Long-range Plan Overview:
The long-range plan tracks and projects financial and operational data of key operational aspects of the University such as: student enrollments, tuition pricing, housing, dining services, fund-raising, auxiliary operations, salaries and fringe benefits, staffing needs, utility costs, depreciation expenses, other revenues and expenses by natural classification, capital expense cash flows, long-term investments, and debt service. The plan also tracks and projects data on key strategic initiatives to ensure the financial feasibility of such initiatives. This detailed information is linked to a summarized pro forma income statement and balance sheet to enable the financial management of the University to review the impact of ongoing and future changes on the institution’s operating cash, other assets, liabilities, and fund balances. The long-range financial plan also monitors the impact of changes in future financial plans on the key financial ratios that the University is required to maintain for debt covenant and current debt-rating purposes.
Long-range Financial Planning Process:
The Vice President for Business Affairs, in consultation with the President’s Cabinet, sets the broad-based planning parameters for the Long-Range Financial Planning model. The long-range financial plan (also known as the “Five-year financial model”) is maintained and updated by the Associate Controller and Budget Analyst in the Controller’s Office. However, every major function within the University contributes towards the maintenance and update of this model, with information and ideas flowing in both directions between the Controller’s Office and individual departmental/divisional budget managers, divisional VPs, and the President’s Cabinet.
Updates are continually made to the model to reflect changes in existing assumptions and future outlook. The long-range planning, annual operating and capital budgeting, and projection process are interrelated and form a single planning and budgeting system. During each fiscal year, as the University undertakes a projection of its year-end revenues and expenditures, it requests certain departments to provide updates to the model for the current and the outgoing years. The Controller’s Office budgeting staff also periodically meets with certain budget managers to obtain clarifications and updates on the outlook for future periods. The Long-range planning model is also tied to historical financial reporting. The model has a unique “look-back” feature, which tracks past financial and operational data. This enables the University to review and examine past trends to compare against current budgets and projections, and to develop future planning parameters and assumptions.
The availability of funds required to finance the capital construction, facilities renovations, and information technology acquisitions of the University is tracked through the model. The Facilities Management and the Information Services divisions both provide periodic updates to the Controller’s Office on the costs and scheduling of current and future capital projects. Since such capital plans typically span across a longer time horizon, the existence of a five-year plan enables the University to plan out the financing needs for such capital expenditures and determine the ability of the University to fund them through internal fund-balance reserves or the issuance of debt.