Frequently Asked Questions
FY 2018 financial recovery plan
What is the 2018 financial recovery plan?
As shared during the town hall meetings hosted by President Schulz and Provost Bernardo in the fall, the University has been spending more than it is bringing in for the previous 4 fiscal years. In FY17, expenditures in primary operating funds exceeded revenues by almost $30M. The goal for FY18 is to improve that run rate by $10M so that at the end of FY18 our expenditures will exceed revenues by $20M or less.
What are the primary operating funds?
Primary operating funds include the state general fund (Fund 001), dedicated local accounts (Fund 148), associated students account (Fund 522), other enterprises (Fund 570), the housing and food service account (Fund 573), and other miscellaneous funds, including federal appropriations (Fund 143), stores (Fund 440), printing (Fund 448), other internal service accounts (Fund 450), motor pool (Fund 460), and parking services (Fund 528).
What does ‘run rate’ mean?
Run rate refers to ‘living within your means’ by not spending more than annual (current year) revenues and/or allocations excluding carryforward balances. Here’s the formula for run rate:
(Annual revenues* and/or allocations*) – (Annual expenditures) = Run Rate
*Annual revenues/allocations do not include carryforward balances
What is the plan to achieve the FY 2018 $10M run rate improvement target?
Areas will be given specific run rate improvement targets for PBL funds and must achieve a run rate equal to or better than FY 2017 on all other funds. (Note: colleges and the provost’s areas are aggregated.).
What about development funds?
Development funds are not included in primary operating funds because their use is restricted and not available for general operations of the University.
What are PBL funds?
PBL funds include the General fund (001), F&A (148-02 & 148-03), AFI (148-05), and EDI (148-06). Federal appropriations are excluded from PBL funds for this exercise.
Why are the targets focused on PBL funds?
Upon analysis of the FY 2017 $30 million negative run rate, over 80% of it was attributable to deficit spending in PBL funds—nearly half in the state general fund alone. Deficit spending in other fund types is minimal aside from Athletics (Fund 522), so initial efforts will focus on correcting these
How were the PBL fund run rate improvement targets determined?
The cumulative (all areas) target was calculated as 2.5 percent of fiscal year 2017 expenditures (excluding benefits) on the PBL funds identified above.
Do area recovery plans impact the targets?
The provost will work with deans to distribute the academic area targets across the colleges in the most equitable manner possible, taking into consideration previously identified recovery plans for those that have been running an ongoing deficit.
Does this mean that the targets are to be met through expenditure reduction only?
No. The ‘run rate improvement target’ can be met through any combination of new revenues and/or expenditure reductions.
Your FY18 run rate targetis equal to your FY17 run rate + the ‘run rate improvement target’ for your area. For example, if your area had a positive run rate in PBL funds for FY 2017 (more revenue than expenditures), you need to improve that positive run rate by your ‘run rate improvement target’. Likewise, if your area had a negative run rate for FY 2017 you need to reduce your deficit by the ‘run rate improvement target’ in FY 2018.
Why are benefits excluded from the run rate improvement target calculation?
Including benefits would have resulted in larger targets for areas to absorb. Since benefit costs are auto-allocated to cover benefit expense (i.e., allocation = expense) benefits do not impact the run rate for PBL funds that draw on the central benefit pool.
Is the run rate improvement target a PBL reduction?
No, PBL will not be reduced by the run rate improvement target amount. The improvement target is to be managed at the area level, and improvement in the run rate will be held at the area level, ultimately increasing area carryforward.
Will areas be required to ‘give back’ funds to Central equal to the run rate improvement target?
No, for FY2018 the improvement target is to be managed at the area level, and improvement in run rate will be held at the area level, ultimately increasing area carryforward.
Are the actions taken this year to be considered permanent?
WSU must align expenditures and allocations for our PBL funds long term. The actions for FY18 seek to reduce our deficit spending by $10M, however, we will still be spending about $20M more than estimated revenues. Clearly, we will need to continue to take action to correct the remaining deficit. The intent is to establish goals and processes for FY19 by early spring. It is prudent to begin adjusting your budgetary run rate now in a manner that will enable additional improvement in FY19 and FY20.
What target for improvement has Athletics been given?
Athletics has been given a target that is greater than 2.5%. Specifically, Athletics is expected to both boost revenues and reduce expenses, such that its area deficit for FY18 is -$7.9 M or less.
How can areas track progress against the targets?
The Budget Office will provide reports for tracking progress on a monthly basis. Variances will be monitored throughout the year so that timely corrective action can be taken.
What actions will be taken in the future to close the gap on deficit spending?
New revenue sources are under consideration and in process, including the INTO initiative and expansion of online programs.
Should we expect additional reductions in FY 2019?
WSU must align expenditures and allocations for all funds long term. The actions for FY 2018 seek to reduce our deficit spending by $10M. Even so, we will still be spending about $20M more than estimated revenues. It is prudent to expect and to plan for additional actions in FY19 to align expenditures. Discussions of FY19 budget plans will be discussed and vetted by early spring 2018.
Information posted current as of 12.1.17