Date:June 12, 2012

To: Senate Fiscal Committee

From:Central Services Subcommittee

Re: Possible Options to Generate Stable Funding Pool for One-Time Funding Requests

for the CSS Support Office Budget Request Process

Each year, one of the responsibilities of CSS is to review special funding requests received from Central Support Units. These units, such as University Libraries or the Office of the CIO or the Office of Human Resources, do not generate funds in the same way that academic units do and so must seek additional resources through internal reallocations or requests for special funding. One of the routes for those requests is through CSS.

Over the last five fiscal years the amount available to be distributed in the support unit special budget request process has varied considerably from as much as $19M to as little as $11.2M, and a downward trend has been apparent in the last three years. In addition, the sources of those funds have become inconsistent as funds available from various sources have waxed and waned: investment income was the sole revenue source in FY 2008 and 2009 but now has essentially disappeared; fee reconciliation was a source in FY 2010 and 2011 but in 2011 SFC recommended that these funds be returned to the colleges and so they were not available for FY 2012. The funding available for FY 13 is uncertain at this time due to semester conversion and the potential impact on enrollment projections. The result of these inconsistencies is unstable funding sources and uncertain amounts available for these central support units to apply for as they seek to improve services or engage in new initiatives intended to help Ohio State advance from excellence to eminence.

Attached is a document prepared by CSS that proposes an initial “filtering” process to ensure that budget requests are funded most appropriately (from internal reallocation or through the capital project funding process sources) and outlining a number of potential sources of funding intended to develop a more stable pool of resources for future support unit budget requests.

CSS seeks SFC’s review, comment, and eventual approval this document. After approval, this document will be forwarded to Provost Alutto and Senior Vice President for Business and Finance Chatas.

Possible Options to Generate Stable Funding Pool for One-Time Funding Requests

for the CSS Support Office Budget Request Process

Goal

  • Build as permanent and stable a pool of funds as possible for the annual Support Office Budget Request process

Concepts

  • Rather than providing a fixed floor/minimum amount and ceiling/maximum amount, the funding available will likely be within a range
  • A mix of funding sources should be considered to ease the impact of potential volatility in one or more sources and to provide more stability
  • Estimates of the income to be generated by each source under certain assumptions (such as percent or dollar amount from proposed funding source) will be developed

A. Pre-Request “Filters” that Should Be Applied Prior to Submission of Central Support Unit Budget Requests to SFC/CSS

1. Reinforce the expectation that each support unit will review its funding and reallocate within current operations, if possible, to generate funding for projects before requests are submitted.

  • Advantages
  • Requires units to conduct due diligence
  • Requires units to prioritize
  • Encourages efficiencies within units
  • Unit pays for its own new initiatives
  • Encourages collaboration among units to complete larger or shared projects
  • Possible disadvantages
  • No single central review of initiatives as CSS currently does
  • May not generate sufficient funding to fully support new initiatives
  • Unit may be as efficient and focused as possible so no extra budget is available

2. Ensure that requests more properly supported by capital funds are directed to the capital request process and that requests more properly supported by central funds are directed to CSS. Develop a statement identifying which types of projects should be directed to the capital planning process (utilizing the forthcoming revised capital request process) and which to the annual support unit budget process, with flexibility. A draft version of this is attached. CSS and IPPLG will need to consult to ensure that projects are not submitted and funded by each process or are missed.

  • Advantages
  • Involves IPPLG (Integrated Physical Planning Liaison Group)
  • Request channeled to most appropriate funding sources
  • Possible disadvantages
  • Need development and communication of guidance on what is and is not capital
  • Timing (being addressed as formerly biennial request process within OSU becomes annual)

B. Possible Alternative Funding Methods Utilizing Centrally-Generated Funds (not in any order of priority)

1. For projects spanning multiple units or enterprise-wide, part of a university-wide initiative, or requiring multiple years of funding, determine funding options by request and assess for each item individually (example: replacement of Public Safety radio system)

  • Advantages
  • Associates costs with a specific project
  • Distributes cost by user/beneficiary
  • Possible disadvantages
  • To what degree does the proposed project benefit the university as a whole?
  • For multi-unit projects, how would the distribution of costs be determined—by use, by budget, by enrollment?
  • Hard to do budget planning if year-to-year assessments are variable
  • Should there be a minimum dollar threshold for a specific assessment?

2. Set aside a portion of the funding (from centrally-held PBA associated with support units) generated by the President’s current 1% reallocation. Currently, unspent balances of $3M remain from FY 11 and $3M from FY 12 (projected); another $3M is expected to be generated in FY 13.

  • Advantages
  • Utilizes an established funding source
  • Reallocation fund comes from support offices only. Colleges not impacted
  • Possible disadvantage
  • Limits flexibility for President’s initiatives or strategic investments

3. Utilize a portion of the receipts from any new net marginal resource initiatives

  • Advantages
  • Utilizes new funding source(s)
  • Should provide an annually predictable/stable amount
  • Possible disadvantages
  • Uncertainly regarding how new funds might be received—annually, lump sum
  • How to divide these new funds between direct academic support and support office needs
  • Would the portions be provided by formula or by request

4. Utilize a fixed percentage of the annual investment income

  • Advantages
  • More consistent funding source providing a somewhat predictable amount
  • Would not “tax” support units or academic units
  • Although investment income varies annually, over time the amount directed to the support unit find should be affordable
  • Possible disadvantages
  • Amount available would be variable depending upon the yield from the investment portfolio
  • Reduces the investment income available to be used elsewhere or for reinvestment

C. For Specific Projects To Create a More “Green” or “Sustainable” University

1. Utilize a percentage of the savings from energy efficiency/sustainability efforts to fund university-level projects that make Ohio State more “green” or “sustainable.” Funding amount unknown. Need to coordinate this proposal with the proposals being generated by CDS in their POM analysis.

  • Advantages
  • Generates “free” resources by cost avoidance for spending on utilities that would have occurred in the absence of green/efficiency/sustainability programs
  • Incents efficiency/sustainability as a means of generating these funds
  • Possible disadvantages
  • Funds would not be available immediately
  • Some time would be required to fully develop this fund
  • Funding available would vary depending upon specific efficiency/sustainability activities and specific return per project
  • Perhaps best used as a supplementary source
  • Not to be used for capital projects