PRESIDENT’S RECOMMENDED OPERATING BUDGET PLAN
FISCAL YEAR 1999-2000
Contents Page
I. Fiscal Year 1999-2000 Operating Budget Plan
Centrally Distributed and Attributed Funds
Introduction/Guiding Principles 4
Fiscal Year 1999-2000 Operating Budget – Overview 4
Fiscal Year 1999-200 Operating Budget – Context of 5
Biennial Budget Appropriation
Fiscal Year 1999-2000 Operating Budget – Investment Plan 7
Fiscal Year 1999-2000 Operating Budget – Resource Plan 9
-01 Operating Budget 10 Preparing for the Fiscal Year 2000
II. All Funds Budget Context
A. Current Funds 13
B. Noncurrent Funds 15
III. Budget Development 16
IV. President’s Recommended 1999-2000 Financial Plan by Fund Group
Budget Plan Summary 17
Centrally Distributed and Attributed Funds 17
Operations and Maintenance Fund 17
A. Projected Resources 18
B. Proposed Distributions 18
Tuition Fund 18
A. Tuition Plan 18
B. Tuition Estimates by Collegiate Unit 19
C. Revenue Allocations 21
State Specials 21
A. Projected Resources 21
B. Proposed Distributions 22
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Contents Page
Indirect Cost Recovery 22
A. Projected Resources 23
B. Revenue Distributions 23
Central Reserves 25
A. Projected Resources 25
B. Proposed Distributions 25
Self-Sustaining Funds 25
; Auxiliary Enterprises 25
; Internal Service Organizations 26
; Other Unrestricted and Other Restricted Nonsponsored Accounts 26
Sponsored Research 26
V. Special Budget Issues
Compensation 26
; Compensation Plan 26
; Fringe Benefit Rates 27
Enterprise Systems Project 27
Rates and Fees 29
VI. Noncurrent Funds Budget Summary 30
VII. Budget Plan – All Current Funds Estimate 30
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Contents Page
Attachments
1) Resource and Expenditure Budget Plan (University Fiscal Page) 32 2) Policy Memorandum – Salary Adjustments for Faculty Not 33
Covered by Collective Bargaining Agreements, Academic Professional
and Administrative Staff and Graduate Assistants and Other 95XX
Student Employees
3) Definitions of Current Sponsored and Nonsponsored Funds 40 4) Fund Forecast – Allocated and Attributed Funds 42
5) Approved Tuition Rate Schedule 46
6) Fringe Benefit Rates by Component 49
50 7) Student Professional Fringe Table 1999-2000
8) Approved Academic Fees 51
9) Approved Course Fees 52
10) Student Services Fees Recommendations 60
11) Budget Resolution on the 1998-99 Operating Budget – Board of Regents 73
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I. Fiscal Year 1999-2000 Operating Budget Plan – Centrally Distributed
and Attributed Funds
Introduction
For fiscal year 1999-2000, the University of Minnesota’s operating budget plan presented to the Board of Regents has been constructed based upon the following four principles:
; Maximizing the University’s ability to budget new state funds for fiscal year 1999–2000
and fiscal year 2000–01 in a manner consistent with the priorities outlined in the biennial
budget proposal;
; Providing resources to meet financial obligations not directly related to the biennial
budget proposal including costs associated with: a) common goods; b) targeted academic
investments; and, c) core administrative services;
; Adopting internal financing mechanisms that communicate and support the concept that
each academic and administrative unit must share responsibility for the welfare of the
institution as a whole; and
; Establishing a preliminary financial framework to guide the development of the fiscal year
2000-01 operating budget plan.
Fiscal Year 1999-2000 Budget - Overview
The President’s Fiscal Year 1999-2000 Operating Budget has been prepared based upon
projected revenues and expenditures from a wide variety of sources. Attachment 1 (Resource and Expenditure Budget Plan) displays the recommended budget plan for all current, non-sponsored funds (funds supporting annual operating expenses). In summary, the budget for total current, nonsponsored funds is proposed as follows:
Table 1
Proposed Fiscal Year 1999-2000 Budget Current Nonsponsored Funds –
Beginning Balance $328,435,000
Revenues & Net Transfers $1,545,575,417
Total Net Resources $1,874,010,417
Expenditures $1,573,280,534
Ending Balance $300,729,883
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Within the framework of Attachment 1 the primary funds supporting teaching, research and outreach are Operations and Maintenance (O&M), Tuition, State Specials and Indirect Cost Recovery (ICR). These four funds total 65% of externally generated revenues of the University and represent the major focus of budget development and planning. Table 2 below summarizes the revenue and expenditure plans relative to these four funds.
