Budget Briefing 2011/12

Catherine Whalley - PRAS

Stephen Purbrick - Finance

What this presentation will cover

Budgeting process – timeline

JRAM allocations for 2011/12 – informed by: HEFCE grant for 2011/12 Fee income for 2011/12

Services’ budgets for 2011/12 Infrastructure Charge allocations for 2011/12

Setting the 2011/12 budget

Future challenges and the University’s response

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Budgeting Process October 2010

Academic divisions tasked with identifying non pay savings of 5% Services tasked with delivering year 2 of agreed 3-year savings targets

January 2011 Divisions and services plans reviewed

February Service costs for 2011/12 agreed by PRAC and divisional 123 charge

allocations for 2011/12 calculated March

HEFCE grant letter received and JRAM allocations for 2011/12 calculated April

Budget targets agreed by PRAC June

Budget review meetings July

Final 2011/12 budget agreed

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HEFCE grant allocations for 2011/12 (1)

 

2010/11 (March 2010)

2010/11 (March 2011)

2011/12 (March 2011)

difference between 2011/12

and 2010/11 (March 2011

figures)

£m £m £m £ %

TOTAL 189.6 184.8 187.3 2.6 1.4%

mainstream T grant 58.2 55.6 53.1 -2.5 -4.5%

mainstream R grant 123.8 121.7 127.1 5.4 4.5%

Other (WP, Libraries, Museums etc) *

7.6 7.5 7.1 -0.4 -5.3%

* Not including HEIF

HEFCE grant allocations for 2011/12 (2)Teaching funding Continued reductions in T funding.

Research funding QR: concentration through movement of weightings (for

4* – 3* – 2* – 1* – unclass) from

9 – 3 – 1 – 0 – 0 to 9 – 3 – 0.294 – 0 – 0 Charity support stream: Drop in rate per £ but our

volume has increased faster than the sector’s volume. Business support stream: EU & Overseas volume

now included in HEFCE calculations. PGR funding: the rate of funding per PGR FTE has

fallen again.

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Fee income for 2011/12 (1)

Fee income for 2011/12 is currently forecast to be £11.6m (8.9%) more than that budgeted for 2010/11.

Some of this has already fed through in the JRAM 2010/11 in-year update (£3.3m above budget), the rest arrives in the 2011/12 initial JRAM allocations.

Current forecasts for 2011/12 are based on current student numbers and next year’s fee levels.

Informed by new SNP forecast intake figures from divisions, PRAS will model fee income for 2011/12 based on next year’s projected student numbers.

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Fee income for 2011/12 (2)

Student FTEs grew approximately 2% from 2009/10 to 2010/11.

Very broadly, 35% of students generate 70% of fee income, and it is these students who are growing in number.

Many fee rates are increasing 4% from 2010/11 to 2011/12 and new bespoke fee rates are kicking in too, noticeably for Humanities PGT students.

Fee rates for HEU PG students are rising more than they normally would, to compensate for the loss of Roberts funding.

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JRAM allocations for 2011/12 (1):

JRAM allocations for 2011/12 (2): comparing 2010/11 in-year update allocations with 2011/12 initial allocations

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CHANGE in £m MSD SSD MPLS Hum OUDCE Colleges TOTAL               

HEFCE T (including RDP) & TDA -£0.4 -£0.1 -£0.6 -£0.4 -£0.0 -£1.0 -£2.5

UG fees £0.3 £0.1 £0.2 £0.2 £0.0 £0.9 £2.0

PGT fees £0.0 £2.2 £0.1 £1.1 £0.1 £0.2 £3.7

PGR fees £0.5 £0.9 £0.7 £0.3 £0.0 £0.4 £2.6

PGT realignment trans funding £0.5 -£0.5 £0.3 -£0.2 -£0.0 -£0.0 £0.0

Total T and related streams £0.8 £2.6 £0.8 £1.0 -£0.0 £0.4 £5.8               

R - QR £0.5 £0.2 £0.1 £0.1 £0.0 £0.1 £0.9

R - Charity £1.5 £0.0 £0.3 £0.2 £0.0 £0.0 £2.1

R - Business £2.6 £0.2 -£0.3 -£0.0 £0.0 £0.0 £2.6

QR trans funding £0.5 £0.4 £0.5 -£0.4 £0.0 -£0.9 -£0.0

Total R and related streams £5.1 £0.8 £0.6 -£0.1 £0.0 -£0.7 £5.5               

TOTAL £5.9 £3.4 £1.4 £0.9 -£0.0 -£0.3 £11.3

Services budget 2011/12 (1)

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UAS [1] ASUC [1] OUED Other Total£m £m £m £m £m

2010/11 budget 57.9 24.9 25.6 0.4 108.8Inflation adjustment 0.4 0.2 0.4 0.0 1.0Savings (2.8) (0.6) (0.3) (0.2) (3.9)Unavoidable costs 1.7 0.3 0.9 2.92011/12 budget target 57.2 24.8 26.6 0.2 108.8

