"Financial Sustainability: Creating a University of the 21st Century." A presentation by UC Davis Vice Chancellor and Chief Financial Officer, Dave Lawlor.

1. Creating a University for the 21st Century,
FINANCIAL SUSTAINABILITY | ROADSHOW
EXPANDED LEADERSHIP TEAM| MARCH 2015
DAVE LAWLOR
VICE CHANCELLOR & CHIEF FINANCIAL OFFICER
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2. Agenda
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Framing
Economic Model
Capital Plans
Priorities
Structure
VC-CFO Initiatives

3. Framing
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4. 4
UC Davis of the 21st century, in order to
accomplish its core mission, must be
run as well as the best global
enterprises.

5. Why?
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UC Davis of the 21st Century, Why?
in order to accomplish its core mission, To attract & invest in faculty, research,
academic programs, & support
infrastructure we must be wise stewards
of all resources, and have sufficient
resources to be competitive on important
dimensions.
must be run as well as the best global
enterprises.
There are more pressures on families
than ever before to afford a quality
university education.
We must become an irresistible
investment opportunity for federal, state,
and corporate investments in our core
mission and in new partnership
opportunities.

6. Guiding Principles
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• Financial stability enables the core
mission
• We take a One UC Davis
perspective in all that we do
• Financial sustainability means that
we take a comprehensive,
balanced, long-term view
• We engage in sophisticated yet
digestible conversations
• Key decisions are viewed through
the economic lens also
• We need a deeper understanding
of institutional data in order to
make better decisions

7. Financial Sustainability Action Plan:
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New Revenues
Cost Efficiencies
Increased Research
Fundraising
Faculty
Student Services
Research
Student Success
Staff
Infrastructure
• At maturity generate $50M of annual
recurring funds per year to be spent on key
academic initiatives1.
1 This excludes tuition & fee price increases and other associated base
compensation growth.
-
10.0
20.0
30.0
40.0
50.0
60.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
New Investments in UC Davis
$500M on a
cumulative Basis
Sources Uses
Invest Half a Billion

8. Financial Sustainability Action Plan
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FSAP Tranparency Report
0
50
100
150
200
250
Sources Funnel Available for Investment Invested
Financial Sustainability Action Plan
Base Year FY12, GoalYear FY21
We have identified $200M of new sources
of funnel which we are presently pursuing.
Of these funnel items, in FY14 we have
generated $34M+ of incremental Net
Revenue available for investment. $34M
was generated from the 2020 Initiative;
$XM from Administrative Efficiencies, $YM
from ICR growth, and $ZM in new Payout on
new gifts to our endowment.
$xM has been invested in recurring items.
Not shown on the recurring chart: $cM of
one time sources have been harvested, and
$dM of which has been invested in one
time uses.
DRAFT

9. The Economic Model
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10. A Future Profile - Operating
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• Revenue Growth
• Research Growth
• Efficiencies: Working Smarter
• Payout on New Gifts to the
Endowment
• Things to Fix:
• Recharge Philosophy &
Methodology
• Deferred Maintenance
• Others?

