BOARD OF REGENTS July 2020 -0- Fiscal Year 2020-21 Budget for UC Office of the President July 30, 2020 BOARD OF REGENTS July 2020 -1- TO THE REGENTS OF THE UNIVERSITY OF CALIFORNIA: FISCAL YEAR 2020-21 BUDGET FOR THE UNIVERSITY OF CALIFORNIA OFFICE OF THE PRESIDENT (UCOP) Contents FY20-21 SITUATION ASSESSMENT .................................................................................................................................2 EXECUTIVE SUMMARY ...................................................................................................................................................2 The FY20-21 UCOP Budget ........................................................................................................................................3 Key Budget Drivers ....................................................................................................................................................3 Budget Risks ..............................................................................................................................................................5 FY19-20 to FY20-21 Budget Summary ......................................................................................................................5 FY20-21 Budget: Key Takeaways ..............................................................................................................................6 BACKGROUND ...............................................................................................................................................................7 About the University of California (UC) ....................................................................................................................7 About the University of California Office of the President (UCOP) ..........................................................................7 FY20-21 UCOP BUDGET .................................................................................................................................................8 Sources of Funds .......................................................................................................................................................8 Uses of Funds ............................................................................................................................................................9 Programs and Initiatives .........................................................................................................................................10 Central and Administrative Services .......................................................................................................................11 UCPath ....................................................................................................................................................................12 Unrestricted Strategic Priorities Fund (SPF) ...........................................................................................................13 Designated and Restricted Strategic Priorities Fund (SPF) .....................................................................................13 RESERVES .....................................................................................................................................................................14 Reserve Target Funding Levels ...............................................................................................................................14 Forecasted Reserves ...............................................................................................................................................14 FUND BALANCES ..........................................................................................................................................................15 Actual and Forecasted Balances .............................................................................................................................15 EXECUTIVE BUDGET COMMITTEE RECOMMENDATIONS ............................................................................................16 PRESIDENT’S RECOMMENDATION ..............................................................................................................................17 APPENDIX 1: UCOP SCHEDULES ...................................................................................................................................19 APPENDIX 2: FY20-21 PRESIDENTIAL INITIATIVES .......................................................................................................34 APPENDIX 3: KEY TO ACRONYMS ................................................................................................................................36 BOARD OF REGENTS July 2020 -2- FY20-21 SITUATION ASSESSMENT The FY20-21 University of California Office of the President (UCOP) budget reflects an annual operating plan developed during an extended period of economic uncertainty. The COVID-19 pandemic was not well understood when planning for the FY20-21 budget kicked off, and the full impact still remains unknown. The budget presented in this item reflects contributions from the Executive Budget Committee (EBC) which is comprised of senior academic and financial leaders from all the campuses as well as leadership from the Academic Senate and UCOP. The EBC collaborates with UCOP leadership to deploy resources in ways that best serve the mission and the campuses. Throughout the UC system, UCOP and campuses are concerned about revenue, operational disruption, and impacts to teaching, research and public service. UCOP has prepared a fiscally conservative, balanced FY 20-21 budget based on the anticipated 12.7% reduction in State direct appropriation communicated in the June State of California budget. Overall, UCOP’s proposed budget is reduced by 8.5% compared to FY19-20, while continuing critical support for valued programs and services, absorbing unavoidable annual cost increases, and advancing important projects that show return on investment, or long-term savings to the system. EXECUTIVE SUMMARY UCOP started the FY20-21 budget cycle in December 2019 at a time of economic growth and stability. Through March 2020, the budget process proceeded normally with UCOP divisions identifying priorities for the coming fiscal year, but with the assumption that the State’s direct appropriation would continue to be held flat for the fourth consecutive year with no campus assessment to augment unrestricted funding permitted. Having redirected $166.3M in unrestricted funds from UCOP to the campuses over the past three years, this budget planning cycle began with the goal of closing the unrestricted funding gap created by the transition from an assessment to direct appropriations. On March 19, 2020 Governor Newsom issued a shelter-in-place order, and an unprecedented level of uncertainty was introduced for the University, California, and the nation. The COVID-19 pandemic has and will continue to have profound consequences, and conservative, disciplined financial planning is required now more than ever. UCOP originally prepared a budget for the May meeting that would close the unrestricted funding gap and reduce the UCOP budget overall by 5%. Just prior to the meeting, the Governor’s May revised budget was published with a 10% reduction to UCOP’s appropriation. The UCOP budget was appropriately withdrawn and replaced with a continuing resolution. The June State budget agreement states that, in the absence of federal funding, the UCOP appropriation will be reduced from FY19-20 by $43.2M to $297.0M, or 12.7%. To achieve this goal in the short time available, UCOP substantially slowed the rate of expenditures through a hiring freeze, travel restrictions, limited funding for the President to respond to emergent priorities, contract renegotiations and delayed investments. Many of these reductions are not repeatable or sustainable in future years, and some are not without consequence to the campuses. In response to the University’s rapidly-changing circumstances, the proposed July budget, reduced 8.5% in total from FY19-20, satisfies three objectives: • • • Reduce the budget by 8.5% in total, including a 12.7% reduction from State appropriations Balance the budget by fund type and align to available financial resources Mitigate the financial impact to campuses from budget changes in FY20-21 BOARD OF REGENTS July 2020 -3- The FY20-21 UCOP Budget UCOP organizes its budget according to three different categories defined below. Sources of Funds • Unrestricted • Designated • Restricted Uses of Funds • • • • Special Expense Classifications Programs and Initiatives Central and Administrative Services UCPath Strategic Priorities Funds o Unrestricted o Designated/Restricted • Pass-through • Fee-for-Service In addition to the Sources and Uses of Funds, UCOP shows pass-through dollars which flow through the UCOP budget to campuses, researchers, and the public for systemwide programs. The largest programs are Agriculture and Natural Resources, and the statewide Tobacco-Related Disease Research Program, managed by Academic Affairs. Systemwide fee-for-service activities are provided by UCOP to campuses on a fee basis. The largest fee-for-service activities include UCPath, legal services, and management of investment assets and employee/retiree benefits. The three budget categories are displayed in Figure 1. Figure 1: FY20-21 Budget Summary by Category $ millions Sources of Funds bt Unrestricted bt Designated bt Restricted FY20-21 Budget $ 238.6 % of Total 27.5% $ 421.5 48.5% $ 208.5 24.0% $ 868.6 100.0% $ 357.1 41.4% $ 381.3 44.2% $ 90.1 10.5% $ 20.0 2.3% $ 13.5 1.6% $ 862.0 100.0% Pass-Throughs $ 310.9 36.1% Fee-For-Service $ 281.0 32.6% Total Special Expense Classification $ 591.9 68.7% Budget Net of Expense Classification $ 270.1 31.3% Total Sources 73% of the sources of funds are designated for specific programs and services or restricted for use by a third party. Uses of Funds bt Programs and Initiatives bt Central/Admin Services PaUCPath F - Strategic Priorities Fund, Unrestricted at Strategic Priorities Fund, Desig. & Restricted Total Uses Special Expense Classification 41% of the uses of funds are dedicated to ~30 programs managed by UCOP on behalf of the State, Federal Government, Regents and the UC system. 