Table 2
The President’s Fiscal Year 1999-2000 Operating Budget
Beginning Balance ($1,003,988)
Revenues and Net Transfers
Operations & Maintenance $546,321,128
Tuition $234,414,331
State Specials $83,113,500
Indirect Cost Recovery $54,632,773
Total Net Resources $917,477,744
Allocations to Academic & Support Units $916,818,412
Ending Balance $659,332
Fiscal Year 1999-2000 Operating Budget - Context of Biennial Budget Appropriation
University of Minnesota
The University of Minnesota's 2000-2001 Biennial Budget Proposal was designed to increase the strength of the University as it enters a new century by providing resources to:
; provide competitive compensation for all employee groups;
; enrich the undergraduate experience;
; address changes in the design, delivery and financing of health professional education; ; connect the University to the community at large; and
; promote a climate of quality University services.
The proposal represented an increase of $198,774,000 over base level funding. The total biennial appropriation request totaled $1,289,068,000. The House and Senate approved, and Governor Ventura signed, bills that provide an increase of $120,551,000 over base level funding for fiscal years 2000 and 2001. The 2000-2001 biennial state appropriation for the University of Minnesota totals $1,207,682,000.
The biennial funding increase is represented by two distinct appropriations from the state. The first is a general appropriation of $1,191,687,000, an increase of $103,956,000 from the state’s general fund and an increase of $600,000 from the state’s Health Care Access Fund. The second is an appropriation of $15,995,000 for health professional education resulting
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from the establishment of a medical education endowment. One-time tobacco settlement payments of $277,000,000 were used to establish this endowment.
These appropriations, like the Governor’s original recommendation for the University,
recognize each of the University’s five major biennial budget initiatives.
State Grant Program
In addition to direct funding for the University, the state appropriations for higher education include significant additional funding for students with financial need through the Minnesota state grant program. The major changes include the following:
; The living and miscellaneous expense allowance for all students in all institutions is
increased.
; Tuition increases in public institutions are recognized and funded and the tuition
maximums for students in private institutions are increased by approximately 3 percent. ; The family/government share of a student's state grant budget is increased from 53 percent
in 1998-99 and 1999-2000 to 54 percent in 2000-01.
In addition to these changes in the State Grant Program, the maximum federal Pell grant will increase from $3,000 in 1998-99 to $3,125 in 1999-2000 and 2000-01.
As a consequence of these changes, the maximum, combined grant support from the federal Pell grant program and the Minnesota state grant program for students on the Twin Cities campus with the greatest financial need (i.e., $0 expected family contribution) will increase as shown in the table below. The combined grant total already exceeds the cost of tuition and required fees by $343, and that variance is expected to grow to $589 over the next two years.
Twin Cities Undergraduate Students (full-time, $0 EFC)
Actual Projected Projected
1998-99 1999-00 2000-01
Tuition and Required Fees $4,746 $4,667 $4,807
Maximum Pell and State Grant $5,088 $5,163 $5,395
Total Grants minus Tuition and Required Fees $343 $496 $589
Increases will be similar on the Crookston, Duluth, and Morris campuses.
MINITEX
The higher education appropriation from the state includes a significant increase in funding for MINITEX Library Information Network, a program of the Minnesota Higher Education Services Office located at the University of Minnesota. This appropriation provides new funding of $3.8 million for the biennium, a 73% increase over the previous biennium.
These funds provide for:
- enhanced document delivery, including electronic delivery of articles to the
desktop (MINITEX provides loans and photocopies from the University Libraries
collections to other libraries in Minnesota, North Dakota, and South Dakota);
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- one-time resources for moving the MINITEX Office from Wilson Library to
MnLAC in January 2000 and purchasing furnishings and hiring staff to provide
services from the storage cavern that will house infrequently used but important
materials from the University Libraries and libraries of all types throughout
Minnesota;
- adding the table of contents of book titles to LUMINA, MnSCU/PALS, CLICNET,
and other academic libraries in Minnesota;
- licensing of scholarly and research databases for academic and state government
libraries in Minnesota; and
- licensing general reference databases for statewide access in Minnesota in
cooperation with funding provided to MN Department of Children, Families and
Learning.
MNSCU
The biennial state appropriation for the Minnesota State Colleges and Universities (MnSCU) totals $1,115,791,000, an increase of $103,956,000. This appropriation recognizes the MnSCU initiatives of institutional competitiveness (including increases for compensation), student success, technology, and economic development.
Fiscal Year 1999-2000 Operating Budget – Investment Plan
The President’s Fiscal Year 1999 – 2000 Operating Budget represents the first year of a two-year investment plan. The allocation of new resources in fiscal year 1999 – 2000 is
predicated upon a two-year financial strategy directly linked to the University’s original biennial budget proposal. The priorities of that proposal were:
; Competitive Compensation
; Enriching the Undergraduate Experience
; Financing Health Professional Education
; Connecting the University to the Community
; Promoting a Climate of Quality Service
As introduced at the Board of Regents May 1999 meeting, the President’s Fiscal Year 1999-
2000 Operating Budget organizes investments in to four major categories: 1) compensation; 2) targeted academic investments; 3) core administrative services; and 4) common goods. The following table provides a summary of these investments for fiscal year 1999-2000.
