Transcript Project Update - Budget Office

REVISED DRAFT 5/29/2014
Strategic Financial
Forecasting Project
Georgia Tech Foundation
Development Committee
Project Update
June 2014
History and Background
• Initiative of GTF Development Committee
• Team assembled in July 2012; key core working group:
 David Perdue, Chair, GTF Development Committee
 Sandi Bramblett, DSG/Administration & Finance
 Emily Howell, College of Engineering
 Mark Long, Georgia Tech Foundation
 Renee Queen, GT Alumni Association
 Dorcas Wilkinson, Development
• Continuation of Project by Decision Support Group
• Sponsor: Steve Swant, Executive Vice President for
Administration & Finance
• Forecasting Model Implementation Directors:
• Jim Kirk, Institute Budget Planning and Administration
• Sandi Bramblett, Institutional Research and Planning
Importance of Model in GT’s Financial Planning Process
• Focus on GT Strategic Plan in building the next year’s budget
• Annual budget and program proposals from colleges & other
units – linked to Strategic Plan
• Base budget analysis – considers performance/ workload
metrics for all campus units:
• Enrollment and other student data
• Sponsored program activity
• Faculty and staff totals and ratios compared to workload
• Executive considerations in reviewing spending options:
1. Workload factors for colleges & other units
2. Investments to further Strategic Plan objectives
3. Future resource limitations – based on forecasting model
Importance of Model in GT’s Financial Planning Process
GT’s Rolling Budget Review and Approval Process
• December/January
• Revenue and spending projections for next FY
• Tuition, fee, funding requests to BOR
• Multi-year projections with scenarios
• February/March
• Preliminary unit budget & strategic planning
• Unit Presentation of priorities to President’s Office
• Performance metrics to President’s Office
• April/May
• Update of revenue projections:
•
•
•
BOR action on tuition, fees, allocations
Student enrollment update – summer/ fall
Multi-year projections update
• Executive allocation decisions for Original Budget
• Hold-back items contingent on fall revenue picture
Importance of Model in GT’s Financial Planning Process
GT’s Rolling Budget Review and Approval Process
• June/July/August
• Initial allocations & adjustments to Original Budget
• Fiscal year close-out & determination of year-end
resources available
• Review of contingent/hold-back items
• September/October • Budget adjustments based on 1st quarter spending
& revenue factors
• Preparation of revised list of hold-back items for
consideration in 3rd quarter
• December/January/ • Budget adjustments based on 2nd quarter spending
& revenue factors
February
• Multi-year projections update
• Begin following year’s budget planning process
Strategic Financial Forecasting Project Goals
• Institute Ongoing Goals:
• Identify multi-year gaps between the Institute’s projected revenues
and expenditures under various scenarios.
• For annual budget process determine risks in making new
commitments.
• Estimate the level of resources available for GT Strategic Plan and
other initiatives over extended period.
• Consider alternate revenue sources to match requirements.
• Institutional Long- Range Development Goals (to be affirmed):
• Determine Development priorities for upcoming Capital Campaign.
• Determine how the next Capital Campaign will target its efforts to
fill the resource gap.
• Common Goal: Jointly address resource requirements of the Institute
for instruction, research, and public service to students, businesses,
sponsors, and other Institute stakeholders.
Project Approach – 1st Phase
• Enhancement of existing financial modeling efforts
• Expanded scope of financial planning to consider:
• Entire Institute enterprise
• Expanded timeframe – from 3 years to 6 years out
• Particular needs of GTF Development effort
• Compiled and analyzed 9 years of actual trend data from
Fiscal 2005-2013 & Fiscal 2014 budget data:
•
•
•
•
Revenue and expenditures
Student data
Faculty and staff data
Research activity
• Projected 6 year revenue, expenditures, and net revenue
from Fiscal 2014 through 2019
• Sensitivity analysis for input variables to create scenarios
Long Term Forecasting Model Input Fields
Research
Revenue
Expense
Source: Grants and Contracts, GT Research Corporation
Education
Revenue
Auxiliary Sales and Services*
Private Philanthropy*
Facilities and Administration Overhead Recoveries Revenue
State Appropriations Revenue
Other General Revenue (including student activity fees*)
Expense rates for GTF, F&A, State, Other General and Tuition
Faculty Salary
Student/Staff Salary
Fringe Benefits
Other Non Personal Services
Maintenance and Other Related Operating Capital Costs
* Expense = revenue for changes in these sources of funds
Selected
Variables
Considered
in
Forecasting
Model
Long Term Forecasting Model Input Fields
Tuition Factors
Enrollment Growth
Undergraduate - Resident