31% is the remaining UCOP budget net of dollars passed through UCOP to recipients across the State and fee-for-service activities. Key Budget Drivers The proposed FY20-21 budget reflects a total reduction of $79.7M or 8.5% from FY19-20. Reductions come primarily from cuts to unrestricted expenditures and reduced revenues from restricted revenue programs. Designated funds show a slight reduction with lower expenditures for UCPath and other feefor-service and administrative programs. BOARD OF REGENTS July 2020 -4- UCOP implemented significant cost reduction measures in light of the current environment. The budget includes $114M in reductions offsetting $34M in strategic investments for a net reduction of $80M. UCOP has: • • • • • • • • Directed divisions to identify 9% in operating expense reductions on unrestricted funds Eliminated the annual merit program for non-represented staff Implemented a hiring freeze for the full fiscal year Eliminated travel budgets through December 2020 Reduced the unrestricted Strategic Priorities Fund by 33%, from $30M to $20M Adjusted revenue projections for tobacco-related diseases research Retained revenues from UC applications to support the ApplyUC system; and Redirected CENIC (a systemwide high-capacity computing internet service) and UCOP’s contribution to systemwide library content purchases to campus fee-based services. To mitigate the FY20-21 campus impact of these and ApplyUC, UCOP will take a one-time distribution from the President’s Endowment Fund of $19.6M. Each year, UCOP typically faces inflationary cost increases, including compensation and benefit changes, escalations to service contracts such as audit fees, technology licenses, and other costs primarily associated with the critical administrative services UCOP manages. For FY20-21, UCOP included only critical and essential budgeted increase including: • • • • • • • Business development opportunities for the national labs, approved by the Regents committee Prior commitments to faculty diversity, California Digital Library (CDL) and research programs Required improvements to the retirement benefits administration system Required UCPath efforts to update general ledger integrations and transition to a new hosting service which will generate future savings Required transition to Oracle finance and budget systems and contractual increases to multiple systemwide technology licenses Support for Title IX administration Risk mitigation areas that prevent potential exposures The initial review of the UCOP-wide and divisional augmentation needs, many of which came from divisional strategic plan goals, resulted in several requests being denied or reduced. To achieve the final proposed budget, most proposed augmentations were denied, for example: • • • • • • • • Expanded academic programs, library collections, and academic personnel management Increased funding for outside legal fees on campus matters per trend analysis; and several inhouse positions to offset outside counsel expenses Delayed support for new UC Health collaborative initiatives to preserve medical center funding Enhanced global investments compliance and development of a real estate management practice Expanded systemwide sourcing capabilities and funding for campus building assessments Additional systems vulnerability testing An annual review of SMG market reference zones Building and marketing the UC brand These items reflected both service delivery opportunities and enhanced risk mitigation strategies. While the President, Executive Budget Committee, and division leaders acknowledge the potential of many of these investments to maintain effectiveness and/or serve the mission, the final budget eliminated them. BOARD OF REGENTS July 2020 -5- Budget Risks The proposed UCOP budget carries greater risk than in a typical year. Systemwide decisions and other impacts related to COVID-19 may yet further impact the UCOP budget. The hiring freeze will place additional workload on the existing workforce which, exacerbated by the eliminated merit program, could increase workforce disruption and year-end retirements. Some FY20-21 projects will be deferred, and service levels may need to be adjusted. Eliminating travel for the first half of the year could become an issue if COVID-19 restrictions subside sooner than anticipated. Perhaps most significant, the unrestricted Strategic Priorities Fund, reduced to $20M, will have little funding to respond to COVID-19 or other urgent/emergent issues that arise during the year, or priorities the incoming president may set. FY19-20 to FY20-21 Budget Summary Figure 2 summarizes and compares the proposed FY20-21 budget with the current budget, including fund balances and reserves. This format is adapted from a California State Auditor recommendation. Figure 2: FY19-20 to FY20-21 Budget Summary1 UCOP Proposed Budget Summary (Adapted from CSA Figure 111) Overall UCOP Variance: Inc/(Dec) $ in millions FY19-20 Budget Variance: Increase/(Decrease) FY19-20 Forecast vs FY19-20 Budget FY19-20 Forecast FY19-20 Forecast vs FY20-21 Budget FY20-21 Budget FY19-20 Budget vs FY2021 Budget UCOP USES2 3 $ ubtot Programs and Initiatives 4 ubtot Central and Administrative Services (excl UCPath) 5, trate Strategic Priorities Fund Unrestricted 5, trate Strategic Priorities Fund Desig. & Restricted SUBTOTAL USES 408.2 406.5 ($1.7) 357.1 ($49.4) ($51.1) 409.8 408.9 (0.9) 381.3 (27.6) (28.5) 30.0 27.3 (2.7) 20.0 (7.3) (10.0) - - 13.5 13.5 13.5 $ 771.9 ($70.8) ($76.1) 90.1 (1.7) (3.6) $ 862.0 ($72.5) ($79.7) $ 848.0 $ 941.7 CPat UCPath $ - $ 842.8 91.8 (1.9) $ 934.6 ($7.2) 93.7 TOTAL USES % Spent: $ ($5.3) 99.2% % Change: -8.5% % Change Unrestricted: -16.6% INCLUDED IN USES ABOVE Fee-For-Service6 $ Pass-Throughs7 Total Fee-For-Service and Pass-Throughs 276.9 $ 364.5 $ CENTRAL OPERATING RESERVE8,9 8 NON-OPERATING AND PROGRAM RESERVES 641.4 274.7 $ 372.7 $ 647.4 $ 15.0 $ 97.9 6/30/20 Balance (2.2) $ 281.0 8.2 $ 6.0 $ 310.9 $ 591.9 $ 6.3 $ 4.1 (61.8) (53.6) (55.5) $ (49.5) Remaining Balance Commitments 10 FORECASTED FUND BALANCES NET OF RESERVES $ Undesignated - UCOP Undesignated - Systemwide 11 Designated Restricted11 Total Forecasted Fund Balances Net of Reserves $ 1 Figure 11 in CSA Report 2016-130 issued April 25, 2017. 4 2 Additional details in Schedule A and Schedule B. Additional details in Schedule C. 5 3 6 2.6 $ 1.5 5.4 5.4 92.6 22.4 3.6 104.1 29.3 $ $ 1.1 70.2 3.6 $ 74.8 Additional details in Schedule D 7 Additional details on pg 11. Additional details in Schedule F18 Additional details in Schedule G. 9 Held in President's Endowment Fund. Additional details on pg 12. 10 Additional details in Schedule H. 11 Designated and Restricted fund balances are intended for their original purpose BOARD OF REGENTS July 2020 -6- FY20-21 Budget: Key Takeaways Budget Summary 1. The UCOP proposed $862M budget is an $80M (8.5%) reduction compared to FY19-20. 2. Net of pass-through and fee-for-service activities, the budget is $270M (10%) lower than FY19-20. 3. UCOP took aggressive measures to lower costs across programs and initiatives, central and administrative services, UCPath operations, and the Strategic Priorities Fund. 4. Significant cuts do not come without notable risks including limited funding for COVID-19 related costs or other urgent needs related to the many academic and administrative programs UCOP manages. 5. To mitigate the campus impact for CENIC, ApplyUC and systemwide library purchases in FY20-21, UCOP will take a one-time, $19.6M distribution from the President’s Endowment Fund for the campuses. 6. UCOP and the EBC will continue to monitor the UCOP budget throughout FY20-21, including managing the impact of systemwide and other COVID-19-related decisions. Programs and Initiatives (P&I) (Schedule C) 7. The FY20-21 budget for Programs and Initiatives is $357M (41%) of the UCOP total budget. 8. State and federal programs make up $256M of the P&I budget; Agriculture and Natural Resources (ANR) and the Tobacco-related Disease Research Program (TRDRP) comprise $220M of that total. 9. Expense projections are $51M (12%) lower due to less revenues for TRDRP, UC National Laboratories research funds, and a refinanced loan for the UC Observatories. 10. Pass-through funding makes up $311M (36%) of the total budget; these funds are distributed to campuses, and researchers, K-12 programs, and other recipients throughout California in support of the University’s teaching, research and public service mission. Central and Administrative Services (CAS) and UCPath (Schedule D) 11. The FY20-21 budget for Central and Administrative Services is $381M (44%) of the UCOP total budget. 12. The CAS budget supports critical systemwide services in finance, human resources, compliance, legal, health, communications, government relations and others. 13. The CAS budget is $29M (7%) lower than FY19-20; reductions are driven primarily by hiring and travel freezes, targeted cuts to unrestricted division budgets, and the transition of CENIC and systemwide library collections to campus fee-based service models (supported in FY20-21 by a one-time PEF distribution). 14. The UCPath operations budget of $90.1M is down from $93.7M in FY19-20 or 3.8% despite significant service growth now that all campuses are live with UCPath. 15. Fee-for-Service activities, primarily in the CAS budget, make up $281M (33%) of the total budget Strategic Priorities Funds (SPF) (Schedules F1 and F2) 16. The Unrestricted Strategic Priorities Fund is reduced from $30M to $20M, a 33% cut. The fund is almost entirely committed at the time of this budget proposal. 17. A new Designated/Restricted Strategic Priorities Fund is included to recognize that other major projects and one-time needs have designated or restricted funds to support them and should not be part of a department’s operating budget. Fund Balances and Reserves (Schedules G, H) 18. Unrestricted fund balances are forecasted to be $1.1M, a 97% reduction from the current year. 19. Designated fund balances are primarily held by UCNL from lab fees collected from the management of multi-billion-dollar federal lab contracts. Fund balances are reviewed by the Regents Labs Committee each July. UCNL balances are 76% of total fund balances. 20. Total reserve balances are $112.9M, forecasted as of June 30, 2020. The majority of the reserves support multi-billion-dollar systemwide national lab contracts and the housing loan programs. BOARD OF REGENTS July 2020 -7- BACKGROUND About the University of California (UC) As the largest university system in the nation, UC serves more than 285,000 students, produces groundbreaking research and is a powerful economic engine for the State of California. Through its 10 campuses, 5 medical centers, and 3 national laboratories, UC provides unparalleled access to upward economic mobility, focuses on its core missions of teaching, research, and public service, and touches the life of every Californian. UC is committed to access, affordability, and excellence with five of the ten campuses designated as Hispanic Serving Institutions (HSIs) for maintaining undergraduate Hispanic enrollment at or above 25%. UC is a $5 billion research enterprise that receives roughly 10% of total federal research dollars awarded annually. A network of libraries house nearly 40 million print volumes, second only to the Library of Congress. Seven UC campuses are members of the prestigious Association of American Universities (AAU), and UC is the only university to manage more than two national laboratories. Approximately 4.7 million outpatient visits take place across the UC health centers each year. About the University of California Office of the President (UCOP) UCOP is the systemwide headquarters of the University of California. UCOP employees manage academic programs and business operations supporting the university’s research, teaching and public service mission. UCOP’s FY20-21 budget of $862.0M is approximately 2.2% of total UC expenditures (over $40 billion per the FY2019 financial statement). The budget primarily supports two areas described below: 1. Academic and Public Service Programs – UCOP manages almost 30 programs that support the teaching, research, and public service mission of the University. These programs provide thousands of students learning and research opportunities; fund researchers across the State through competitive grant programs, and promote access and diversity through its outreach programs. Approximately 36% of the UCOP budget passes through these UCOP programs. Examples include: Research Programs  Tobacco-Related Diseases  Breast Cancer  HIV/AIDs  UC Observatories Teaching Programs  UC