UCSF School of Medicine SOM Faculty Council Meeting

UCSF School of Medicine SOM Faculty Council Meeting Budget Report, UCOP Funding Streams, State Educational Appropriation & Compensation Plan Guidelines March 15, 2012 SCHOOL OF MEDICINE, UNIVERSITY OF CALIFORNIA, SAN FRANCISCO

Agenda § FY 12 Mid-Year Budget Report SOM Draft § UCOP Funding Streams § Background § Financial impact on UCSF and the SOM § Other changes to the UCSF revenue mix § Implementation at UCSF § Decision re: SOM allocation § SOM FY 13 State Educational Appropriation allocation § New allocation methodology § FY 13 allocation § Proposal for distributing appropriation to the departments § Compensation Plan Project Status Report 2/23/2021 2

SOM Budget and Finance Committee § Convened in January 2009 as a Budget Work Group § Chaired by Dr. Hawgood § Dr. Hawgood’s charge to the Work Group § Advisory for budget allocation decisions § Analyze impact of changes in revenue sources and expenses on Departments, Institutes, Centers, Dean’s Office and School SOM Draft § Analysis of faculty and staff hiring plans to ensure viability and sustainability § Evaluate gift and endowment assumptions § Advise on Dean’s allocation of program support (eg. Recruitment and retention packages) 06/08/2011 3

SOM Draft Members of B and F Committee • • • Arenson, Ronald Ascher, Nancy Basbaum, Allan Carlisle, Sue Carroll, Peter Chrisman, Maye Chen Davis, Graeme Foster, Elyse Hindery, Michael 2/23/2021 • • Kenaani, Mounira King, Talmadge Lucey, Catherine Maze, Mervyn OHara, Susan Paardekooper, Anja Wintroub, Bruce Yamamoto, Keith 4

Budget Process § SOM Consolidated Budget template and process have been adopted in all four schools SOM Draft § Better coordination with the Medical Center and SFGH budgeting process 06/08/2011 5

SOM Draft FY 12 Mid-Year Budget Report 2/23/2021 6

SOM Draft SOM Consolidated Income Statement 7 Data includes joint Department of Bioengineering and Therapeutic Sciences Fund balances include income funds held at the foundation 2/23/2021 Source: UCSF G/L & SOM Consolidated Budget 7

SOM Draft FY 12 Budget Report § Income/Loss (before transfers): § Budgeted a <$16. 1 M> loss, but currently projecting a surplus of $11. 3 M. A positive variance to budget of $27. 4 M § Fund balances: § Budgeted a decrease in total fund balances of <$37. 8 M>, but currently projecting a decrease of only <$2. 9 M>. A positive variance to budget of $34. 9 M 2/23/2021 8

FY 12 Budget Report SOM Draft § Major Revenue Variances: § $11. 3 M- ICR and other opportunity appropriations, Substance Abuse program (Neurology – Gallo Institute) being funded by UCOP through opportunity funds in FY 12 (budgeted in state sponsored research). § $25. 6 M- Net clinical revenue, based on YTD and current trends § $4. 9 M- MC strategic support, agreements not final during budget process § $5. 4 M- STIP/TRIP § $41. 9 M- Sponsored research § Major Expense Variances: § $41. 9 M- Sponsored research § $9. 1 M – Clinical incentives § $5. 1 M- Salary (not related to sponsored research) § $6. 8 M- Benefits (not related to sponsored research) 2/23/2021 9

SOM Draft UCOP Funding Streams 2/23/2021 10

UCOP Funding Streams Background § Implementation date § UCOP implemented a new “Funding Streams” funds flow methodology July 1, 2011, for FY 12 § Goal § To simplify and make transparent UC’s funds flow § How the revised funds flow works SOM Draft § Distributes nearly all state general funds to the campuses § Allows the campuses to retain revenue they generate (e. g. , ICR, tuition), instead of being pooled together and reallocated by UCOP § Assesses a tax on campus expenditures § 1. 6% of annual current funds expenses at the campuses - FY 10 used as base for FY 12 calculation § Total $278 M (initial FY 12 assessment) 2/23/2021 11

SOM Draft 2/23/2021 12

SOM Draft 2/23/2021 13

SOM Draft 2/23/2021 14

New UCOP Funds Flow SOM Draft Impact on SOM 2/23/2021 15

UCOP Funding Streams Financial impact on UCSF (slide 1 of 3) § UCSF’s share of the FY 12 UCOP tax is $48. 8 M SOM Draft § Though originally presented as revenue neutral, the “Funding Streams” implementation resulted in an $8. 7 M increase in UCSF expense in FY 12 (see slide #11) § The UCOP tax assessment cannot be paid using restricted funding sources (e. g. , sponsored projects revenue, gift and endowment income). Therefore, the tax has to be paid using unrestricted revenue (State Educational Appropriation, ICR, clinical revenue, misc. sales & services revenue) § The tax assessment results in an exchange of unrestricted revenue for restricted revenue 2/23/2021 16

