VCAF Budget Officers Group

February 13,2013

Agenda 1. FY14 Budget Outlook

2. FY14 Campus Budget Process (CBO)

3. FY14 Division Budget Process (VCAF)

A lot happened in 2012…

Outreach Workshops & One Hierarchy

FY13 BFS Changes

Finance Summit FY13 Forecast Adjustment at the Dept ID

UC Berkeley Budget Plan

A three-pronged financial strategy is required to support our mission and objectives

Control Expenses

• Every dollar we save is a

dollar that we can redeploy towards the highest needs

• Every unit and every

employee can do their part to trim expenses

Access and Excellence

Financial Sustainability

Grow Revenues

• Campus units need to

become more engaged in the process of generating and managing revenues

• We need to move towards a world defined by dynamic revenue generation (versus incremental mindset)

Improve Resource

Allocation

• Ensure that we are doing the best possible job of allocating our scarce resources towards your unit’s top priorities.

1 2 3

TOP

DO

WN

B

OTTO

M U

P

A New Framework With a dynamic, iterative, integrated strategic planning process

Campus Rolling 2-year plan

Medium term

strategy

Overall resource envelope

Make trade-off decisions

Allocate resources

Measure &

Evaluate Divisions- VCAF Rolling 2-year plan

Medium term

strategy

Unit resource envelope

Make trade-off decisions

Allocate resources

Measure &

Evaluate

Campus 8-10 Year Aspirational Plan guides all rolling plans

Medium term

strategy

Unit resource envelope

Make trade-off

decisions

Allocate resources

Measure &

Evaluate

Departments Rolling 2-year plans

Budget Predictability Range

Actual Financial Performance

Posit

ive

Varia

nce

FY13-14 Operating Budget: Position Info One Hierarchy [CalPlan, BFS ’s]

FY14-15 Robust local budget processes New initiatives [Position Info, One Hierarchy, etc]

FY12-13 Forecast

Neg

ativ

e Va

rianc

e

FY15-16

Phased process of budgeting improvement

Agenda 1. FY14 Budget Outlook

2. FY14 Campus Budget Process (CBO)

3. FY14 Division Budget Process (VCAF)

What are the overarching goals for this year’s process?

1. Understand your departments’ strategic and financial goals

2. Develop a holistic budget

3. Implement local budget processes

4. Help your Dean, VP, or VC understand the SRECNA view of their operations

5. Prepare a budget plan appropriate for public sharing

UCB

Chancellor’s Budget Hearing

VCAF Budget Process

Departments create budgets aligned to their strategy

Budgets are developed across multiple layers B

otto

m U

p B

udge

ts

Top

Dow

n B

udge

t Dec

isio

ns

VCAF Submission to Campus

Program Narrative

Overall strategic plans Consolidated budget

narrative

Narrative

= VCAF Budget Submission to Campus

Numbers

Appropriate for Public sharing NOT for Public sharing

Issues (not for Public Sharing)

Supplemental Budget Requests (not for Public Sharing)

Financial

Worksheet Key data points from

SRECNA reports Could be integrated

into consolidated budget narrative

+ + +

1 2 3 4

System

Campus

Division

Department

Agenda 1. FY14 Budget Outlook

2. FY14 Campus Budget Process (CBO)

3. FY14 VCAF Division Budget Process (VCAF)

Budget Discussion Cycle

• Business Overview

Regular Financial Management

Rotation

Special Project or Corrective Action

VCAF Frequency

Quarterly (6 meetings

per quarter for VCAF)

Once every 18 to 24 months (2 meetings

per quarter for VCAF)

As needed (1 to 2 meetings

per quarter for VCAF)

Purpose • Service trends metrics • Review YTD, QTD budget

to actuals • Surplus deficit discussion • Strategy • Course correction

• Accountability—expectation that your numbers and performance are being monitored

• Fresh perspective

• Accountability—expectation that your numbers and performance are being monitored

• Situation escalation • Problem resolution

Criteria • Reports to Vice Chancellor

• Include key managers, as needed

• Reports to Associate Vice Chancellor

• Major financial opportunity

• Major financial risk • More than 20% in deficit

or two Qtrs not meeting planned deficit reduction plan

System

Campus

Division

Department

VCAF Division Budget Discussions Discussion Date Department Budget Owner Departmental