Washington Center  UC Sacramento Center  Innovative Learning and Technology Outreach Programs  Student Academic Preparation and Academic Partnerships (SAPEP)  Historically-Black Colleges and Universities  Post-Doctoral Fellowships Other Programs  Agriculture and Natural Resources (ANR)  California Digital Library  UC Press  UC National Laboratories 2. Centralized Services – Several divisions manage systemwide services on behalf of the University. A few examples of these services are:      UCPath Retirement Center Risk services/insurance Capital financing and bonding Corporate accounting      Employee benefit programs HR/Career Tracks Labor negotiations Information technology Student Aid      UG/Transfer Admissions General Counsel Government Relations Compliance and audit Energy purchases BOARD OF REGENTS July 2020 -8- FY20-21 UCOP BUDGET UCOP’s total proposed budget for FY20-21 is $862.0M. UCOP budgets sources and uses of funds. The following sections describe the sources and uses, which are also detailed in Schedules A-E. Sources of Funds In FY20-21, UCOP’s budget provides sources totaling $868.8M which are detailed in the attached Schedule A. As shown in Figure 3 below, 73% of fund sources are either restricted or designated. The June State budget agreement states that, in the absence of federal funding, the three UCOP appropriations (for UCOP, UCPath, and ANR) will be reduced from FY19-20 by $43.2M to $297.0M, or 12.7%. For UCPath, the State budget appropriation reduces State funds by 12.7%, but allows for an increase in the fee-for-service to a level of not to exceed the FY19-20 budget. The three State General Funds appropriations comprise 34% of UCOP budgeted sources of funds. Figure 3: Sources of Funds $ in millions Unrestricted: $238.6M (27%) Designated: $421.7M (49%) Restricted: $208.5M (24%) Unrestricted State General funds include $187.9M in direct appropriation, as well as State funds appropriated for faculty diversity and UC’s capital program. $1.5M in Undesignated fund balances are also included in the Unrestricted sources. 1 Due to timing of sources and uses, the net margin reflects a surplus of $6.7M in designated and restricted funds for FY20-21. Surplus funds, primarily from UCNL and the mortgage program, will be used in subsequent years and/or added to the fund balances for future expenditures. The implementation of a new UCOP budgeting system in FY19-20 enabled the capability of separately budgeting sources and uses and reporting net margin. Additional information can be found in Schedule B. Figure 4 below shows the source changes between FY19-20 and FY20-21 by fund type. BOARD OF REGENTS July 2020 -9- Figure 4: Change in Sources of Funds • $ millions Unrestricted FY19-20 FY20-21 $ % Budget Budget Incr/(Decr) Incr/(Decr) (16.6%) • ($47.4) $ 286.0 $ 238.6 Designated $ 427.7 $ 421.5 (6.2) (1.4%) Restricted $ 228.0 $ 208.5 (19.5) (8.6%) Total $ 941.7 $ 868.6 ($73.1) Fund Type -7.8% • Significant reduction on Unrestricted funds to balance the budget and reflect the reduced State appropriation Reduction on Designated funds driven by ANR and UCPath State appropriation reductions Restricted funds reduction primarily from State tobacco revenues Uses of Funds The FY20-21 budgeted use of funds budget is $862.0M. Programs and Initiatives and Central and Administrative Services combined make up 86% of the budget. UCPath represents 10.5% of the budget, and the Strategic Priorities Funds comprise approximately 4% of the budget. Figure 5 provides an overview of UCOP uses by functional area. Figure 5: Uses of Funds $ in millions Figure 6 below outlines the changes in the budget by functional area. Additional detail on the Uses of Funds, including budgets, forecasts and variances are included in the section below and Schedules A-E. BOARD OF REGENTS July 2020 -10- Figure 6: Change in Uses of Funds $ millions FY19-20 Budget Functional Area $ Programs and Initiatives FY20-21 Budget $ % Incr/(Decr) Incr/(Decr) 408.2 $ 357.1 ($51.1) (12.5%) (7.0%) 409.8 381.3 (28.5) UCPath 93.7 90.1 (3.6) (3.8%) Strategic Priorities Fund, Unrestricted 30.0 20.0 (10.0) (33.3%) Central/Admin Services - 13.5 13.5 $ 941.7 $ 862.0 ($79.7) (8.5%) excl. UCPath $ 848.0 $ 771.9 ($76.1) (9.0%) Strategic Priorities Fund, Desig. & Restricted Total 0.0% The total budget has decreased by 8.5% , or 9% excluding UCPath The unrestricted Strategic Priorities Fund has been cut by 33%, from $30M to $20M Programs and Initiatives The proposed FY20-21 Programs and Initiatives budget is $357.1M, or 41.4% of the uses of funds. Figure 7 below shows the distribution between approximately 30 State/Federal and systemwide programs. Most programs are managed by Academic Affairs as part of the research and public service the university provides on behalf of the state and federal governments such as oversight of the TobaccoRelated Disease Research Program (TRDRP). The majority of these dollars are pass-throughs to campuses and other research groups where the money is spent. The complete list of programs, budgets, forecasts and comparisons, can be found in Schedule C. Figure 7: Programs and Initiatives $ in millions 72% - State/Federal Programs are either required by legislation or operated by UC on behalf of the State or Federal government, e.g., ANR and the Tobacco-Related Disease Research program. 28% - Systemwide Programs benefit the UC campuses and many other statewide recipients, e.g., SAPEP, UCPress, UC research and astronomy programs. UCOP forecasts quarterly, and reviews variances accordingly. The Q3 Programs and Initiatives forecast totals $406.3M or $1.9M (-0.5%) lower than budget. Lower forecasted spend for TRDRP and the California Breast Cancer Research programs are offset by increases to UC Mexico and the Lab Funds Research programs. Variances for the current year and comparison to the FY20-21 budget are in Schedule C. Pass-through funds flow through the UCOP budget directly to campuses or other California institutions, individuals or researchers. The largest pass-through program is Agriculture and Natural Resources (ANR) which UC operates as the land-grant University for the State of California (see Schedule E). The majority of pass-through funds are distributed by the Academic Affairs division for research, diversity programs, online learning initiatives, undocumented students and more. BOARD OF REGENTS July 2020 -11- Figure 8: Pass-through Funds Programs $ in millions Pass-Throughs Agriculture & Natural Resources Research Grant Programs UC Observatories Public Service Programs National Laboratory Programs UC Research Initiative Diversity Initiatives Online Education Initiatives Public Service & Law Fellowship iCAMP Other Academic Pass-Throughs UC Health Initiatives UC-Mexico Programs Undocumented Students UC Libraries All Others Total Pass-Throughs FY19-20 Budget $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 173.2 93.2 22.2 11.6 14.0 9.7 5.0 4.0 5.2 2.5 1.9 2.2 11.8 8.1 364.5 FY19-20 Forecast $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Year-Over-Year Decrease $ Year-Over-Year Decrease % 172.4 86.3 21.8 10.9 20.7 8.9 8.2 4.6 5.3 2.2 3.8 1.9 5.0 2.2 11.7 7.0 372.7 FY20-21 Budget $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 162.3 70.6 16.1 9.3 9.8 7.4 6.2 4.3 4.2 3.5 4.2 2.0 2.0 2.2 0.3 6.7 310.9 • • • The top three pass-through programs account for 80% of the total ANR decrease is driven by a 12.7% lower appropriation of State funds Research Grant Programs are lower due to timing of available grant funds compared to prior year (53.6) -14.7% For FY20-21, the pass-through funds decreased $53.6M, or 14.7%. Of the total, $23M is a reduction in projected revenues for the Tobacco Disease research program due to timing of tax receipts. Approximately $11M is due to the reduction in the State appropriation for the Agriculture and Natural Resources program, and $6M is related to restructuring an internal loan for the UC Observatories. Systemwide library collection funds are primarily funded by campus transfers directly to UCSD for purchasing on behalf of all the campuses. After FY20-21, the portion that UCOP used to fund will also be transferred by the campuses directly to UCSD rather than passing through the UCOP budget. Central and Administrative Services Central and Administrative Services make up $381.3M or 44.2% of the total budget. Figure 9 below and Schedule D provide a budget overview by division. The Central and Administrative Services budget supports critical systemwide services and UCOP internal operations. The Operations division, which makes up a third of this budget, provides systemwide HR, benefits and retirement management, technology services, energy programs, strategic planning, and internal UCOP operations. Figure 9: Central and Administrative Services $ in millions BOARD OF REGENTS July 2020 -12- UCOP forecasts quarterly and reviews variances accordingly. The Q3 forecast for Central and Administrative Services totals $408.9M or $0.9M (-0.2%) lower than the budget. Primary drivers include lower spend for the UC Health collaborative and CFO (procurement, capital assets), offset by higher costs in UC Legal, COO, UC Investments and Academic Personnel and Programs. Projected variances for the current year and a comparison to the FY20-21 budget are shown on Schedule D. The majority of UCOP Fee-for-Service activities, shown in Figure 10 below, are contained within the CAS budget. Figure 10: Fee-for-Service Activities $ in millions Fee-for-Service UCPath Operations Office of the General Counsel Investments & Asset Management UC Retirement System Employee Benefits Administration UC Health Collaborative Risk Management Information Technology Services UCPath Projects Bond Management Patent Royalty Administration UC Mortgage Origination Plan Other Services Total Fee-for-Service FY19-20 Budget $ $ FY19-20 Forecast FY20-21 Budget 93.7 $ 45.4 37.6 29.4 27.7 20.2 6.9 6.2 3.4 2.7 2.1 1.6 91.8 $ 51.5 39.7 25.4 28.3 14.4 6.1 7.3 2.8 2.6 2.0 2.7 90.1 44.7 39.7 34.9 27.2 17.8 6.7 4.6 4.4 3.0 2.4 2.2 3.3 276.9 $ 274.7 $ 281.0 Year over Year Increase $ Year over Year Increase % • • The top five fee-forservice activities account for 84% of the total. The overall increase in Fee-for-Service activities is driven mainly by work on the pension administration system 4.1 1.5% Fee-for-Service activities are centrally performed functions that UCOP operates on behalf of the UC system to avoid redundancy on campuses and to save costs. UCPath is the single largest fee-for-service operation. UC Legal fees fund third-party legal costs that UC Legal coordinates on behalf of the campuses. Centrally UCOP manages investment, systemwide retirement and employee benefit programs. UCPath UCPath provides HR and payroll services to all UC locations and over 230,000 employees. The final campus deployments at UC San Diego and UC San Francisco were recently completed. Lawrence Berkeley National Laboratory with just over 3,600 employees, is scheduled to go live in August 2020. For FY20-21, the UCPath operating budget is $90.1M, down 3.8% from $93.7M in FY19-20. The budget includes $45.7M in direct State appropriations, which reflects a 12.7% reduction from the State’s previous $52.4M level. Consistent with past practice, UCPath will fund $46.9M from a W-2 fee-forservice campus allocation model and $1.8M fee-for-service for LBNL. Reductions in the UC Path budget will put a strain on the center’s ability to meet its service level commitments to the locations. Two critical one-time projects, shown in the Designated