Budget Advisory Committee Update

February 26, 2014

Dear colleagues,

We’re writing to you today to provide various updates on the recently established Finance Group and the campus budget development process. This process includes long-term financial planning, a revised charge for the Budget Advisory Committee and, lastly, the establishment of a new Subcommittee on Capital Budget. While all of the information may not necessarily be pertinent to your daily work, for the sake of transparency and open communication, we believe it’s important to share the following with you.

Finance Office

In December 2013, the Division of Planning and Budget established the Finance Group, which is responsible for managing the process for the development and recommendation of the campus operating budget to the chancellor. In addition, this office will be responsible for the development and recommendation of a campus capital budget.

In related news, the campus launched a nationwide search recently for an assistant vice chancellor for Finance who will report to the vice chancellor for Planning and Budget. The vice chancellor for Business and Administrative Services serves as the chair of a search committee, which includes representatives from our campus, the UC Office of the President and subject-matter experts from the Los Angeles, Riverside and Davis campuses. 

While this search remains ongoing, the Finance Group will begin to identify business intelligence and corporate performance-management tools that will enable the campus to consolidate its budget process. This new budget-development software should enhance our revenue planning, budgeting and forecasting processes. It should also facilitate a consolidated budget development and approval process across all campus fund sources.

The Finance Group will consult with Accounting Services, Research Accounting Services, Information Technology and units across campus. They will make recommendations regarding the selection of new campus budget software and the process for the development of the campus budget.   

Strong collaboration between our accounting offices and the Finance Group will be essential for strong financial planning in the years ahead. In the past year, these groups have begun to work more closely together and have made progress to enhance the solid relationship necessary for effective financial management. We encourage the partnerships to continue to grow as we move forward.

Campus Budget Development

On another note, we are very aware of the frustration managers experienced in previous years with developing their budgets. Notwithstanding this frustration, we also know we must use the same financial system to plan expenditures for the new fiscal year that begins on July 1, 2014. 

In collaboration with Accounting Services, the Campus Budget Office has provided information about the roles and responsibilities for campus departments, accounting offices and the budget office. They have also developed tools to help guide the process of budget development prior to the implementation of new budget software. We expect new budget software to be available for the FY 2015-16 budget process.

The vice chancellor of Planning and Budget, interim controller and interim budget director met with school and department leaders to provide information about this planning process during the past week. Please do not hesitate to contact those leaders should you have questions.

Long-Term Financial Planning

Developing long-term financial projections for campus operating and capital budgets will be essential to develop an executable financial plan for the 2020 Project. As we look to the future, we need to begin to plan for the investments that will sustain our existing operations and drive growth, remaining consistent with our Long-Range Enrollment Plan (LREP).

The Strategic Academic Focusing Initiative, led by Provost and Executive Vice Chancellor Peterson and Divisional Council Chair Lopez-Calvo, will be another essential component of our planning processes. The initiative will provide a roadmap for the growth of the university’s academic programs for the 2020 Project. The roadmap will reflect the cross-cutting themes the institution has identified as strategically important for growth. It will also guide our faculty hiring program within select areas that cut a wide interdisciplinary swath through the range of the University’s academic strengths. 

In addition, our plans need to be informed by several factors including:

1.     Investments required to operate and maintain our campus, including the replacement and rehabilitation of buildings and equipment;

2.     A new compensation philosophy – being developed at the direction of the chancellor –  that will better align campus compensation to appropriate markets;

3.     Growth in mandatory operating costs, such as increasing employee benefit costs and utilities;

4.     Opportunities to maximize efficiencies and the commensurate investments necessary to implement efficiency plans;

5.     Reforms necessary to eliminate structural deficits within components of the campus budget; and

6.     Potential short-term investments necessary to address campus space challenges prior to the delivery of facilities under the 2020 Project. 

Budget Advisory Committee

To help the campus enhance administrative efficiencies and evaluate opportunities to gain from economies of scale, Chancellor Leland recently updated the charge of the Budget Advisory Committee. 

The Budget Advisory Committee has been charged with providing advice to the chancellor with respect to near-term and long-term financial planning issues across all fund sources. The committee facilitates a consultative and transparent approach to the allocation of university resources. It includes broad campus representation to provide the chancellor with recommendations based on input from leaders within the campus community. Members will be asked to examine issues from a university-wide perspective and to offer informed and thoughtful deliberations for full discussion. 

Also, the Budget Advisory Committee will be asked to review and make recommendations periodically for revisions to the charges for all administrative campus budget-related committees.

In addition to existing budget advisory committees, the Budget Advisory Committee may occasionally establish additional sub-committees. The updated charge for the committee can be accessed here.

The Budget Advisory Committee recently held its first meeting under this new charge. At this meeting, it discussed the current budget advisory structure, day-to-day roles and responsibilities for financial management, and the need for campus budget software. The presentation made to the committee can be found here.

In addition, Interim Assistant Vice Chancellor of Business Financial Services and Controller Mike Riley discussed the campus annual financial report. This report can be accessed here.

Subcommittee on Capital Budget

The approval of budgets and finance plans for capital projects would benefit from the periodic advice from subject-matter experts and project sponsors. Consequently, the new Subcommittee on Capital Budget will provide a forum for those groups to discuss pending capital budget matters that require approval from the Regents, officials at the Office of the President, the chancellor and/or the vice chancellor for Planning and Budget.

The Subcommittee on Capital Budget will be co-chaired by Vice Chancellor for Business and Administrative Services Michael Reese and the Vice Chancellor for Planning and Budget Feitelberg. It will facilitate communication among campus stakeholders involved with all aspects of the lifecycle of campus projects including the planning, design, construction, financing, operations and maintenance of the projects. As such, discussions about optimal procurement and financing strategy, and the commensurate financial and operating risks that the campus may face during the course of project development and over its lifecycle, should be discussed.

The charge for the Subcommittee on Capital Budget can be accessed here.

We appreciate your continued patience and support as we build a strong financial-planning process that will help guide the campus in the coming years. 

Sincerely,

Thomas W. Peterson                
Provost and Executive Vice Chancellor
Co-Chair, Budget Advisory Committee

Daniel M. Feitelberg                                                
Vice Chancellor, Planning and Budget                      
Co-Chair, Budget Advisory Committee