Finance and Administration - Board of Trustees - The University of ...

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Finance and Administration Committee - III. Minutes of Last Meeting1He then showed the composition of the liabilities. One of the biggest items isthe deferred revenue increase and most of that is due to the solar grantmentioned earlier that the University received. We received the money onthe frontend and are now deploying. That was accounted for as deferredrevenue until the services are performed.The next comparison had to do with revenues that grew over the year. Thebiggest part of that is the increase in gifts, grants and contracts in the amountof $93 million. UT Knoxville had $20 million and the UT Health ScienceCenter had approximately $18 million. Again, a big piece of that was thesolar grant from the state. There was also an increase in the local and stateappropriations of $63 million. Approximately $59 million of that was theone-time non-recurring state appropriation and the difference between thatand the $63 million had to do with the group health insurance benefits thatwent up and is funded by the state. The $36 million fee increase is one thatthe Board approved. Last year the University presented an 8.5%recommendation and upon discussions and vetting the Board agreed to 9%.The $36 million represents the 9% fee increase. Again, improved returns onthe investment results rounded out the increase in revenues.Finally, the expenditure categories; salaries and benefits year over yearrepresents almost 70% of what the University spends. It is the mostsignificant piece because we are a people business. The salaries and benefitsincreased by $48 million with $11 million in the instruction function as wedeployed some of the one-time monies to folks to address high demandclasses. There was $6 million in research and another $3 million was fromauxiliary operations. Utilities, supplies and other services increased by 10%or $40 million which doesn’t represent that utility costs increased that much.This is a catchall from salaries and benefits and is much broader than justutilities and supplies. This was a quick snapshot of how the University’sfinancial statements will reflect this year for June 30, 2011 versus last year,June 30, 2010. Again, we expect to have the final statements by the end of theyear and are waiting on the final auditors' opinion letter and once it isreceived will be published and distributed to the Board.VI.Approval of FY 2012-13 Operating Budget Appropriations Request—ActionItem (Exhibit 4)—Chair Talbott asked Interim CFO Peccolo to continue withthe next item. Mr. Peccolo explained that three of the budgetary units arefunded by a formula driven by different outcome measurements. The rest ofthe University is what is termed as non-formula. Each year we are allowed torecommend an improvement in the funding for the non-formula units to theTennessee Higher Education Commission (THEC) who incorporates it intotheir overall budget request to the Governor and then becomes part of the911
Finance and Administration Committee - III. Minutes of Last Meeting1state’s budget. This year, the list included in the Board materials shows thebreakdown of the improvement request. It is $34.6 million and about half ofthat represents one-time expenditures in equipment or program initiation.The balance is a recurring type of expenditure. It may not surprise anyone,but we aren’t very hopeful that any of the requests will be part of theGovernor’s budget because of the state’s finances. We do have theopportunity to make a case for those funding improvements to the extent thatwe can.The schedule behind the cover memo gives you the amounts and is set up bybroad strategic categories; research, economic development, and studentaccess and student success. Behind that information is a narrative that gives acomplete description and discussion of what each one of those requests are.As previously mentioned, upon approval by the Board, this request isforwarded to the Tennessee Higher Education Commission (THEC) forinclusion of the Governor’s budget.Chair Talbott stated that it is an action item and called for a motion topresent. Vice Chair Stansberry moved approval of the University’s stateappropriations budget request for non-formula support of operations for thenew budget year as presented in the meeting materials; seconded by TrusteeAnderson and approved unanimously.Trustee Wharton asked how realistic it was that the University can get fundsto help our extension agents where there is a serious problem. Mr. Peccoloreplied that it was a great question. Clearly some of the improvementrequests are dealing with the salary deficiencies and related compensationissues. He was not sure how successful the request would be. He thenexplained that they are speaking with the Tennessee Higher EducationCommission about looking at some kind of formula or structure so that thenon-formula units can have some kind of deliverables or measurables whichwould make a strong case for improved funding. The problem is that we donot anticipate any additional funding to higher education and then noted thatthe President might want to speak to the issue. President DiPietro addressedTrustee Wharton and told him that he knows very well that the issue withExtension is not a good one and we are not proud of it from the standpoint ofthe salary structure around some of those positions. We interacted withTHEC a few times within the last year looking at an approach for nonformulaunits that at least provides when budgets go down that it wouldprovide some accommodation for the fact that they cannot generate tuition.One of the things we have come up with is to evaluate the UT Health ScienceCenter, the Institute of Agriculture, Space Institute and Institute of PublicService based on performance. When you make these accommodations and1012
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