 4.8

Why is this important?UT System & Legislative pressures

Measures administrative efficiency Stakeholder accountability Affordability of higher education

Chancellor’s Framework2. B. 1. Utilize Incentive Based Compensation Strategies:

Presidential Performance Reviews

UT System & Legislative pressures Measures administrative efficiency Stakeholder accountability Affordability of higher education

Chancellor’s Framework2. B. 1. Utilize Incentive Based Compensation Strategies:

Presidential Performance Reviews

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How do we Further Reduce or Maintain (Improve) UTSA’s Administrative Cost

RatioOverall expenditures need to increase at

a rate higher than Institutional Support costs increase Fill vacant faculty positions Add new faculty positions Increase restricted funding expenditures –

sponsored programs & gifts Reduce Institutional Support Costs

Overall expenditures need to increase at a rate higher than Institutional Support costs increase Fill vacant faculty positions Add new faculty positions Increase restricted funding expenditures –

sponsored programs & gifts Reduce Institutional Support Costs

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