11. How things fit together…
1212
Period review of Actuals to
Budget & Review of
Forecasts for balance of
the year
Meet monthly with
Assistant VCs and Assistant
Deans
Top Down
Guidance
Bottoms Up
Budgeting
(NBM)
Quarterly
Monitoring &
Reforecasting
line
See Instructions for Definitions of Fund Types
State Funds
& Tuition
ICR
All Student
Fees
All Other
Funds
Total
State Funds
& Tuition
ICR
All Student
Fees
All Other
Funds
Total
PRIOR YEAR CARRYFORWARD:
1 Total $3,652 $1,852 $836 $5,227 $11,567 $5,821 $1,337 $901 $4,598 $12,657
2 Change from Prior Year $2,169 -$515 $64 -$629 $1,089
SOURCES OF ANNUAL OPERATING FUNDS
(net of depreciation, improvements reserves, and distributions out of org)
3 State Funds and Tuition $45,982 $45,982 $49,712 $49,712
4 Indirect Cost Return $3,110 $3,110 $3,937 $3,937
5 Course Material Fees $895 $895 $660 $660
6 Summer Sessions $419 $419 $1,753 $1,753
7 COSMOS Program $465 $701 $1,166 $467 $826 $1,293
8 All Other Funds $3,378 $3,378 $2,423 $2,423
9 ANNUAL OPERATING SOURCES $46,447 $3,110 $1,314 $4,079 $54,950 $50,179 $3,937 $2,414 $3,249 $59,778
USES OF ANNUAL OPERATING FUNDS
EMPLOYEE COMPENSATION:
Faculty
10 Regular Faculty (ACAD, SB01, SUB0) $20,461 $78 $37 $20,576 $21,854 $12 $321 $13 $22,200
11 Academic Administrators (SB05) $41 $41 $39 $0 $0 $5 $43
12 Other Academics (SB06, SB03, ACAX, ACGA) $201 $12 $103 $316 $301 $0 $91 $0 $393
13 Teaching & Research Assistants, House Staff (SB02, SB07, SB04) $6,058 $62 $22 $6,141 $6,828 $0 $402 $70 $7,301
14 Staff Salaries (STFO, SUBS, SUBG, SUBX, STFB) $5,477 $969 $185 $1,375 $8,006 $6,161 $914 $270 $1,435 $8,780
15 Employee Benefits (SUB6, SB28, SB67) $9,514 $325 $101 $531 $10,471 $10,876 $255 $177 $567 $11,875
16 Total Employee Compensation $41,751 $1,294 $438 $2,068 $45,551 $46,059 $1,181 $1,262 $2,090 $50,591
OPERATING EXPENSES AND EQUIPMENT
17 Supplies & Expense (SUB3) $1,911 $1,153 $694 $1,964 $5,722 $1,672 $971 $758 $2,598 $6,000
18 Equipment & Facilities (SB34, SUB4) $243 $843 $10 $89 $1,184 $979 $385 $91 $45 $1,500
19 Total Operating Expenses and Equipment $2,154 $1,996 $704 $2,053 $6,907 $2,652 $1,356 $849 $2,643 $7,500
20 TRAVEL (SUB5) $124 $283 $108 $386 $901 $231 $190 $86 $455 $962
21 FINANCIAL AID (SCHL) $249 $52 $111 $412 $93 $93 $0 $163 $349
22 OTHER UNALLOCATED (SUB8, SUB7, SBMC) $105 $105 $0 $0 $69 $69
23 TOTAL EXPENDITURES $44,278 $3,625 $1,250 $4,723 $53,876 $49,034 $2,820 $2,198 $5,419 $59,471
24 ANNUAL NET OPERATING POSITION [Surplus (+)/Deficit (-)] $2,169 -$515 $64 -$644 $1,075 $1,145 $1,117 $216 -$2,170 $308
Explanatory Notes:
Regular faculty category includes temporary instructors ($2.3Min 13-14). 13-14 income and 14-15 carryforward has been reduced by $1.0Mfor COSMOS on-line tuition payments that were transferred to other UC campuses
in July 2014. MPS had $7.0Min COBL obligations at YE13-14 primarily for faculty startup and retention funding commitments. Projected $2.0Mdeficit in 14-15 Other Funds operating position reflects the utilization of
carryforward balances.
Division of Mathematical and Physical Sciences
Sources & Uses All Funds, Excluding Contracts & Grants and Agency Accounts
(Dollars in thousands)
2013-14 Actual 2014-15 Budget Estimate
Iterations to
reconcile
during budget
setting
process

12. Comparison Institutions
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UC DAVIS
UC Berkeley
UCLA
UC San Diego
University of Michigan
University of Illinois at Urbana-Champaign
University of Wisconsin - Madison
University of Virginia
Cornell University
University of Southern California
We are envisioning what the university of the 21st
century looks like and we will be using that vision as
our guide

13. Capital
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14. A Future Profile - Capital
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• Operating strength enables
capital strength
• Affordability dimensions: build,
operate, & maintain
• Long range financial planning &
short term implementations
• Systematically solving the
deferred maintenance problem
• Leverage multiple funding
sources

15. 2014-24 Capital Financial Plan - $2.9B
$303,660
$1,634,137
$605,613
$40,723
$362,667
Project Goal
Regulatory Student Success Student Experience
Research/Initiatives Support and Stewardship
$867,750
$190,067
$1,370,664
$457,558
$45,000
Type of Project
New Construction and Renovation Infrastructure
New Construction Renovation
Deferred Maintenance Program
Capital
Priorities:
Regulatory (Seismic)
Critical Infrastructure
Capacity (e.g. 2020)
…etc…
Determine appropriate
proportions
Deferred maintenance
handled parallel

16. Capital

17. Capital and Space Planning - February 2015
Note:
• 2020 total seat goal = 12,000.
Growth provides 14,490 seats for
2020. If ADA and fire code upgrades
are made to existing classrooms,
anticipate 2,103 seat loss. Result is
12,387 seats following upgrades.
• The number of classrooms in Haring
Hall phases is yet to be determined.
Capital

18. Deferred Maintenance Needs - $1.3B
$141,222
$67,998
$68,062
$39,248
$34,590
Facilities Immediate Needs -
$42M Mechan
ical
$16,862
$8,119
$8,127
$4,686
$4,130
Maintenance/Repair - $351M
Mechanical
Electrical
Plumbing/Stea
m
Structural
$396,272
$190,804
$190,984
$110,131
$97,062
Modernization/Renewal -
$985M Mechanical
Electrical
Plumbing/Stea
m
Structural
Roofing
Deferred Maintenance Composition
• Institute new policies whereby deferred maintenance doesn’t get
worse with new projects (FFEs for DM required).
• Develop a prioritized list of items over a 20 year time frame
• Resolve via: Replacement, Discontinued Use, Remediation