SPF (see Schedule F-2) include: • • A $1.9M project to migrate system hosting to Amazon Web Services, yielding significant cost savings beginning in FY21-22 A $1.8M project on behalf of the UC National Laboratories to bring LBNL onto the platform BOARD OF REGENTS July 2020 -13- UCPath has a rigorous governance process in place to oversee the budget, expenditures, and service levels. UCOP and the campuses will continue to advocate restoring the fee-for-service model for the entire UCPath budget, as this model allocates the costs appropriately across all locations. The current hybrid funding model is complex. Unrestricted Strategic Priorities Fund (SPF) The SPF was created in FY17-18 to fund short-term programmatic needs, administrative projects, emergent or urgent priorities, and presidential initiatives. While some funds would be committed by the time of the budget presentation, there would also be an uncommitted allocation, recognizing that the president needs some funding available throughout the year to fund urgent project and priorities. The unrestricted SPF allows for more stability in planning divisional budgets as they no longer need to increase or decrease their budgets for one-time projects. To achieve the budget reduction target this year, SPF funding has been reduced from $30M to $20M, or 33%. Schedule F-1 details the projected FY19-20 forecast and FY20-21 known commitments of approximately $19.9M, which include: • • • • • On-going support for undocumented students Programs that support the academic mission, students, and researchers Several IT projects to improve technology and software systems (HR, finance, and others) Searches, audit responses, and legal fees Presidential initiatives, described in further detail in Appendix 2 Notably, the FY20-21 SPF has low uncommitted availability. Historically, events do occur during the year such as this year’s COVID-19 pandemic that are unforeseen and require resources. In FY20-21, the budget will have few funds immediately available to support emergent needs or internal priorities. Designated and Restricted Strategic Priorities Fund (SPF) In addition to the unrestricted SPF, a new SPF for one-time designated and restricted projects has been added. This Designated and Restricted SPF provides the transparency of short-term projects funded on designated or restricted funds so they may be accounted for separately from annual departmental operating budgets. Schedule F-2 shows the planned projects to be funded by this SPF. These projects appropriately utilize designated and restricted funds and although they increase the overall size of the UCOP budget, they do not have the same flexibility as unrestricted funds. This year, major projects include improving the retirement administration system and processes, completing a high ROI project to move UCPath hosting to Amazon Web Services and configuring the UCPath system to meet the needs of LBNL. All requests were reviewed by the Executive Budget Committee, UCOP leadership, and the President; only critical projects are budgeted. BOARD OF REGENTS July 2020 -14- RESERVES UCOP reserves are funds intentionally allocated and accrued from fund sources for use in the event of revenue disruption, maintenance of assets including buildings and infrastructure, or in anticipation of a large expense. UCOP completed a comprehensive review of best practices and peer benchmarking and established target funding levels for all reserves. The largest UCOP reserves, for the National Labs and UC Housing Loan programs, are reserves against multi-billion-dollar portfolios that are managed by UCOP and overseen by the Regents. Reserves are not fund balances. While a reserve is intentionally accrued to manage risk, a fund balance is the net position, or the cumulative revenues (sources) received in excess of expenditures (uses) for a fund at any given time. Reserve funds are maintained separately from operating funds in order to manage each more effectively and transparently. Reserve Target Funding Levels In March 2019, UCOP established and reviewed guiding principles for UCOP reserves with the Board of Regents. The guiding principles include target funding levels, and controls for monitoring, reporting, and drawing on funds. In January, 2018 the Regents adopted the Policy on a Central Operating Reserve for the University of California Office of the President. The policy and presidential guidelines establish the size, funding source and circumstances for drawing on the Central Operating Reserve. This reserve target is set at $15M or at least 3.5% of covered funds and expenses against the principle of the President’s Endowment Fund. The $15M target for the Central Operating Reserve is unchanged for FY20-21. Forecasted Reserves UCOP reports reserve balances and target funding levels to the Regents twice annually, during the presentation of the budget, and after fiscal year close. At the time the budget is presented, the fiscal year is not yet finalized, and therefore reserve balances are forecasted. Figure 11 below projects a total reserve balance of $112.9M as of June 30, 2020. Details are in Schedule G. Figure 11 – UCOP Reserve Balances $ in millions UCOP RESERVES Building and Capital Assets Reserves Variance: 6/30/20 6/30/20 Reserve Reserve Target Reserve Target Forecasted Over Max / (Under Maximum Minimum Reserve Min) $ 3.0 $ 8.5 $ 3.2 $ - Program Reserves1 65.9 Other Required Reserves Sub-Total Program and Non-Operating Reserves $ 27.3 96.2 $ $ 111.2 $ Central Operating Reserve 2 TOTAL UCOP RESERVES 15.0 83.3 37.6 129.4 $ 15.0 144.4 $ 56.8 (9.1) 38.0 97.9 0.4 15.0 - 112.9 Program Reserves are currently under the minimum due to two new UCNL reserves, increasing over the next 3 to 10 years to the target amount. FY19-20 approved spend plan here: https://regents.universityofcalifornia.edu/regmeet/july19/n1.pdf 2 See Schedule G for additional details. Total reserve balances are under the target maximum, however some reserves may be slightly over the target maximum. 1 Total reserves of $112.9M are within the established target funding range minimum of $111.2M and maximum of $144.4M. New reserves are being established for new contracts in the Office of National Labs. The Housing Loan program reserve was identified as having a forecasted $.4M balances in excess BOARD OF REGENTS July 2020 -15- of its maximum target, and was therefore reviewed. This reserve requirement has been increased due to growth in the overall size of the loan portfolio from $1.58 to $1.65 billion, and an increase in UCowned loans. The Regents determined in January 2012 that the program is required to maintain a 3.5% maximum reserve target. Given the current financial crisis, and need to accommodate requests for loan forbearance, the Office of Loan Programs recommended to management increasing the maximum target to 4.5%, with a resulting target maximum of to $37.6M. The forecasted reserve is $.4M greater than the maximum. FUND BALANCES Fund balances reflect the difference at a point in time between sources and uses, less any known encumbrances and commitments. Because fund balances are one-time non-recurring funding streams, they must not be relied upon to fund recurring operations. Schedule H, UCOP Fund Balances by Fund Type, provides additional detail to the fund balances described below. UCOP has taken several steps to improve the management and transparency of fund balances including development of: • • • Clearer definitions and a decision tree used to revalidate the categorization of all funds Reports providing actual and forecasted fund balances and commitments at year-end (June 30) Repeatable processes to categorize funds, assess all potential needs or uses, and reallocate funds to the campuses, as available Actual and Forecasted Balances To develop the FY20-21 budget, UCOP analyzed actual fund balances as of March 31, 2020 and then forecasted fund balances for June 30, 2020. UCOP also reviewed known commitments identified for next year. Restricted or designated fund balances are used for their intended purpose. Per the California State Auditor (CSA) recommendation to reallocate fund balances to the campuses, UCOP has undertaken an extensive review of its balances over the last three years, and has reallocated $166.3M to the campuses, of which $148.4M was from fund balances. The details of this reallocation were covered here, in the November 2019 budget report to the Regents. Similar to last year, and because balances are forecasted to be much lower this year, UCOP will review final year-end balances before identifying any further reallocation opportunities. Figure 12 shows a breakdown of fund balance by fund type, forecasted as of June 30, 2020. Overall, fund balances are projected to decrease by $74.4M or 50% compared to last year, the largest reduction (97%) taking place in the unrestricted funds. Figure 12: UCOP Fund Balances $ millions Unrestricted Designated Restricted Total Fund Balance 6/30/20 Change in Fund 6/30/19 Forecasted Remaining Balance % Change Balance Balance Balance Commitments $ 40.5 $ 8.0 $ 6.9 $ 1.1 $ (39.4) -97.4% 90.4 92.6 22.4 70.2 (20.2) -22.3% 18.4 3.6 3.6 (14.8) -80.6% $ 149.3 $ 104.1 $ 29.3 $ 74.8 $ (74.4) -49.9% BOARD OF REGENTS July 2020 -16- Unrestricted Fund Balances afford the most flexibility for use. Unrestricted balances total $1.1M or 1.5% of the total remaining fund balance. Historically, UCOP relied on these balances to address emergent priorities, but this practice was replaced in FY18-19 with the establishment of the Strategic Priorities Fund. Some of the key causes of the change in unrestricted fund balances include: • • $27.3M committed for the FY19-20 UCOP Strategic Priorities Fund $10.2M committed to campus-specific seismic work, interest on commercial loans and systems replacements At this time, given that only $1.1M remains in the forecasted balance, and the uncertain State funding for the FY20-21 year, UCOP is not recommending a reallocation of this fund balance. Balances will be reviewed by UCOP after the June 30, 2020 fiscal close and reported in the FY19-20 Budget-to-Actuals item presented at the November 2020 Regents Meeting. Designated Funds Balances total $70.2M or 94% of the forecasted remaining fund balance. A designated balance is considered committed by the regents or administration for an intended purpose. The largest balance, $58.3M, or 78% of total fund balances, is regents-designated for the management of the UC National Laboratories and the Lab Fees Research Program. The Office of National Labs provides a spending and reserves plan to the Regents’ Labs Committee each July for approval. Designated fund balances also include balances for self-funded programs. The causes of change are due to: • $13.4M increase in the Lab LLC program due to timing of receipt of fee income • $17.6M decrease in the Lab Fees Research program to fund campus research opportunities • $7.7M decrease in UC Health funds for the health collaborative strategic initiatives • $6.6M decrease in endowment cost recovery funds planned for campus development work • $5.6M decrease in iCAMP capital asset planning funding for work to be done through FY20-21 Restricted Fund Balances by definition, cannot be reallocated for other purposes. Contracts and grants are funded on a reimbursement basis and thus carry no balances. Federal and special State appropriations are forecasted to be slightly lower based on disbursements to the campuses and laboratories. Restricted balances represent only 5% of the