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Table 3
Fiscal Year 1999-2000 Operating Budget Investments
Centrally Distributed Funds
Total New
Investment Percent of Total
Compensation $ 18,374,764 32.9%
Targeted Academic Investments $ 12,741,843 22.8%
Core Administrative Services $ 5,232,334 9.3%
Common Goods – Facilities $ 5,807,237 10.4%
Common Goods – Technology $ 12,650,836 22.6%
Common Goods - Miscellaneous $ 1,131,821 2.0%
Grand Total $ 55,938,835 100%
Note: The above table does not include investments funded through new state special dollars such as the tobacco
endowment, Animal Health and Food Safety, Rapid Response Fund, Regional Partnerships, Commercialization
of Technology and general inflation.
Examples of the investments made under the three major categories are:
Targeted Academic Investments
; Compact Investments
; 30 New Faculty / Freshmen Seminars (8 first year and 22 second year)
; Undergraduate Academic Investments (study abroad, research opportunities)
; Clinical Outcomes Research Center
; Rochester
; Faculty Service Awards / Regents Professors / Morse & Graduate Teaching
Awards
; CLA Best Departments
Core Administrative Services
; EEO – Community Education Program
; External Sales
; ICR Rate Development
; Financial Management
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Common Goods
; New Building Operations
; Repairs and Betterments
; U of M Issued Debt
; Gateway Leases
; Technology Enhanced Learning
; Libraries / Digital and Undergraduate
; MnVU / ISEEK
; Enterprise Project / Grants Management
; Web Development
; Classrooms
; Financial Aid
; State Fair Building
Compensation
Of the 3% compensation increase dollars, $231,781 are allocated to Crookston, $1,534,218
are allocated to Duluth, $436,199 are allocated to Morris, and $16,172,566 are allocated for
all other units of the University. Attachment 2 is a copy of the policy memorandum
impacting salary adjustments for fiscal year 1999-2000.
Fiscal Year 1999-2000 Operating Budget – Resource Plan
Resources identified to fund the investments categorized above are from five major sources as
outlined in Table 4 below:
Table 4
Fiscal Year 1999-2000 Operating Budget Resource Plan
Centrally Distributed Funds
New Resources Percent of Total
New State Appropriations $ 39,588,014 70.8%
Enterprise Assessment $ 6,094,494 10.9%
Institutional Revenue Sharing $ 5,898,585 10.5%
One-Time Central Balance Recapture $ 2,807,742 5.0%
Central Reserves $ 1,550,000 2.8%
Grand Total $ 55,938,835 100%
Note: The above table does not include resources appropriated as new state special dollars such as the tobacco
endowment, and funds for Animal Health and Food Safety, Rapid Response Fund, Regional Partnerships, Commercialization of Technology and general inflation.
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New State Appropriations – The increase in state appropriations for O&M for fiscal year
1999-2000 is $40,228,000. As shown above, $39,588,014 of those new funds are being allocated for a variety of new investments. The remaining amount will carry forward into fiscal year 2000-01 to help address increased future investment needs. The state specials appropriations increased by $11,093,500 over the base, (a net increase of $9,801,527 over the previous year) and the details regarding those investments are listed on page 22 of this document.
Enterprise Assessment – The enterprise assessment was approved as part of the overall
financing plan for the Enterprise Project and was implemented in fiscal year 1997-98. Due to the availability of one-time funds during the current fiscal year, 1998-99, the assessment was suspended for one year. The President’s recommended operating budget plan for fiscal year 1999-2000 includes reinstating this assessment. The charge will be 1% of total salary expenditures in a set of defined fund groups.
Institutional Revenue Sharing (IRS) – The IRS plan included in this budget recommendation
has two parts. The first involves a consistent 2% assessment on actual “sales and services” revenues realized in each unit of the University. The goal here is to implement a system in which external purchasers of University goods and services realize a small amount of overhead costs in their charges. The second part of the IRS involves an additional obligation for campus and collegiate units such that their total IRS payment (the 2% assessment plus the remaining charge) equals 1% of their total current nonsponsored revenues for the year. The additional obligation for central administrative units involves targeted reallocations or cost burdens, rather than a formulaic calculation of total payment.
One-Time Balance Recapture – As part of the annual budget review of each unit of the
University, year-end balances are analyzed and explained. To meet some of the nonrecurring investment needs for the next year, some central administrative balances determined to be uncommitted are being reinvested.
Central Reserves – This budget plan includes one-time allocations from central reserves for research projects associated with the NIH settlement requirements, funds for Y2K modifications and improvements to Eastcliff.
Preparing for the Fiscal Year 2000-01 Operating Budget
It is important to note that the University’s budget is balanced for both years of the biennium. Sufficient resources are available in the second year of the biennium to meet all fixed obligations and prior commitments established by the President’s Fiscal Year 1999-2000
Operating Budget Plan.
Consistent with the four principles outlined in the introduction to this document, the University is committed to developing a preliminary financial framework for fiscal year 2000–01 – including potential new items of investment. Table 5 below represents a planning
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