Analyst

D1 April Athletics Sandy Barbour Laura Hazlett

D2 April Business and Admin Services Ron Coley Denise Cronin

D3 April Finance Erin Gore Hugh Graham

D4 April IST Lyle Nevels Michelle Kresch

D5 April HR Jeanine Raymond Rick Mena

D6 April Shared Services Thera Kalmijn TBD

D7 April Rotation A Discipline on rotation

D8 April Rotation B Discipline on rotation

D9 April Special Project A Depends on Quarter/Year

D10 April Special Project B Depends on Quarter/Year

System

Campus

Division

Department

Key milestones/dates for the FY14 budget process 2013

Jan Feb Mar Apr May Jun Jul Aug

FY14 UCB budget plan published

Activity

VCAF & Chancellor Budget Hearing

Budget submission deadline

FY14 Operating Budget opens

Dept meetings and priority setting

Budget call letter distribution

Budget process training

Unit budgets completed

Budget process decisions

FY13 Forecast update due

CalPlanning, Phase 3 training

CalPlanning, Phase 3 go-live

Late Jan. 2013

2/11/2013

3/7/2013

3/11/2013

4/5/2013

6/28/2013

Depts & VCAF Budget Discussions

TBD

System

Campus

Division

Department

Narrative Template Located at budget.berkeley.edu

VCAF Budget Discussion Process

•Purpose: Develop detailed DeptID budgets aligned to strategic priorities •Timing: February through early April

Budget Development

•Purpose: Prep VCAF (Wilton) by providing summary of known issues from pre-analysis •Duration: Via email •Timing: 1 week prior to Budget Discussion

VCAF Prep

•Purpose: Prep the department by reviewing budget data and identifying key talking points •Duration: 1 to 2 hours •Timing: Two days prior to Budget Discussion

Department Prep

•Purpose: Substantive conversation about the “state of the department” •Duration: 1 hour •Timing: April

Budget Discussion

•Purpose: Determine and document short and/or long term actions •Duration: 15 min •Timing: Immediately after Discussion

Debrief

•Purpose: Communicate budget decisions to VCAF Departments •Timing: June

Budget Decisions

System

Campus

Division

Department

2

3

4

5

1

6

Department Budget Development Sample Work Plan for Finance

Timing Data or Narrative Task

Budget Owner

(Erin Gore)

Dept. Analyst (Hugh

Graham)

Managers (I.e., Laurent Heller, Paula Milano, etc.)

Now to Feb 8 Data Distribute FY13 variance reports to managers Developer Reviewer

Now to Feb 8 Narrative Review FY13 variances and document strategic priorities Approver Developer

Feb 11 – Mar 3 Data Update FY13 Forecast data in CalPlanning Developer Reviewer

Mar 4 – 7 Data Approve FY13 Forecast Data Approver Developer

Mar 11 Narrative Finalize Strategic Priorities for FY14 Approver Developer

Mar 15 Narrative Review first draft of Narrative Reviewer Developer Developer

Mar 11 – 29 Data Update FY14 Budget data in CalPlanning Developer Reviewer

Mar 30 – Apr 5 Data Review FY14 Budget Data Reviewer

Mar 30 Narrative Review second draft of Narrative Reviewer Developer Reviewer

Apr 5 Data and Narrative

Submit FY14 Budget and Narrative Approver

System

Campus

Division

Department

1

Budget Discussion Pre-Analysis

Pre-Analysis Quick Look at Financials Key Drivers of Financials (i.e., operating

transfers, revenue compared to plan, expenses compared to plan, planned events not occurring as expected, etc.)

Significant and Outstanding Items (i.e., new building, compensation negotiations, new initiatives, etc.)

Analysis of metrics explaining progress towards strategic objectives

The pre-analysis template will be used with be developed jointly by the VCAF Analyst, Department Analyst, and the Department AVC.

2

System

Campus

Division

Department

Departmental Prep Meeting Agenda Meeting Agenda Time

(1 to 2 hrs) Logistics Description

Review Budget Discussion Agenda 15 min VCAF Attendees (2 people)

VCAF Budget Analyst, Budget Director (Laurent Heller)

Discuss budget for each detailed area • Review CalPlanning Report(s) • Prepare tradeoff scenarios and

review alignment to strategy • Review pre-analysis document and

prioritize discussion items for VCAF budget discussion

45 to 105 min Dept. Attendees (2 people)

Budget Owner, Departmental Analyst

Timing Two days prior to Budget Discussion

3

System

Campus

Division

Department

The Departmental Prep meeting will ensure the Budget Discussion is substantive conversation about the “state of the department”.