forecasted remaining fund balance. EXECUTIVE BUDGET COMMITTEE RECOMMENDATIONS The Executive Budget Committee (EBC) issued its annual budget letter to President Napolitano in midApril. Despite the pandemic crisis and many competing priorities, the EBC actively engaged with UCOP throughout the budget development process and provided thoughtful guidance. The EBC recommended that UCOP plan the FY20-21 year with caution and slow spending growth given today’s very uncertain environment. The Committee’s feedback, recommendations and guiding principles include support for: • • • A return to the campus assessment funding model to enable more integrated planning between UCOP, the campuses and the system UCOP’s 5% savings target on all unrestricted funds (the president subsequently increased the target to 9% for the July budget proposal) Modest and managed growth on designated funds that (1) show return on investment, or (2) provide net new revenue or savings BOARD OF REGENTS July 2020 • • • -17- Implementing campus fee-based-service models for services such as the University’s high-speed internet connectivity (CENIC) and cybersecurity (FireEye), the California Digital Library (CDL) content purchases, and the ApplyUC student application support, and phasing them in Funds to stabilize and enhance the UCPath system, however at a reduced level than requested Deferring the FY20-21 UCOP budget presentation to allow more time to better understand the current financial uncertainty facing the university The president considered the Committee’s recommendations and made adjustments to the budget proposal accordingly. Specifically, the president: • • • • • Directed divisions to identify a 9% reduction target of $25.7M on all unrestricted funds Managed and limited growth and investment in key areas such that in total the UCOP budget was balanced, incorporated State budget appropriation reductions, reduced the unrestricted budget by 16.6%, and the total UCOP budget by 8.5% Reduced funding for UCPath operations and enhancement projects Implemented campus fee-based service models for CENIC, CDL and ApplyUC, which in total represent $19.6M. Recognizing the challenging financial circumstances facing the campuses, the president is phasing these in over the next year by providing a one-time distribution of $19.6M from the President’s Endowment Fund and allowing time for UCOP and the campuses to review the level of service in future years. Deferred the May budget item until July after the Governor’s May revised budget was published. PRESIDENT’S RECOMMENDATION UCOP has developed a conservative plan for FY20-21 that delivers a substantial expenditure reduction, complies with available State fund allocations and allows time to assess longer-range objectives during the coming year. The proposed budget is comprehensive, transparent and demonstrates UCOP’s contributions to the University’s teaching, research, and public service mission. Pursuant to Regents Policy 5101, the President of the University recommends approval of the UCOP FY20-21 Budget by the Board of Regents. UNIVERSITY .J Appendices BOARD OF REGENTS July 2020 -19- Appendix 1 APPENDIX 1: UCOP SCHEDULES Schedule A Sources and Uses by Year Overall UCOP $ in millions Variance Increase/(Decrease) Budget Forecast Budget FY19-20 FY19-20 FY20-21 FY19-20 Forecast vs FY19-20 Budget FY20-21 Budget vs FY19-20 Forecast FY20-21 Budget vs FY19-20 Budget SOURCES Unrestricted Sources Undesignated State General Funds 209.8 218.0 193.3 8.2 (24.7) (16.5) Investment Income 25.2 38.2 26.1 13.0 (12.1) 0.9 Other Unrestricted Sources 17.0 29.5 17.8 12.5 (11.7) 0.8 Undesignated Fund Balance 34.1 2.2 1.5 (31.9) (0.7) (32.6) $286.0 $287.9 $238.6 $1.9 ($49.3) ($47.4) Subtotal - Undesignated Designated Regents-Designated 24.5 30.5 29.5 6.0 (1.0) 5.0 Program-Designated 236.9 236.9 234.2 0.0 (2.7) (2.7) UCPath Fee-For-Service 41.3 39.4 48.7 (1.9) 9.3 7.4 UCPath State General Funds 52.4 52.4 45.7 0.0 (6.7) (6.7) UC ANR State General Funds 72.6 71.8 63.4 (0.8) (8.4) (9.2) $427.7 $431.0 $421.5 $3.3 ($9.5) ($6.2) $713.7 $718.9 $660.2 $5.2 ($58.7) ($53.5) Gifts and Endowments 12.5 12.7 13.3 0.2 0.6 0.8 Contracts and Grants 51.6 50.8 48.8 (0.8) (2.0) (2.8) Subtotal - Designated Subtotal - Unrestricted Restricted Sources Federal and State Appropriations/Regulations Subtotal - Restricted Total Sources 164.0 152.0 146.5 (12.0) (5.5) (17.5) $228.0 $215.5 $208.5 ($12.5) ($7.0) ($19.5) $941.7 $934.4 $868.7 ($7.3) ($65.7) ($73.0) Programs and Initiatives Campus Programs State/Federal Programs Systemwide Programs 0.0 0.9 0.0 0.9 (0.9) 0.0 290.1 281.1 256.2 (9.0) (24.9) (33.9) 118.2 124.6 100.9 6.4 (23.7) (17.3) $408.2 $406.5 $357.1 ($1.7) ($49.4) ($51.1) 61.2 61.6 51.2 0.4 (10.4) (10.0) 7.3 6.4 6.7 (0.9) 0.3 (0.6) External Relations & Communications 17.8 16.9 18.2 (0.9) 1.3 0.4 Finance 45.7 39.7 47.4 (6.0) 7.7 1.7 145.8 150.3 130.2 4.5 (20.1) (15.6) Subtotal - Programs and Initiatives Central and Administrative Services Academic Affairs Ethics & Compliance Operations President's Executive Office 4.6 4.1 4.4 (0.5) 0.3 (0.2) Secretary of the Regents 3.6 3.7 3.0 0.1 (0.7) (0.6) Systemwide Academic Senate 2.4 2.2 2.2 (0.2) 0.0 (0.2) UC Health 29.1 23.4 26.3 (5.7) 2.9 (2.8) UC Investments 34.3 36.6 33.6 2.3 (3.0) (0.7) UC Legal 58.0 64.0 58.1 6.0 (5.9) 0.1 $409.8 $408.9 $381.3 ($0.9) ($27.6) ($28.5) 30.0 27.3 20.0 (2.7) (7.3) (10.0) 0.0 0.0 13.5 0.0 13.5 13.5 93.7 91.8 90.1 (1.9) (1.7) (3.6) $941.7 $934.6 $862.0 ($7.2) ($72.5) ($79.7) 0.0 0.0 6.7 0.0 6.7 6.7 Pass-Throughs 364.5 372.7 310.9 8.2 (61.8) (53.6) Fee-For-Service 276.9 274.7 281.0 (2.2) 6.3 4.1 $641.4 $647.4 $591.9 $6.0 ($55.5) ($49.5) Subtotal - Cent / Admin Svcs Strategic Priorities Fund - Unrestricted Strategic Priorities Fund - Designated / Restricted UCPath Center Operations TOTAL USES NET MARGIN SURPLUS (DEFICIT) Included in Sources and Uses Above Total Fee-For-Service and Pass-Throughs BOARD OF REGENTS July 2020 -20- Appendix 1 Notes to Schedule A: Sources Unrestricted Sources 1. 2. 3. 4. State General Funds: $193.3M per the State budget appropriation. Investment Income: $26.1M estimate based on historical returns; approximately flat to FY19-20. Other Unrestricted: $17.8M estimate based on historical returns; approximately flat to FY19-20. Undesignated Fund Balance: $1.5M estimate based on Q3 Forecast. Designated Sources 5. 6. 7. 8. 9. Regents Designated: $29.5M increased by $5.0M (20.4%) for UCNL for expansion opportunities. Program-Designated: $234.2M decreased by $2.7M (-1.1%) primarily in the UC Health Collaborative based on slower growth projections. UCPath Fee-For-Service: $48.7M increased by $7.4M (17.9%), offsetting the reduction in state funds (as approved by the State). UCPath State General Funds: $45.7M per the State budget appropriation; decreased by $6.7M (-12.7%). UC ANR State General Funds: $63.4M per the State budget appropriation; reduced by $9.2M (-12.7%). Restricted Sources 10. Gifts and Endowments: $13.3M increased by $0.8M (6.4%) due to greater anticipated endowment payout and program fundraising. 11. Contracts and Grants: $48.8M decreased by $2.8M (-5.4%) driven by reductions to ANR’s extramural funding. 12. Federal and State Appropriations: $146.5M decreased by $17.5M (-10.7%) due to the timing of Prop 56 funds for tobacco disease research. Notes regarding Uses are appended to Schedules, C, D and F BOARD OF REGENTS July 2020 -21- Appendix 1 Schedule B Expenditure by Fund Overall UCOP $ in millions FY20-21 Undesignated TOTAL SOURCES Designated Budget Restricted 238.6 421.5 208.5 868.7 256.2 USES Programs and Initiatives 0.9 107.2 148.1 39.0 60.4 1.5 100.9 $40.0 $167.6 $149.6 $357.1 39.5 10.7 1.0 51.2 6.7 0.0 0.0 6.7 11.8 5.5 0.9 18.2 Finance 23.7 21.4 2.4 47.4 Operations 74.1 10.5 45.6 130.2 President's Executive Office 4.0 0.3 0.1 4.4 Secretary of the Regents 3.0 0.0 0.0 3.0 Systemwide Academic Senate 2.1 0.0 0.1 2.2 UC Health 3.4 21.6 1.4 26.3 State/Federal Programs Systemwide Programs Subtotal - Programs and Initiatives Central and Administrative Services Academic Affairs Ethics & Compliance External Relations & Communications UC Investments UC Legal Subtotal - Central and Admin. Services (excl UCPath) Strategic Priorities Funds SUBTOTAL USES UCPath Operations TOTAL USES NET MARGIN: SURPLUS (DEFICIT) 1 1Due 0.0 33.6 0.0 33.6 10.4 46.8 0.9 58.1 $178.6 $150.3 $52.3 $381.3 20.0 7.2 6.3 33.5 $238.6 $325.1 $208.2 $771.9 0.0 90.1 0.0 90.1 $238.6 $415.2 $208.2 $862.0 $0.0 $6.3 $0.3 $6.7 to timing of sources and uses, the net margin reflects a surplus for FY20-21. Surplus funds will be used in subsequent years and/or added to the fund balances for future expenditures. The implementation of a new UCOP budgeting system in FY19-20 enabled the capability of separately budgeting sources and uses. Unrestricted funds are budgeted centrally by UCOP’s budget team. UCOP divisions budget designated and restricted sources based on anticipated revenues such as UC Office of National Laboratories’ (UCNL) lab management fees or restricted revenues as in the case for Tobacco-related Disease Research (Proposition 56) funds. Revenues and expenses may differ due to timing differences. Of the $6.5M budget surplus. $6.2M is from designated funds, mainly attributed to anticipated UCNL fee income ($4.3M) which will be allocated through the annual spend plan approved by the Regents, and the mortgage origination program fees ($1.7M). BOARD OF REGENTS July 2020 -22- Appendix 1 Schedule C Budget by Programs and Initiatives Programs and Initiatives $ in millions Variance Increase/(Decrease) Budget Forecast Budget FY19-20 FY19-20 FY20-21 FY19-20 Forecast vs FY19-20 Budget FY20-21 Budget vs FY19-20 Forecast FY20-21 Budget vs FY19-20 Budget PROGRAMS AND INITIATIVES Campus Programs 0.0 0.9 0.0 0.9 (0.9) 0.0 178.7 177.7 167.2 (1.0) (10.5) (11.5) 12.8 8.1 12.9 (4.7) 4.8 0.1 California Subject Matter Project (CSMP) 8.6 7.7 8.1 (0.9) 0.4 (0.5) Gaining Early Awareness and Readiness for Undergraduate Programs 3.5 4.2 3.2 0.7 (1.0) (0.3) Graduate Medical Education 2.0 2.1 2.1 0.1 0.0 0.1 Office of the National Laboratories (UCNL) 5.4 5.4 6.8 0.0 1.4 1.4 State/Federal Programs Agriculture and Natural Resources (ANR) California Breast Cancer Research Program Other State/Federal Programs Tobacco-Related Disease Research Program (TRDRP) UC Research Initiatives: Cancer Research Coordinating Committee (CRCC) 0.5 0.8 0.4 0.3 (0.4) (0.1) 76.2 72.6 53.0 (3.6) (19.6) (23.2) 2.3 2.3 2.4 0.0 0.1 0.1 $290.1 $280.9 $256.2 ($9.2) ($24.7) ($33.9) California HIV/AIDS Research Program (CHRP) 8.8 8.7 8.6 (0.1) (0.1) (0.2) Eligibility in the Local Context (ELC) 1.0 0.8 0.9 (0.2) 0.1 (0.1) Historically Black Colleges and Universities (HBCU) Fellowship Initiative 1.8 2.0 1.7 0.2 (0.3) (0.1) Historically Black Colleges and Universities (HBCU) Summer Research Initiative 1.8 2.0 1.9 0.2 (0.1) 0.1 Innovative Learning Technology Initiative (Online Education) 9.0 9.0 8.1 0.0 (0.9) (0.9) Natural Reserve System (NRS) 3.0 2.2 2.5 (0.8) 0.3 (0.5) Other Systemwide Programs 2.4 3.4 2.3 1.0 (1.1) (0.1) President's Postdoctoral Fellowship Program (PPFP) 0.0 0.8 0.0 0.8 (0.8) 0.0 San Joaquin Valley PRIME program 1.9 1.9 1.9 0.0 0.0 0.0 SAPEP 8.4 8.5 6.6 0.1 (1.9) (1.8) 7.5 7.5 7.5 0.0 0.0 0.0 14.6 14.6 8.8 0.0 (5.8) (5.8) Subtotal - State/Federal Programs Systemwide Programs UC Astronomy Programs: University of California Observatories (UCO) University of California Astronomy Programs: W.M. Keck Observatory (Keck) University of California Institute for Mexico and the United States (UC MEXUS) 0.0 3.0 0.0 3.0 (3.0) 0.0 University of California Press 23.9 22.6 23.4 (1.3) 0.8 (0.5) UC Research Initiatives: Laboratory Fees Research Program (LFRP) (4.3) 14.9 21.2 10.6 6.3 (10.6) UC Research Initiatives: Multi-Campus Research Programs and Initiatives (MRPI) 8.0 7.6 8.6 (0.4) 1.0 0.6 University of California Washington Center (UCDC) 8.2 6.6 7.4 (1.6) 0.8 (0.8) Valley Fever Research Subtotal - Systemwide Programs TOTAL USES 2.9 2.0 0.0 (0.9) (2.0) (2.9) $118.2 $124.6 $100.9 $6.4 ($23.7) ($17.3) $408.2 $406.3 $357.1 ($1.9) ($49.2) ($51.1) BOARD OF REGENTS July 2020 -23- Appendix 1 Notes to Schedule C: Budget by Programs and Initiatives FY20-21 Budget Increased/Decreased Compared to FY19-20 Budget > $.5M State / Federal Programs 1. 