Undergraduate - Non-Resident
Graduate - Resident
Graduate - Non-Resident
Tuition Rate Increase
Undergraduate - Resident
Undergraduate - Non-Resident
Graduate - Resident
Graduate - Non-Resident
Waivers
Undergraduate - Resident
Undergraduate - Non-Resident
Graduate - Resident
Graduate - Non-Resident
Resident/Non-Resident Mix
Undergraduate Resident %
Undergraduate Non Resident %
Must equal 100%
Selected
Variables
Considered
in
Forecasting
Model
Principal Assumptions for Base Scenario
• No program expansion or improvement in student/faculty ratio
• Modest enrollment growth
• Gradual undergraduate enrollment shift: residents to non-residents
• 5% resident & 2% non-resident tuition increases per year
• 1% state funding increase per year
• Faculty and staff salary increases of 3% per year
• Research expenditures & revenues based on recent trends
Enrollment Assumptions for Base Scenario
Enrollment Assumptions for Base Scenario
Sample Projected Net Revenues – Base Scenario
Revenue
Research
Education
State Appropriations
Tuition (net Waivers)
F&A Recoveries
Auxiliary/ Sales and Services
Other
Private Philanthropy
GT Research Corporation
Total Education
Total Revenue
Expense
Research Grants/Contracts
Faculty
Student/Staff
Fringe Benefits
Total Personal Services
Other Operating Expenses
Total Research Grants/Contracts
Education
Faculty
Student/Staff
Fringe Benefits
Total Personal Services
Other Operating Expenses
Sub-Total Education (No Facilities)
Education - Facilities
Maintenance and Other Related Costs
New Construction
Total Education - Facilities
Total Education
Total Expense
Net
Actual
FY 2013
FY 2014
FY 2015
Projection
FY 2016
FY 2017
FY 2018
FY 2019
687,503,586
639,378,335
658,559,685
678,316,476
698,665,970
719,625,949
741,214,727
206,936,900
282,943,481
146,774,006
187,627,717
104,054,052
119,075,708
13,741,596
1,061,153,460
1,748,657,046
209,006,269
301,614,296
136,499,826
207,982,775
112,200,619
122,647,979
12,779,684
1,102,731,449
1,742,109,784
211,096,332
323,004,686
140,594,820
225,230,203
114,229,227
126,327,419
13,163,075
1,153,645,761
1,812,205,446
213,207,295
339,600,688
144,812,665
234,762,692
116,318,692
130,117,241
13,557,967
1,192,377,240
1,870,693,715
215,339,368
356,996,864
149,157,045
239,081,659
118,470,841
134,020,758
13,964,706
1,227,031,242
1,925,697,212
217,492,762
375,231,652
153,631,756
247,844,193
120,687,555
138,041,381
14,383,647
1,267,312,946
1,986,938,895
219,667,689
394,345,362
158,240,709
256,957,227
122,970,770
142,182,623
14,815,157
1,309,179,536
2,050,394,264
97,008,191
106,580,094
53,873,307
257,461,592
443,530,690
700,992,282
90,217,618
99,119,487
50,102,176
239,439,281
412,483,542
651,922,822
92,924,146
102,093,072
51,605,241
246,622,459
424,858,048
671,480,507
95,711,871
105,155,864
53,153,398
254,021,133
437,603,789
691,624,922
98,583,227
108,310,540
54,748,000
261,641,767
450,731,903
712,373,670
101,540,723
111,559,856
56,390,440
269,491,020
464,253,860
733,744,880
104,586,945
114,906,652
58,082,153
277,575,750
478,181,476
755,757,226
223,122,723
221,451,106
90,106,868
534,680,697
330,094,395
864,775,092
229,904,946
227,986,656
96,568,658
554,460,260
339,654,942
894,115,202
237,161,137
235,231,589
103,681,566
576,074,292
350,630,139
926,704,432
244,381,126
242,629,612
111,341,129
598,351,866
361,990,136
960,342,002
251,820,321
250,262,740
119,590,247
621,673,308
373,404,775
995,078,083
259,485,418
258,138,559
128,475,223
646,099,200
384,848,722
1,030,947,922
267,383,320
266,264,903
138,046,029
671,694,252
396,652,075
1,068,346,327
96,992,595
50,499,654
147,492,249
1,012,267,341
1,713,259,623
99,556,830
77,416,187
176,973,017
1,071,088,219
1,723,011,041
102,202,180
87,113,743
189,315,923
1,116,020,355
1,787,500,862
104,931,354
88,790,765
193,722,119
1,154,064,121
1,845,689,043
107,747,155
84,936,358
192,683,513
1,187,761,595
1,900,135,265
110,652,484
85,194,799
195,847,283
1,226,795,205
1,960,540,085
113,650,344
85,459,701
199,110,046
1,267,456,372
2,023,213,598
35,397,423
19,098,743
24,704,585
25,004,672
25,561,947
26,398,810
27,180,666
Recap of Projected Net Revenues – Base Scenario
$27.2M for FY19 is only 1.3% over projected $2B total
Scenario A – Flat Enrollment
Scenario B – Tuition Increase 2% Above Base
Scenario C – Increase in State Funding to 2%/Year
Scenario D – Additional Other Operating Increases
Scenario E – 20 New Faculty & Support Per Year
Phase 2 Implementation of Model
• Revenue:
• Link Strategic Financial Forecasting Model to other GT
projection models (e.g. tuition, enrollment, sponsored funds)
• Develop scenarios for state revenue projections – determined
following changes to state funding formula
• Develop methods for refining grants and contracts and
indirect cost recovery projections
• Change, test, and challenge all projection assumptions
• Test multiple scenarios for revenue and expenditure
assumptions
• Automate updates of model for future fiscal periods
• Model has been updated for FY13 actual and FY14 YTD data