Budget Discussion Meeting Agenda Meeting Agenda Time

(1 hr) Logistics Description

Overview of Business o Provide Overview of Services o Discuss Service Level Trends and

Metrics o Review Customer Feedback on Areas

of Excellence and Areas of Improvement

15 min VCAF Attendees (4 people)

VCAF (John Wilton), VCAF Chief of Staff (Ann Jeffrey), CFO (Erin Gore) and/ or Budget Director (Laurent Heller), VCAF Budget Analyst

Review CalPlanning Reports o Review YTD Budget to Actuals and

Budget for Next FY

15 min Dept. Attendees (2 people)

Budget Owner, Departmental Analyst

Operating Surplus/Deficit Discussion o Discuss Areas of Expected Deficit and

Approach to Recovery o Discuss Areas of Expected Surplus

and Reasoning for Reserves

15 min Timing April

Wrap-Up o Open Discussion o Finalize and Confirm Next Steps

15 min System

Campus

Division

Department

4

Debrief Meeting Agenda Meeting Agenda Time

(15 min) Logistics Description

Discuss Opportunities and Risks 10 min VCAF Attendees (4 people)

VCAF (John Wilton), VCAF Chief of Staff (Ann Jeffrey), CFO (Erin Gore) and/ or Budget Director (Laurent Heller), VCAF Budget Analyst

Assign Action Owners 5 min Dept. Attendees AVC + Finance Staff

Timing Immediately after Budget Discussion

System

Campus

Division

Department

5

This year’s process will include a debrief meeting to improve our accountability.

Budget Decisions

VCAF Analysis VCAF Budget Decisions

Chancellor’s Budget Hearing

Return on Investment

Alignment to Campus

Strategy

Training Initiative

Building Renovation

New IT System

Athletic Scholarship

Needs

Budget Decisions Finalized

Priorities collected from Department Hearings

6

Budget requests will be prioritized across the VCAF Division and funding decisions will be communicated in June.

System

Campus

Division

Department

What campus-wide assumptions for FY14 will help me?

Campus-Wide Assumption Preliminary Status

Budget cuts No cuts

“Tax” on carry-forward No “tax”

Inflation for fixed costs No increase

Tuition and fee remission No increase

Control-unit block grant allocations No increase

Faculty merit +3%

Staff merit +3%

Benefits, including UCRP Increase based on fringe rate schedule

New campus funding Do not reflect new funding requests in CalPlan

Key FY14 assumptions

What do I do as a finance planner?

Review a roster of your existing employees, including “non-budgeted” Decide if existing employee assumptions are valid or

need to be changed (Keep materiality in mind!)

Assess the changes in terms of your organization’s needs and requirements Complete the planning process by aligning existing

resources to agreed-upon changes

Finance and Human Resources Integration Finance and Human Resources are integral partners in making Human Capital Planning & Management a success.

•HCM Users update data in HCM.

•Manages internal data processes and approvals.

•Approves non-finance data changes.

Finance • Approves

position and job funding.

• Supplies funding chartstrings.

• Advises position & employee data processing as it impacts financial reporting.

Human Resources

HUMAN CAPITAL

PLANNING & MANAGEMENT

Why is position planning important?

NO

N

CO

MP

CO

MPE

NSA

TIO

N

& B

ENEF

ITS

Typical Unit Budget

Compensation is the most significant component of our expense budget

Position planning in HCP allows us to better track and manage these costs We will plan for ALL positions We will plan on ALL funds

Integrating position planning into our overall budget planning leads to the best resource decisions We will plan position expense in HCP and

transfers of funds in CalPlan separately We will see the trade-offs between them

Actual data from HCM expected to be loaded to FY14 Forecast

HCP goes live

HCM data is loaded to FY13 Forecast

You create pooled positions in HCP

You create new positions and make material compensation changes in HCP not previously in HCM

You complete your FY13 Forecast

What should I do in HCP and when should I do it?

FEBRUARY MARCH JULY OCTOBER

2013

APRIL JUNE

FY13 Forecast is copied to FY14 Operating Budget

You may adjust HCP data in your FY14 Operating Budget

You adjust FY14 Operating Budget for new commitments from the FY14 budget process

You may continue to refine your FY13 Forecast and FY14 Operating Budget, including position planning

FY14 Operating Budget is copied to FY14 Forecast

Thanks! Go Bears!!