2. 3. 4. Agriculture and Natural Resources (ANR): $167.2M decreased by $11.5M (-6.4%) due to State general and extramural funds reductions. California Subject Matter Project (CSMP): $8.1M decreased by $0.5M (-5.8%) due to timing of fund transfers. Office of the National Laboratories (UCNL): $6.8M increased by $1.4M (25.9%) due to business development and the SoCal Hub project, offset by hiring/travel freeze. Tobacco-Related Disease Research Program (TRDRP): $53.0M decreased by $23.2M (-30.4%) due to the timing of Prop 56 tax revenues. Systemwide Programs 5. 6. 7. 8. 9. 10. 11. 12. 13. Innovative Learning Technology Initiative (Online Education): $8.1M decreased by $0.9M (-10.0%) due to the anticipated reduction in the State’s UC appropriation. Natural Reserve System (NRS): $2.5M decreased by $0.5M (-16.7%) due to reduction in grant expenses. SAPEP: $6.6M decreased by $1.8M due to a redirection of funds directly to campuses; total funding will remain unchanged. University of California Astronomy Programs: W.M. Keck Observatory (Keck): $8.8M decreased by $5.8M (-39.7%) due to the restructuring of an internal loan to a longer term; no operational impact. UC Press: $23.4M decreased by $0.5M (-2.1%) from hiring/travel freeze. UC Research Initiatives: Laboratory Fees Research Program (LFRP): $10.6M decrease of $4.3M (-28.9%) due to a one-time, timing decrease in grant awards for the UCNL Fees Research Program. UC Research Initiatives: Multi-Campus Research Programs and Initiatives (MRPI): $8.6M increased $0.6M (7.5%) due to a strategic augmentation to provide grant funds for campuses. University of California Washington Center (UCDC): $7.4M decreased $0.8M (-9.8%) due to reduced utility expenses and hiring/travel freeze. Valley Fever Research: $0.0M; this was a one-time $2.9M State appropriation in FY19-20. BOARD OF REGENTS July 2020 -24- Appendix 1 Schedule C-1 Programs and Initiatives by Fund $ in millions FY20-21 Unrestricted Undesignated Designated Restricted Funds Budget PROGRAMS AND INITIATIVES State/Federal Programs Agriculture and Natural Resources (ANR) 0.2 96.0 71.0 167.2 California Breast Cancer Research Program 0.0 0.0 12.9 12.9 California Subject Matter Project (CSMP) 0.2 4.5 3.4 8.1 Gaining Early Awareness and Readiness for Undergraduate Programs 0.0 0.0 3.2 3.2 Graduate Medical Education 0.0 0.0 2.1 2.1 Office of the National Laboratories (UCNL) 0.0 6.8 0.0 6.8 Other State/Federal Programs 0.5 (0.1) 0.0 0.4 Tobacco-Related Disease Research Program (TRDRP) 0.0 0.0 53.0 53 UC Research: Cancer Research Coordinating Committee (CRCC) 0.0 0.0 2.4 2.4 0.9 107.2 148.1 256.2 California HIV/AIDS Research Program (CHRP) 0.0 8.6 0.0 8.6 Eligibility in the Local Context (ELC) 0.9 0.0 0.0 0.9 Historically Black Colleges and Universities (HBCU) Fellowship Initiative 1.7 0.0 0.0 1.7 Historically Black Colleges and Universities (HBCU) Summer Research Initiative 1.9 0.0 0.0 1.9 Innovative Learning Technology Initiative (Online Education) 0.0 8.1 0.0 8.1 Natural Reserve System (NRS) 1.8 0.0 0.7 2.5 Other Systemwide Programs 2.2 0.1 0.1 2.3 San Joaquin Valley PRIME program 0.0 1.9 0.0 1.9 SAPEP 4.9 1.0 0.7 2.0 UC Astronomy: University of California Observatories (UCO) 7.5 0.0 0.0 7.5 UC Astronomy: W.M. Keck Observatory (Keck) 8.8 0.0 0.0 8.8 University of California Press 1.0 22.4 0.0 23.4 UC Research: Laboratory Fees Research Program (LFRP) 0.0 10.6 0.0 10.6 UC Research: Multi-Campus Research Programs and Initiatives (MRPI) 6.8 1.9 0.0 8.6 University of California Washington Center (UCDC) 1.5 5.9 0.0 7.4 39.0 60.4 1.5 100.9 $40.0 $167.6 $149.6 $357.1 Subtotal - State/Federal Programs Systemwide Program Subtotal - Systemwide Programs TOTAL USES BOARD OF REGENTS July 2020 -25- Appendix 1 Schedule D Budget by Division and Sub-Division Central and Administrative Services $ in millions Variance Increase/(Decrease) FY19-20 FY19-20 FY20-21 Budget Forecast Budget FY19-20 Forecast vs FY19-20 Budget FY20-21 Budget vs FY19-20 Forecast FY20-21 Budget vs FY19-20 Budget CENTRAL AND ADMINISTRATIVE SERVICES USES Academic Affairs Academic Personnel and Programs 29.4 31.7 19.2 2.3 (12.5) Diversity and Engagement 0.8 1.9 1.1 1.1 (0.8) 0.3 Immediate Office Institutional Research and Academic Planning 6.5 5.6 6.2 (0.9) 0.6 (0.3) 4.1 4.8 5.1 0.7 0.3 10.6 7.9 8.7 (2.7) 0.8 Research and Innovation Student Affairs (10.2) 1.0 (1.9) 9.7 9.8 10.8 0.1 1.0 1.1 61.2 61.6 51.2 $0.4 ($10.4) ($10.0) 7.3 6.4 6.7 ($0.9) $0.3 ($0.6) Alumni and Constituent Affairs 0.7 0.6 0.5 (0.1) (0.1) (0.2) Executive Communications & Engagement 0.8 0.7 0.8 (0.1) 0.1 0.0 Federal Government Relations 2.8 2.7 2.9 (0.1) 0.2 0.1 Institutional Advancement 2.0 1.9 2.3 (0.1) 0.4 0.3 Legislative Analysis 0.8 0.8 0.8 0.0 0.0 0.0 Marketing and Communications 6.3 4.9 5.4 (1.4) 0.5 (0.9) Media Relations 0.9 0.8 0.8 (0.1) 0.0 (0.1) State Government Relations 2.9 2.8 2.8 (0.1) 0.0 (0.1) Subtotal - Academic Affairs Ethics & Compliance External Relations & Communications Immediate Office Subtotal - ER&C 0.6 1.7 1.9 1.1 0.2 1.3 17.8 16.9 18.2 ($0.9) $1.3 $0.4 (0.3) Finance Budget Analysis and Planning 2.3 1.9 2.0 (0.4) 0.1 Capital Asset Strategies & Finance 12.4 10.0 13.3 (2.4) 3.3 0.9 Financial Accounting 10.5 9.7 11.1 (0.8) 1.4 0.6 (0.3) Risk Services Strategic Sourcing/Procurement Immediate Office Subtotal - Finance 8.3 7.6 8.0 (0.7) 0.4 10.9 9.9 11.8 (1.0) 1.9 0.9 1.3 0.5 1.2 (0.8) 0.7 (0.1) 45.7 39.7 47.4 ($6.0) $7.7 $1.7 Operations Energy and Sustainability 4.4 5.0 4.4 0.6 (0.6) 0.0 51.5 51.5 44.3 0.0 (7.2) (7.2) Operational Expenses 8.0 7.5 1.8 (0.5) (5.7) (6.2) Strategic Program Management Office 1.8 1.5 1.7 (0.3) 0.2 (0.1) Systemwide Human Resources 48.2 45.8 46.3 (2.4) 0.5 (1.9) UCOP Operations 30.8 38.0 30.3 7.2 (7.7) (0.5) Immediate Office 1.1 1.1 1.3 0.0 0.2 0.2 145.8 150.3 130.2 $4.5 ($20.1) ($15.6) President's Executive Office 4.6 4.1 4.4 ($0.5) $0.3 ($0.2) Secretary of the Regents 3.6 3.7 3.0 $0.1 ($0.7) ($0.6) Systemwide Academic Senate 2.4 2.2 2.2 ($0.2) $0.0 ($0.2) Self-Funded Health Plans 4.6 4.9 4.8 0.3 (0.1) 0.2 UC Health Core 4.3 4.1 3.8 (0.2) (0.3) (0.5) Information Technology Services Subtotal - Operations UC Health UC Healthcare Collaborative 20.2 14.4 17.8 (5.8) 3.4 (2.4) Subtotal - UC Health 29.1 23.4 26.3 ($5.7) $2.9 ($2.8) UC Investments 34.3 36.6 33.6 $2.3 ($3.0) ($0.7) UC Legal 58.0 64.0 58.1 $6.0 ($5.9) $0.1 SUBTOTAL USES $409.8 $408.9 $381.3 ($0.9) ($27.6) ($28.5) UCPath Center Operations TOTAL USES 93.7 91.8 90.1 ($1.9) ($1.7) ($3.6) $503.5 $500.7 $471.5 ($2.8) ($29.2) ($32.0) BOARD OF REGENTS July 2020 -26- Appendix 1 Notes to Schedule D: Central and Administrative Services FY20-21 Budget Increased/Decreased Compared to FY19-20 Budget > $.5M Academic Affairs 1. 2. 3. 4. Academic Personnel and Programs: $19.2M decreased by $10.2M (-34.7%) due to a net $9.6M transition to direct campus funding of library content purchases managed at UCSD, 10.4% set-aside program budget reductions, hiring/travel reductions, plus other departmental budget reductions. Institutional Research and Academic Planning: $5.1M increased by $1M (24.4%) due to staff transition from ITS. Research and Innovation: $8.7M decreased by $1.9M (-17.9%) due to reduced positions, hiring/travel freeze. Student Affairs: $10.8M decreased by $1.1M due to reduction to UC’s systemwide appropriation and hiring/travel freeze. External Relations & Communications 5. 6. 7. Institutional Advancement: $2.3M increased by $0.3M (15%) due to additional fundraising work for the LBNL Foundation. Marketing and Communications: $5.4M decreased by $0.9M (-14.3%) due to reduced salary costs on FTEs. Immediate Office: $1.9M increased by $1.3M (216.7%) due to the vacancy factor in the FY19-20 budget which was budgeted in the immediate office whereas the hiring freeze was budgeted within each department. Finance 5 6 7 Capital Asset Strategies & Finance $13.3M increased by $0.9M (7.3%) due to the transition of the Treasury group from OCIO, offset by hiring/travel freeze. Financial Accounting: $11.1M increased by $0.6M (5.7%) due to licenses for the new financial system (Oracle Cloud ERP). Strategic Sourcing/Procurement: $11.8M increased by $0.9M (8.3%) due to software licensing and professional services. Operations 8 Information Technology Services: $44.3M decreased by $7.2M (-14.0%) due to headcount reductions, hiring/travel freeze, and transition to one-time PEF distribution for CENIC (campus high-speed internet) services. 9 Operational Expenses: $1.8M decreased by $6.2M (-77.5%) due to salary savings and other cost reduction programs. 10 Systemwide Human Resources: $46.3M decreased by $1.9M (-3.9%) due to hiring/travel freeze and professional services. 11 UCOP Operations: $30.3M decreased by $0.5M (-1.6%) due to the hiring/travel freeze. UC Health 12 UC Health Core: $3.8M decreased by $0.5M (-11.6%) due to the hiring/travel freeze. 13 UC Healthcare Collaborative: $17.8M decreased by $2.4M (-11.9%) due to slower-than anticipated growth; alignment to forecast. Other Divisions 14 Ethics & Compliance: $6.7M decreased by $0.6M (- 8.2%) in professional services, training, hiring/travel freeze. 15 Secretary of the Regents: $3.0M decreased by $0.6M (-16.7%) due to remote meetings including facilities and security. 16 UC Investments: $33.6M decreased by $0.7M (-2.0%) due to Treasury group transition, hiring/travel freeze, offset by contract increases/targeted investments. 