Difference 11/12 - 10/11 (0.7) (0.1) 1.0 (0.2) 0.0

Savings as a % of budget -5% -2% -1% -4%

[1] reflects divisional budget structure for 2011/12

Savings – split roughly evenly across: savings in staff costs across UAS and ASUC £1.1m savings in non-staff costs across UAS and ASUC £1.1m higher external income generation £1.1m Other (including charges to colleges) £0.6m

Unavoidable costs – heavily challenged by BSC: license and staffing costs for agreed IT developments £0.9m Investment for REF and impact of lost income streams £0.8m increase in Library materials budget £0.3m additional resource to cover transfer of R&M responsibilities from academic depts to OUED £1.0m

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Services budget 2011/12 (2)

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123 Infrastructure charge for 2011/12 (1)

  £m Services budget target 108.9 Services surpluses to reserves (e.g. Graduate Accommodation) 1.1

Costs in the 123 model not in the services: e.g. insurance 2.6 Costs in the 123 model from academic divisions: OSC 0.6

TOTAL 123 charge for 2011/12 113.1

123 Infrastructure Charge for 2011/12 (2)

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£m MSD SSD MPLS Hum OUDCE colleges other TOTAL2011/12 123 charge 27.4 15.5 26.7 15.2 1.6 2.4 24.4 113.12010/11 123 charge 27.3 15.6 25.8 15.5 1.6 2.6 24.3 112.7difference 0.1 -0.1 0.8 -0.3 0.0 -0.2 0.1 0.4

The total 123 charge for 2010/11 was £112.7m. Without the addition of the Oxford Super-computer,

the 123 Infrastructure charge would be lower in 2011/12 than in 2010/11.

Setting the budget 2011/12 – high level

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£m

Budget surplus 2010/2011 0.3

HEFCE and fee changes via JRAM 11.6

OUP transfer interest 7.7

PRAC non-pay saving targets 4.6

OMIS savings 1.3

Services improvements 0.8

Increased utility costs (1.9)

Other (central adjustments) (4.3)

Sub-total 20.1

PRAC adjustments (6.3)

Target surplus 2011/2012 13.8

Setting the budget 2011/12 – divisions

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£m £m £m £m

Initial HEFCE charitable

PRAC adjusts

Budget target

Medical Sciences 13.0 (1.0) (3.0) 9.0

Social Sciences 6.0 (2.0) 4.0

MPLS 0.5 (0.3) 0.2

Humanities (2.1) (0.2) (2.3)

C Education (0.1) 0.2 0.1

Services 1.6 1.6

Central costs & adjusts 1.2 1.2

Target 2011/2012 20.1 (1.5) 4.8 13.8

Note – figures include £2m transfer from Medical Sciences to Humanities, and £0.8m transfer to the Colleges, under the 2010 ‘SPRIG’ proposals.

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Looking aheadMajor changes to funding streams

Reduction in HEFCE teaching funding and introduction of higher student fees from 2012/13

Significant cuts in HEFCE capital funding

Reduction in Research Council funding

Overall impact of £9k fees(after reduction in HEFCE teaching grant)

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£m

Additional income (allowing for loss of teaching capital)

10.0

Fee waivers and bursaries (5.5)

Access, outreach and student support (1.5)

Income to be shared between University and Colleges 3.0

HEFCE Capital Investment Fund73% reduction

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0

5

10

15

20

25

30

35

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

£m Teaching CIF

Research CIF

Research Council Savings 2011/12 – 2014/15 £428m from HEIs & RC Institutes & Facilities Oxford to reduce its FEC indirect charge by 2%

(5 bands for savings up to 5%) Inflation reduced to zero Savings applied to existing and future awards Future equipment funding needs matched-

funding from HEIs (50% +?) Impact on Oxford unknown

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5 year forecasts – key assumptions

HEFCE teaching grant falls significantly, by up to 33% pa.

HEFCE research grant remains static, on the back of high quality research

£9k fees for HEU undergraduates and above inflation increases for overseas and post-graduates

Falling research overheads, largely as a result of the RCUK savings

No growth in University funded staff & modest pay awards.

University funded capital expenditure capped at £50m pa on average

5 year forecast - results

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-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

£m

Forecast Surplus / (deficit) for the year

Strategies for dealing with the funding environment (1) Pay costs

Continue with the recruitment protocol Continue with pensions reforms (USS & OSPS) Contain pay inflation Deliver full 10% Service savings

Non-pay costs New VFM approach IT & Science purchasing groups Continue to develop Small Research Facilities

Shared services

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Strategies for dealing with the funding environment (2)

Capital Focus remaining HEFCE CIF on existing space,

sustainability and carbon management Focus capital as much as possible on endowment

to generate income to cover existing costs (£60m teaching fund and £192.5m OUP endowment)

Diversify sources of research income ……

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Sources of research income

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Sponsor typeAug to Jan

awards 09/10 £m

Aug to Jan awards 10/11

£m

Change from previous year

%

Research councils 52.0 41.9 -19

UK Charities 51.4 116.4 127

UK Government 17.5 11.5 -34

EU Government 5.1 17.3 238

UK & Overseas Industry 7.9 123.8 1468

Other 7.2 16.4 128

Total 141.1 327.4 132

Any questions?

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