19. Multi-pronged approach to DM reduction
• The core deferred maintenance
balance will be mitigated by a
combination of items:
• Replacement Facilities
• Renovations
• Discontinuance
• Acceptable State Continuance
• DM investments
New
Construction
Stop
Using
Good
Enough
Renovations
Total Deferred
Maintenance
$1.3B
$X
$Y$W
$Z

20. Priorities
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21. Priorities
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Resource
Stewardship
Planning &
Execution
Delight Our
Customers
We must delight our
customers in every aspect
of what we do.
Thoughtful planning and
relentless execution
becomes our reputational
core.
We will use our scarce
resources in a thoughtful,
optimal manner, being
ever aware of scarcity of
resources and the need to
be financially healthy.
Develop & Inspire
Our Team
Together we will reach
the next level of
performance while
supporting, developing, &
Caring for our team-
mates.

22. A Key HR Focus:
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Develop & Inspire
Our Team
Together we will reach
the next level of
performance while
supporting, developing, &
Caring for our team-
mates.
 Performance management
 Stay the course on PfR rollout, educate & assist supervisors, set clear cascaded
goals, focus on results.
 Manage expectations. Get to qualified “Yes”.
 Change management:
 Are we doing a good job of defining the burning platform
 Support
 What are the greatest needs of the organization? Are we prepared to train and
equip our leaders and team members?
 Be sensitive to workload, capacity, backlog. Create capacity and help people find
smart ways to stop doing things without compromising customer service.
 Development
 Providing the tools, training, creating time, etc.
 Encourage and support a continual learning environment.
 Care (winning their hearts)
 How we go about engaging our workforce. Characteristics such as: transparency,
clarity in expectations, excellence in communication, Community Principles. Even
when it’s a tough message.
 See and care for the person.

23. Structure
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VC-CFO Senior
Leadership Team
(Comprised of Direct Reports)
VC-CFO Expanded
Leadership Team (~100)
(Included Department Heads)
VC-CFO Council
(Compilation of key leaders both
inside and outside the VC-CFO)
Assistant Vice
Chancellors & Assistant
Deans
(Dotted Line Reports to the VC-CFO)
Leads the VC-CFO function on
strategic and operational (Job
#1) topics.
The linkage with Executive
Leadership (At UCD and UCOP).
Accountable for attaining
excellence across VC-CFO.
Ambassadors for creating and
cascading a vision, key
priorities, and operational
excellence.
We will invest time and energy
to mentor and develop this
group of people—the core
leadership team of VC-CFO
Eyes and ears to report back on
how things are going, monitors
of progress, morale, successes,
cautions, opportunists.
Focused on key priorities—The
imperatives which will allow us
to move to the next level.
This is the group of our most
talented senior leaders, those
with great potential, people
who have a reputation for
getting it done in the right
way—change agents.
Liaisons to the Schools/Colleges
and Administrative Units.
Those close to the heart-beat of
the Schools/Colleges/Units.
Able to influence Deans,
Department Chairs, Faculty,
Vice Chancellors.
The accountability drivers
across the university—a critical
mechanism to attain financial
health.

24. VC-CFO Administrative Initiatives
• Business Management and Analysis Group
• Telecommuting
• Employee Performance Management (EPAR)
• CFO Internship program
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25. Business Management and Analysis Group
Business Management & Analysis
Group (BMAG) is the internal
support group that provides
consistent high level services to
support both VC-CFO and campus
initiatives.
Arriving soon:
http://bmag.ucdavis.edu
New Services-
• Project Management
• Tools, Training and Services
Rebranded Services –
• Human Resources consulting
• IT desktop support and system
administration
• Targeted financial administration &
analytical support
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26. Telecommuting Initiative
• Building on campus tools & piloting new focus for campus
• Creating a 2015 spring / summer cohort goal of 24 employees
• Supervisors supported with monthly meetings
• 6 month trial period
• Long term this initiative creates capacity for additional staff workstations by
having shared workspace for employees
• VC-CFO program specifics coming soon.
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Creating an environment within VC-CFO that robustly adopts and
supports telecommuting for increased employee engagement.

27. Employee Performance Management
VC-CFO will be providing unit wide guidelines by March 25th
• Rating distributions / calibration
• Structure of the Departmental Approval Chain
• Development and quarterly review of employee goals
• Specific
• Measureable
• Attainable
• Results oriented
• Time framed
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28. CFO Internship Program
Creates a highly competitive opportunity for administrative &
business minded students to work on meaningful high-level
projects while receiving 1:1 mentoring from campus leaders.
• Generated student excitement at the Spring 2015 internship fair
• Program launched for spring quarter 2015 with ~ 5 positions
• Fall 2015 recruitment will occur during spring quarter that will grow
program cohort.
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