17 UCPath Center Operations: $90.1M decreased by $3.6M (-3.8%) by adjusting staffing/service levels and hiring/travel freeze. BOARD OF REGENTS July 2020 -27- Appendix 1 Schedule D-1 Central and Administrative Services by Fund $ in millions Unrestricted FY20-21 Designated Undesignated Restricted Budget CENTRAL AND ADMINISTRATIVE SERVICES USES Academic Affairs Academic Personnel and Programs 16.7 1.8 0.7 19.2 Diversity and Engagement 0.9 0.0 0.2 1.1 Immediate Office Institutional Research and Academic Planning 6.2 0.1 0.0 6.2 5.1 0.0 0.0 5.1 Research and Innovation 6.2 2.4 0.0 8.7 Student Affairs 4.5 6.4 0.0 10.8 39.6 10.7 1.0 51.2 6.7 0.0 0.0 6.7 Alumni and Constituent Affairs 0.1 0.5 0.0 0.5 Executive Communications & Engagement 0.8 0.0 0.0 0.8 Federal Government Relations 2.2 0.7 0.0 2.9 Institutional Advancement 0.0 2.3 0.0 2.3 Legislative Analysis 0.8 0.0 0.0 0.8 Marketing and Communications 3.0 1.7 0.8 5.4 Media Relations 0.7 0.0 0.1 0.8 State Government Relations 2.8 0.0 0.0 2.8 Immediate Office 1.4 0.5 0.0 1.9 11.8 5.5 0.9 18.2 Budget Analysis and Planning 2.0 0.0 0.0 2.0 Capital Asset Strategies & Finance 4.4 8.9 0.0 13.3 Financial Accounting 6.6 2.4 2.2 11.1 Risk Services 0.0 8.0 0.0 8.0 10.2 1.6 0.0 11.8 Subtotal - Academic Affairs Ethics & Compliance External Relations & Communications Subtotal - ER&C Finance Strategic Sourcing/Procurement Immediate Office Subtotal - Finance 0.4 0.5 0.2 1.2 23.7 21.4 2.4 47.4 Operations Energy and Sustainability 3.3 1.1 0.0 4.4 33.3 7.7 3.4 44.3 Operational Expenses 1.8 0.0 0.0 1.8 Strategic Program Management Office 1.7 0.0 0.0 1.7 Systemwide Human Resources 6.5 0.0 39.8 46.3 UCOP Operations 26.7 1.7 2.0 30.3 Immediate Office 0.9 0.0 0.5 1.3 74.1 10.5 45.6 130.2 President's Executive Office 4.0 0.3 0.1 4.4 Secretary of the Regents 3.0 0.0 0.0 3.0 Systemwide Academic Senate 2.1 0.0 0.1 2.2 Self-Funded Health Plans 0.0 3.5 1.3 4.8 UC Health Core 3.4 0.3 0.1 3.8 UC Healthcare Collaborative 0.0 17.8 0.0 17.8 Subtotal - UC Health 3.4 21.6 1.4 26.3 0.0 33.6 0.0 33.6 UC Legal 10.4 46.8 0.9 58.1 SUBTOTAL USES 178.7 150.4 52.3 381.3 0.0 90.1 0.0 90.1 $178.7 $240.5 $52.3 $471.5 Information Technology Services Subtotal - Operations UC Health UC Investments UCPath Center Operations TOTAL USES BOARD OF REGENTS July 2020 -28- Appendix 1 Schedule E UC ANR Budget within UCOP Budget by Program and Unit - All Funds $ in millions Varianc es: (Inc rease/ Dec rease) Budget Forec ast Budget FY19-20 FY19-20 FY20-21 FY19-20 Forec ast v s FY19-20 Budget FY20-21 Budget v s FY19-20 Forec ast FY20-21 Budget v s FY19-20 Budget SOURCES Federal AES 7.5 7.3 8.2 (0.2) 0.9 0.7 State UCCE 72.6 72.6 63.4 0.0 (9.2) (9.2) Federal UCCE 0.3 11.9 12.1 12.2 0.2 0.1 Endowment Payout 9.9 9.9 10.4 0.0 0.5 0.5 Extramural Funding 42.1 42.1 40.2 0.0 (1.9) (1.9) Other Sources 34.7 33.7 32.8 (1.0) (0.9) (1.9) $178.7 $177.7 $167.2 ($1.0) ($10.5) ($11.5) Other Campus-Based Academics 0.2 0.2 0.3 0.0 0.1 0.1 UC Berkeley 7.3 7.3 7.2 0.0 (0.1) (0.1) 24.1 24.1 21.0 0.0 (3.1) (3.1) 6.6 6.6 5.6 0.0 (1.0) (1.0) 38.2 38.2 34.0 $0.0 ($4.2) ($4.2) Agriculture Issues Center 0.3 0.3 0.2 0.0 (0.1) (0.1) California Institute for Water Resources 0.7 0.7 1.1 0.0 0.4 0.4 Elkus Ranch Youth Development Center Informatics & Geographic Information Systems 0.8 0.8 0.4 0.0 (0.4) (0.4) 0.7 0.7 1.0 0.0 0.3 0.3 Integrated Pest Management 4.6 4.5 5.8 (0.1) 1.3 1.2 T OT AL UC ANR Budget within UCOP USES Unrestric ted Sourc es AES Campuses UC Davis UC Riverside Subtotal - AES Campuses Statewide Programs & Institutes Nutrition Policy Institute 9.1 9.2 4.7 0.1 (4.5) (4.4) Statewide Programs & Initiatives Sustainable Agriculture Research & Education 4.1 4.1 3.2 0.0 (0.9) (0.9) 0.8 0.8 0.8 0.0 0.0 0.0 Volunteer Based Programs (MFP, MG, Naturalist) Youth, Family & Communities Subtotal - Statewide Programs & Institutes Researc h and Extension Centers (RECs) County-Based Researc h and Extension General Administration UCPath Subtotal - Administration Institutional Support T OT AL UC ANR Budget within UCOP NET MARGIN SURPLUS (DEFICIT ) 1.5 1.5 1.6 0.0 0.1 0.1 3.9 3.9 6.6 0.0 2.7 2.7 26.6 26.6 25.3 $0.0 ($1.3) ($1.3) 16.0 16.0 16.4 0.0 0.4 0.4 72.0 72.0 67.9 0.0 (4.1) (4.1) 18.4 17.4 18.3 (1.0) 0.9 (0.1) 1.6 1.6 0.4 0.0 (1.2) (1.2) 20.0 19.0 18.6 ($1.0) ($0.4) ($1.4) 5.9 5.9 4.9 $0.0 ($1.0) ($1.0) $178.7 $177.7 $167.2 ($1.0) ($10.5) ($11.5) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 BOARD OF REGENTS July 2020 -29- Appendix 1 Schedule F-1 Strategic Priorities Fund Unrestricted Funds Overall UCOP $ in millions Variances:Increase/(Decrease) FY 2019-20 Budget FY 2019-20 Forecast FY19-20 Forecast vs FY19-20 Budget FY 2020-21 Budget FY20-21 Budget vs FY19-20 Forecast FY20-21 Budget vs FY19-20 Budget UNRESTRICTED-UNDESIGNATED FUNDS Campus Program 1 Clean Energy Research Center on Energy and Water Subtotal - Campus Program 0.2 0.2 - - (0.2) (0.2) 0.2 0.2 - $0.0 ($0.2) ($0.2) 2.0 (0.9) Central & Administrative Services 2 Corporate Financial System Replacement Project: Phase 2 (FCCS) 0.6 2.6 1.6 3 FIS Accounting System Project 2.1 - - (2.1) - 1.1 (2.1) 0.2 4 Mainframe Services Migration - 0.2 0.2 0.2 (0.0) 5 Mainframe Services Retirement - 0.2 2.3 0.2 2.1 2.3 6 Supply Chain 500, Phase 1 0.3 0.0 - (0.2) (0.0) (0.3) 7 eBilling Matters Management Software Implementation 0.1 0.2 - 0.1 (0.2) (0.1) 8 Lease Accounting System - GASB 87 - 0.4 0.3 0.4 (0.0) 0.3 9 UCPath Hosting Co-Location (AWS) - 0.8 - 0.8 (0.8) 10 Audit Response - Workforce Planning 0.3 0.2 0.2 (0.1) (0.0) (0.1) 11 Audit Response - Finance Resources 0.3 0.3 0.1 (0.0) (0.1) (0.1) 12 UCM Chancellor Search - 0.3 0.0 0.3 (0.2) 0.0 13 UCOP Presidential Search - 0.2 0.2 0.2 (0.0) 0.2 14 President Transition - 0.0 0.2 0.0 0.1 0.2 15 Procurement Attorney -2 year contract position 0.4 0.4 - - (0.4) (0.4) 16 UCOP HR TAMS & ePerformance Project Resources - 0.5 0.0 0.5 (0.5) 0.0 17 HR TAMS and ePerformance Project Resources - 0.2 0.0 0.2 (0.2) 0.0 18 OP Operations Change Management Resources - 0.3 0.6 0.3 0.3 0.6 19 Student Pay Project Manager - 0.3 0.0 0.3 (0.2) 0.0 20 Systemwide Compliance & Audit Symposium 0.1 0.1 - - (0.1) (0.1) 21 Transfer Guarantee Implementation Project 0.3 0.3 0.3 - (0.1) (0.1) 22 Transfer Guarantee Implementation: Communications & Advising - 0.3 - 0.3 (0.3) - 23 Case Management System for UC Title IX Offices - 0.3 0.1 0.3 (0.1) 0.1 24 DACA Program Communications Support - 0.2 0.1 0.2 (0.1) 0.1 25 Cybersecuity Audit - 0.2 0.1 0.2 (0.1) 0.1 26 Litigation Cost & Whistle Blower Allegations - 1.3 0.1 1.3 (1.2) 0.1 27 COVID-19 Communications - 0.3 0.1 0.3 (0.2) 0.1 28 iCamp Subtotal - Central & Administrative - 3.0 2.2 - (0.8) (2.2) (3.0) 7.4 12.1 6.6 $4.7 ($5.5) ($0.8) Presidential Initiatives 29 Carbon Neutrality Initiative (CNI) 1.4 1.4 1.3 - (0.1) (0.1) 30 Public Law Service Fellowship 5.1 5.1 4.1 - (1.0) (1.0) 31 Global Food Initiative (GFI) 0.5 0.5 0.4 - (0.1) (0.1) 32 Presidential Public Service Fellowship 0.2 0.2 0.1 - (0.0) (0.0) 33 UC National Center for Free Speech & Civic Engagement 0.6 0.6 1.0 - 0.4 0.4 7.7 7.7 6.9 $0.0 ($0.8) ($0.8) Subtotal - Presidential Initiatives Systemwide Programs 34 Undocumented Students - Campus Services & Financial Aid 2.2 2.2 2.2 - 0.0 0.0 35 CDL - UC Open Access Policy Support 0.2 0.2 - - (0.2) (0.2) 36 MRPI Critical Mission Studies @ CA Crossroads 0.5 0.5 - - (0.5) (0.5) 37 UC-Mexico Program 0.8 0.8 0.8 - 38 Presidential Postdoc Fellowship Program - Supplemental Funding 0.3 0.3 0.2 - (0.1) (0.1) 39 ASSIST Project 0.6 0.6 1.3 - 0.7 0.7 40 UC Mexico Program Consolidation - 1.2 1.2 1.2 - 1.2 4.6 5.8 5.7 $1.2 ($0.1) $1.1 0.7 0.7 - - (0.7) (0.7) - 0.5 0.6 0.5 0.2 0.6 0.7 1.2 0.6 $0.5 ($0.5) ($0.1) 20.5 26.8 19.8 $6.3 ($7.1) ($0.7) 9.5 0.5 0.2 ($9.0) ($0.3) ($9.3) $30.0 $27.3 $20.0 ($2.7) ($7.3) ($10.0) Subtotal - Systemwide Programs - - Systemwide Initiatives 41 Diversity Pipeline Initiative 42 Systemwide Intergrated Library System Initiative Subtotal - Systemwide Initiatives Committed Funds Uncommitted Funds Total Strategic Priorities Fund BOARD OF REGENTS July 2020 -30- Appendix 1 Notes to Schedule F-1: Unrestricted Strategic Priorities Fund FY20-21 Budget Increased/Decreased Compared to FY19-20 Budget Campus Programs 1. Clean Energy Research Center on Energy and Water: A five year commitment to this campus program ended in FY19-20. Central & Administrative Services 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. Corporate Financial System Replacement Project: Phase 2): $1.6M increased $1.0M to complete the project in June 2021. FIS Accounting System Project: $0.0M; UCOP successfully implemented the Oracle Cloud ERP system effective July 1. Mainframe Services Migration: $0.2M required to complete migration of UC applications from UCSD to UCLA. Mainframe Services Retirement: $2.3M to migrate UC applications from mainframe to cloud solutions which will generate future savings and reduce dependence on outdated hardware investments. Supply Chain 500, Phase 1: $0.0M; Phase 1 completed. eBilling Matters Management Software Implementation: $0.0M; implementation successfully completed. Lease Accounting System - GASB 87: $0.3M to implement a system required by GASB regulations. UCPath Hosting Co-Location (AWS): Launched with SPF funding; transitioned to the Designated SPF. See Schedule F-2. Audit Response - Workforce Planning: $0.2M to complete workforce plan implementation. Audit Response - Finance Resources: $0.1M to complete budget implementation. UCM Chancellor Search: $0.0; this search was successfully completed. UCOP Presidential Search: $0.2M; final invoicing for this search which has been successfully completed. President Transition: $0.2M to support the president’s transition occurring in FY20-21. Procurement Attorney -2 year contract position: $0.0M; funding has moved to the UC Legal operating budget. OP Operations Change Management Resources: $0.6M to support several complex UCOP Operations projects. Systemwide Compliance & Audit Symposium: $0.0M; symposium was completed in FY19-20. Transfer Guarantee Implementation Project: $0.3M which compares to $0.3M in FY19-20; this program remains flat. Case Management System for UC Title IX Offices: $0.1M to implement a systemwide system for Title IX case management. DACA Program Communications Support: $0.1M to support communications related to DACA. Cybersecurity Audit: $0.1M to complete a cybersecurity audit and risk assessment. Litigation Cost & Whistle Blower Allegations: $0.1M to complete one-time litigation matters. COVID-19 Communications: $0.1M for resources to support systemwide COVID-19 related communications. iCAMP: Transitioned to the Designated SPF in FY20-21. See Schedule F-2. Presidential Initiatives (See Appendix 2 for details) 25. 26. 27. 28. Carbon Neutrality Initiative (CNI): $1.3M decreased by $0.1M (-7.1%). Public Law Service Fellowship: $4.1M decreased by $1.0M (-19.6%). Global Food Initiative (GFI): $0.4M decreased by $0.1M (-20%). Presidential Public Service Fellowship: $0.1M decreased by $0.1M (-50%). 29. UC National Center for Free Speech & Civic Engagement: $1.0M increased by $0.4M (66.7%); original commitment was $1M/year but less funding was needed in FY19-20 due to a carryforward from FY18-19. Systemwide Programs 30. 31. 32. 33. 34. 35. 36. Undocumented Students - Campus Services & Financial Aid: $2.2M to maintain funding levels for campuses and Center support. CDL - UC Open Access Policy Support: Transferred funding to the CDL operating budget; no reduction from FY19-20. MRPI Critical Mission Studies @ CA Crossroads: Transferred to the MRPI operating budget; no reduction from FY19-20. UC-Mexico Program: $0.8M to maintain funding commitment. Presidential Postdoc Fellowship Program - Supplemental Funding: $0.2M a planned decrease from targeted savings. ASSIST Project: $1.3M increased $0.7M (116.7%); strategic augmentation for a project that supports transfer students. UC Mexico Program Consolidation: $1.2M; supports bridging a structural deficit for two years while the program implements changes to eliminate the deficit. Systemwide Initiatives 37. Diversity Pipeline Initiative: $0.0M; Student Affairs plans to institutionalize key components by integrating them into the program activities of the EAOP program on the campuses. 38. Systemwide Integrated Library System Initiative: $0.6M to implement this software solution BOARD OF REGENTS July 2020 -31- Appendix 1 Schedule F-2 Strategic Priorities Fund Designated/Restricted Funds Overall UCOP $ in millions Designated Restricted FY 2020-21 Budget Central & Administrative Services 1 Redwood Stablization - 6.2 6.2 2 RASC Customer Service Support and Reader Boards - 0.1 0.1 3 UCPath AWS Implementation 1.9 - 1.9 4 UCPath Deployment for LBNL 1.8 - 1.8 5 iCamp 3.5 - 3.5 7.2 6.3 13.5 $7.2 $6.3 $13.5 Subtotal - Central & Administrative Total Strategic Priorities Fund Notes to Schedule F-2: Designated and Restricted Strategic Priorities Fund FY20-21 Budget Increased/Decreased Compared to FY19-20 Budget 1. 