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

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Finance and Administration Committee - VI. FY 2012 Revised Operating Budget - ActionMessage from the CFO4Message from the CFOThe FY2012 revised operating budgetreflects operating plans and financialprojections as of October 31, 2011. TheUniversity develops a revised budget eachfiscal year to adjust to the following changesthat occur during the year after the originalbudget is adopted in June:1. The university’s original budget isdeveloped before the end of the previousfiscal year and uses budgeted net assets asits starting point. The revised budget usesactual net assets as its starting point.2. State appropriations are adjustedin September, requiring minor adjustmentsin most years.3. Other adjustments may be neededif there are material changes to operatingplans, organizational structure, revenueprojections, or fixed costs.Revised total revenues are $1.88 billion, a1.0% increase over the original budget.Revised expenses total $1.93 billion, a 3.7%increase. These revisions include all currentfunds: unrestricted educational and general(E&G) funds, restricted E&G funds, andauxiliary funds.Unrestricted E&G funds finance theUniversity’s core recurring operations andaccount for the major changes between theFY2012 original and revised budgets. Therevised unrestricted E&G revenue budgetincreased only $7.2 million or 0.7%. It iscommon to see revenue adjustments in thisrange between original and revised budgets.Budgets for recurring unrestricted E&Gexpenditures and transfers showed a similarmodest increase of $3.5 million, but totalrecurring and non-recurring expendituresand transfers are up $59.0 million (5.6%),reflecting large carry-overs of unspent nonrecurringfunds from FY2011.are continuing to follow the same strategies that wereused with the non-recurring ARRA stimulus fundingin FY 2010 and FY 2011 to upgrade technology inclassrooms, fund energy efficiency projects, andaddress critical maintenance needs; prudent one-timeinvestments that increase capacity and improve longtermeffectiveness and efficiency.Revenue and expenditure data for each operating unitis provided in this budget document. Also included isinformation on athletics and auxiliary budgets. Aseparate publication containing detailed supportingschedules is available in printed or electronic format.As this document comes before the Board, theUniversity is cautiously optimistic for the future. TheGovernor’s proposed budget for FY 2013 containspartial funding for a 2.5% salary increase and a $10.6million operating increase “to reflect greaterinstitutional productivity, such as increases in studentprogression, degree production, research and service,efficiency metrics, and other outcome measures”documented through the Tennessee Higher EducationCommission’s outcomes-based funding formula. Partof these gains are offset by a $7.1 million reductionin base recurring appropriations, but it is still awelcome step in the right direction for the faculty,staff and students of the University of Tennessee.Respectfully,Charles M. PeccoloTreasurer & Chief Investment Officer/Interim Chief Financial OfficerThe revised budget unrestricted E&Gbeginning balance is $50.9 million higherthan original budget. These are one‐timefunds that were budgeted to be spent inFY2011 that have been carried over to bespent in FY2012. Campuses and institutes288
Finance and Administration Committee - VI. FY 2012 Revised Operating Budget - ActionFY2012 REVISED BUDGETOverview4“THE FY 2012EDUCATIONALAND GENERAL(E&G) ANDAUXILIARYENTERPRISESREVISEDBUDGETS AREBALANCED ANDWITHINAVAILABLERESOURCES.FY 2012 Quick FactsEnrollment (Fall 2011) 49,545Total Revenues $ 1.88BPositions 14,551Capital Maintenance $ 23.9MUnrestricted E&GE&G Revenues$1.053BState Appropriations $413.3MSt. Appr. as % of Revenues 39.3%Tuition & Fees$490.9MTuition & Fees ‐ % ofRevenues 46.6%Salaries & Benefits$751.6MSal. & Ben. % of Expenditures 65.5%The University of Tennessee FY 2012 Revised Budgetrevenues total $1.879 billion: $1.053 billion inunrestricted Educational and General (E&G), $625.6million in restricted funds and $200.1 million in auxiliaryfunds. That represents a $17.8 million, or 1.0 percent,increase from the FY 2012 Original Budget.Unrestricted E&G revenues total $1.053 billion, a $7.2million, or 0.7 percent, increase over the FY 2012Original Budget.TOTAL REVENUESFY2012 FY2012 Change ChangeRevenues (Millions) Original Revised Amt. %Unrestricted E&G $ 1,045.7 $ 1,052.9 $ 7.2 0.7%Restricted E&G 615.8 625.6 9.8 1.6%Auxiliaries 199.3 200.1 .8 0.0%Total $ 1,860.8 $ 1,878.6 $ 17.8 1.0%Amounts are in millions and may not add due to roundingRestricted funds must be used in accordance with purposesestablished by an external party; primarily grants, contracts, giftfunds and endowments. Auxiliaries are self-supportingenterprises which furnish services to students, faculty, and staffsuch as housing, bookstores, food service and UTK Men’sAthletics.Unrestricted E&G RevenuesUnrestricted Education and General Funds (Unrestricted E&G)support the core operations of the university: instruction,research, public service, academic support, student services,institutional support, facilities operations and maintenance, andscholarships and fellowships. They are funded primarily thoughtuition and student fees, state appropriations, and other sourcesincluding grants and contracts, federal and local appropriations,sales and services, investment income, and endowmentdistributions.389
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