2. 3. 4. Redwood Stabilization: $6.2M funded from restricted retirement investment funding for required system stabilization and enhancements. RASC Customer Service Support and Reader Boards: $0.1M to augment customer support for UC retirees pending system improvements in item 1 above. UCPath AWS Implementation: $1.9M to migrate UCPath from Oracle (OMCS) to Amazon Web Services (AWS) which will significantly lower annual costs. Funded from UCPath designated fee-for-service funds. UCPath Deployment for LBNL: $1.8M to bring LBNL’s 3,500 UC employees onto UCPath using LBNL-designated funds. 5. iCAMP: $3.5M to support systemwide assessments of campus infrastructure managed by the CFO division using designated funds. BOARD OF REGENTS July 2020 -32- Appendix 1 Schedule G UCOP Reserves $ in millions Variance: UCOP RESERVES Building and Capital Assets Reserves Capital Maintenance and Renewal UCOP IT Infrastructure Sub-Total Building and Capital Assets Reserves Reserve Target Minimum $ Reserve Target Maximum $ 19.0 7.0 10.0 10.0 4.0 23.0 2.5 75.5 1.5 6.3 83.3 $ 17.1 7.8 3.0 11.1 1.3 40.3 1.5 6.3 48.1 $ 18.0 7.0 2.2 3.3 4.7 12.6 1.5 49.3 1.5 6.0 56.8 $ 0.9 (0.8) 2.2 3.3 1.7 1.5 0.2 9.0 (0.3) 8.7 37.6 37.6 129.4 $ $ 31.4 31.4 $ 83.2 $ 38.0 38.0 $ 97.9 $ 6.6 6.6 $ 14.7 15.0 15.0 $ Program Reserves UC National Laboratories LANS and LLNS-LLC Post Contract Contingency1 LANS and LLNS-LLC Fee Contingency1 TRIAD Reserve Fund1 Capital and Campus Opportunity Fund1 LBNL Post Contract Contingency2 LBNL Building Commitment2 LBNL Guest House Renewal & Replacement2 UC National Laboratories SubTotal UC Press UC Washington Center (UCDC)3 Sub-Total Program Reserves $ 19.0 7.0 10.0 10.0 4.0 10.0 1.5 61.5 1.5 2.9 65.9 $ Other Required Reserves Housing Loan Program4 Sub-Total Other Required Reserves SUB TOTAL NON-OPERATING AND PROGRAM RESERVES $ $ 27.3 27.3 $ 96.2 $ TOTAL UCOP RESERVES 15.0 $ 111.2 $ (0.5) $ (0.5) 2.6 $ 0.6 3.2 $ 7.9 0.6 8.5 5 6/30/20 Forecasted Reserve 3.1 $ 0.6 3.7 $ 2.6 $ 0.4 3.0 $ Central Operating Reserve 6/30/19 Actual Reserve 6/30/20 Reserve Target Over Max / (Under Min) 6/30/19 Actual vs 6/30/20 Forecast $ 15.0 144.4 $ 98.2 $ 112.9 $ 1 UCNL TRIAD (LANL) and LLNS-LLC reserves and reserve targets are established by the UC Regents. 2 LBNL reserves targets are established by LBNL and UCNL management. 3 UCDC reserve includes $0.7M in reserves and $5.3M in TRIP. 4 $6.3M of reserve balance is set aside for campus supplemental home loans. 5 Central Operating Reserve is held in the President's Endowment Fund. Per the established Presidential guidelines, the Central Operating Reserve may be supplemented with up to an additional $100M or three months of covered funds from a variety of sources. 14.7 - (1.0) (7.9) (6.7) 0.7 - 0.4 0.4 - BOARD OF REGENTS July 2020 -33- Appendix 1 Schedule H UCOP Fund Balances by Fund Type 1, 2, 3 $ in millions UNRESTRICTED Undesignated - UCOP Investment Income UC General Funds Legal Settlements Other Sub-Total Undesignated - UCOP Undesignated - Systemwide General Obligation Bond Income Sub-Total Undesignated - Systemwide Sub-Total Undesignated DESIGNATED Regents Designated 4 DOE Laboratories LLC LBNL Triad Lab Fees Research Programs and Initiatives UC Healthcare Collaborative California Digital Library ICAMP UC Washington Center Procurement Initiatives Writing Placement Exam Other Central Services Designated Endowment cost recovery Energy and sustainability Other Sub-Total Designated 6/30/19 Balance $ Forecasted Balance $ $ 15.0 10.0 5.2 30.3 $ $ 6/30/20 Remaining 3 Commitments Balance Change in Fund Balance $ 1.1 $ 0.0 0.9 0.6 2.6 $ 1.1 $ 0.4 1.5 $ 0.0 $ 0.0 0.9 0.2 1.1 $ (15.0) (10.0) (4.4) 0.2 (29.2) 10.2 10.2 $ $ 5.4 $ 5.4 $ 5.4 $ 5.4 $ - $ $ (10.2) (10.2) $ 40.5 $ 8.0 $ 6.9 $ 1.1 $ (39.4) $ 14.2 14.9 33.4 $ 28.0 $ 8.9 5.6 23.5 $ 7.7 28.0 $ 8.9 5.6 15.8 13.8 (6.0) 5.6 (17.6) $ 7.9 2.7 5.6 2.5 2.0 1.1 (1.0) $ 0.2 $ 2.2 3.4 4.8 3.1 (0.1) 1.5 $ 0.9 3.4 2.1 - 0.2 $ 1.3 0.0 4.8 1.0 (0.1) 1.5 (7.7) (1.4) (5.6) 2.3 (1.0) (1.2) 2.5 7.9 2.0 (2.9) 90.4 $ $ $ $ 9.4 1.1 1.0 92.6 $ 8.0 0.3 22.4 $ 1.4 0.8 1.0 70.2 $ (6.6) (1.2) 3.9 (20.2) $ $ $ 0.5 $ 3.1 3.6 $ 0.5 $ 3.1 3.6 $ 74.8 $ - (14.3) (0.5) (14.8) (74.4) (35.0) 74.8 $ (109.4) $ RESTRICTED Federal and Special State Appropriations/Regulations Gifts and Endowments Sub-Total Restricted $ 14.8 3.6 18.4 TOTAL BALANCES - before building proceeds Capital Projects $ $ 149.3 35.0 $ $ 104.1 $ 20.8 $ $ $ 29.3 $ 20.8 TOTAL BALANCES $ 184.3 $ 124.9 $ 50.0 $ $ - $ - 1 Fund balances are exclusive of Reserve amounts 2 Systemwide and pass-through fund balances are excluded, such as health and welfare benefits balances, wholesale power program funds, systemwide procurement incentives and patent royalty income 3 Commitments include $5.4M for campus seismic work and interest expense; $7.7M for lab fees research grant awards; $3.4M for ICAMP; $2.1M for procurement licensing fees and $8M for campus development efforts. 4 DOE Laboratories fund balances include DOE fee income from the three UC-run national labs, for lab oversight and building operations. BOARD OF REGENTS July 2020 -34- Appendix 2 APPENDIX 2: FY20-21 PRESIDENTIAL INITIATIVES Presidential Initiatives Detail FY19-20 and FY20-21 The following provides a description of each UC Presidential Initiative including how it furthers the mission of the university. # 1 2 3 4 5 Presidential Initiative Carbon Neutrality Initiative (CNI) Global Food Initiative (GFI) Presidential Public Service Fellowship Public Service Law Fellowships UC National Center for Free Speech and Civic Engagement Total FY19-20 Budget $ 1,380,383 496,000 168,142 5,080,000 565,000 $ 7,689,525 FY20-21 Increase/ Budget (Decrease) $ 1,330,000 $ (50,383) 421,200 (74,800) 145,928 (22,214) 4,050,000 (1,030,000) 950,000 385,000 $ 6,897,128 $ (792,397) 1. Carbon Neutrality Initiative (CNI) The Carbon Neutrality Initiative (CNI) launched in 2013, committing UC to emit net zero greenhouse gases from its buildings and vehicle fleet by 2025 – something no other major university system has done. This initiative advances the public service component of the University’s mission by helping both California and the world to curb the forces that are driving global warming. This initiative also furthers the University’s mission to provide instruction by giving undergraduate and graduate students the opportunity to study issues and fund student-generated projects that support the UC system’s carbon neutrality goal through its Carbon Neutrality Student Fellowship Program. By bringing together a Global Climate Leadership Council to advance both teaching and research about climate change and sustainable business practices, this initiative also furthers the instruction and research components of the University’s mission. 2. Global Food Initiative (GFI) The Global Food Initiative (GFI) was launched in 2014 to address how to sustainably and nutritiously feed a world population expected to reach 8 billion by 2025. By working to increase food access and security among communities across the ten UC campuses, this initiative furthers the public service component of the University’s mission. This initiative also furthers the University’s mission to provide instruction by giving undergraduate and graduate students the opportunity to study issues such as food security and food waste through the GFI Fellowship Program. A community garden project also enables this initiative to provide instruction to elementary school students about ecology and nutrition. Additionally, by conducting systemwide studies about UC student food access and security through the Healthy Campus Network, and by providing development-oriented graduate students from multiple UC campuses the opportunity to engage in planning and implementing projects related to international food systems and agriculture, this initiative furthers the research component of UC’s mission. 3. Presidential Public Service Fellowship The Presidential Public Service Fellowship launched in FY15-16. This need-based fellowship catalyzes student interest in public service careers and encourage more undergraduate students to apply for public BOARD OF REGENTS July 2020 -35- Appendix 2 service internships in D.C. and Sacramento. By providing educational opportunities to UC students and encouraging students to become agents of change in the public arena, this initiative advances UC’s instruction and public service mission components. 4. Public Service Law Fellowships The Public Service Law Fellowship launched in FY16-17 to support approximately 425 summer and 60 post-graduate fellowships annually at all four UC law schools for students pursuing opportunities in public service. Post-graduate fellowships provide up to $45,000 for graduates entering public service plus an additional $2,500 to help defray bar-related costs. Summer fellowships provide approximately $4,000 to subsidize summer public interest law jobs. Annual UC National Public Service Law Conferences are held to showcase important legal scholarship and practice and contribute to the national conversation on public interest law. By making post-graduate work and summer positions accessible for students who want to pursue public service legal careers, this initiative furthers the instruction and public service components of UC’s mission. 5. UC National Center for Free Speech and Civic Engagement The UC National Center for Free Speech and Civic Engagement launched in FY17-18 to explore how the fundamental democratic principles of free speech and civic engagement must adapt to the challenges and opportunities of modern society. By bringing together people of various academic and experiential background from across the country to inform free speech and civic engagement policies on college campuses, in state legislatures, and in Washington, D.C., this initiative furthers the public service mission of the University. Through this initiative, the UC National Center for Free Speech and Civic Engagement supports a fellowship program wherein fellows research First Amendment issues and present their findings at a national conference. The output of this Center also furthers the research component of the University’s mission. The budget for the Center was established at $1M per year for three years. Because the Center, managed by UC Irvine, had funds remaining after the end of the first year, the level of funding in FY19-20 was reduced. The proposed budget for FY19-20 is 5% less than the original commitment. BOARD OF REGENTS July 2020 -36- APPENDIX 3: KEY TO ACRONYMS Acronym ANR CAS CDL CFO COO CSA CSU EBC FY GAAP GO Bond HIS HR Incr/(Decr) IT LANL LBNL LLNL SAPEP SPF TRDRP UC UCDC UCNL UCOP Description Agriculture and Natural Resources Central and Administrative Services California Digital Library Chief Financial Officer Chief Operating Officer California State Auditor California State University Executive Budget Committee Fiscal Year Generally Accepted Accounting Principles General Obligation Bond Hispanic Serving Institutions Human Resources Increase/(Decrease) Information Technology Los Alamos National Laboratory Lawrence Berkeley National Laboratory Lawrence Livermore National Laboratory Student Academic Preparation and Academic Partnerships Strategic Priorities Fund Tobacco-Related Disease Research Program University of California University of California Washington Center University of California National Laboratories University of California Office of the President Appendix 3