UCOP Funding Streams Financial impact on UCSF (slide 2 of 3) § The UCOP initiative changes the methodology for calculating future campus budget cuts or increases and an ongoing UCOP “rebenching” process could result in a redistribution of state funds § Budget cuts have been allocated based on each campus’ current share of the permanent budget SOM Draft § Now that the State General Fund has been “unpooled” and the state educational appropriation is passed on to the campuses, it is likely that future budget cuts or increases will be distributed based on student population (e. g. , number and type) § Unlike the undergraduate campuses, UCSF has limited options to use the student fee structure to generate additional revenue to offset decreases in the state educational appropriation 2/23/2021 17

UCOP Funding Streams Impact on the SOM § While the $8. 7 M increase in expense was absorbed by the Chancellor in FY 12, we expect that in FY 13 this expense will be distributed across the campus SOM Draft § In FY 11, the SOM was 33. 92% of UCSF’s expenditures; applying this percentage to the FY 13 allocation, the SOM’s share of the $8. 7 M increase in expense will be $2. 96 M § The $2. 96 M will be allocated to the departments based on each department’s proportional share of unrestricted revenue *Source: UCSF Annual Financial Report FY 11, schedule E; overall UCSF’s expenditures include Medical Center 2/23/2021 18

SOM Draft Compensation Plan Project Status Report 2/23/2021 19

Status Report l Completed l l SOM Draft l Reviewed Budget & Finance Committee’s compensation plan summaries and findings Interviewed department/ORU chairs and MSOs, with some HR participation (38 meetings) l Developed draft compensation plan principles l Obtained Steering Committee input on principles (8 meetings) l Compensation and retirement benefit benchmark and cost analyses l Draft of revised UCSF compensation plan guiding principles Next steps – to be completed by end of March l Finalize compensation plan guiding principles l Develop implementation plan • Spring – Review principles and implementation plan with Chairs/Directors, Faculty Council and faculty 2/23/2021 20

Project Steering Committee l Ron Arenson, MD, Professor and Chair, Department of Radiology l Nancy Ascher, MD, Ph. D, Professor and Chair, Department of Surgery l Alan Basbaum, Ph. D, Professor and Chair, Department of Anatomy l Claire Brindis, Dr. PH, MPH, Professor and Director, Institute for Health Policy Studies l Marcia Canning, JD, Committee Counsel, Associate General Counsel, Legal Affairs l Peter Carroll, MD, MPH, Professor and Chair, Department of Urology l Michael Chen, Chief Financial Officer, Department of Medicine SOM Draft l Neal Cohen, MD, MPH, MS, Vice Dean for International Medical Services, Risk Management, Compliance, and Related Special Projects, and Interim Vice Dean for Academic Affairs l Amy Friedli, JD, Director, School of Medicine, Academic Affairs l Kevin Grumbach, MD, Professor and Chair, Department of Family & Community Medicine l Michael Hindery, MA, MUP, Committee Chair, Vice Dean for Administration, Finance, & Clinical Programs l Lynda Jacobsen, Deputy Director, Clinical and Translational Science Institute l David Julius, Ph. D, Professor and Chair, Department of Physiology l Mounira Kenaani, Associate Director/Chief Financial Officer, Department of Dermatology and the Diabetes Center l Catherine Lucey, MD, Vice Dean for Education l Robert Nissenson, Ph. D, Professor, Departments of Medicine and Physiology, and Chair Faculty Council 21 2/23/2021 Work Group 21

What Are We Trying to Address? § Comparability and structural equity of compensation systems across ranks, departments and specialties SOM Draft § Flexibility in recognizing individual achievement and responding to market forces, while ensuring that compensation is reasonable in light of the services performed and the School’s educational and research missions § Sound management of financial risks and resources of sections, Departments, the School, and the University 2/23/2021 22

What the Project Isn’t Addressing The Health Sciences Compensation Plan (HSCP) Academic Personnel Manual (APM) policies Promotion guidelines UC benefits SOM Draft § § The project is not a veiled attempt to lower compensation or salaries 2/23/2021 23

Project Objectives l SOM Draft l Develop School-wide principles that guide the implementation of the HSCP by each department and ORU Help sustain the School’s academic, research and clinical excellence by ensuring that the School’s compensation practices support the recruitment, retention and productivity of outstanding faculty The project has strived to balance the needs of the departments/ORUs with the School’s overall mission 2/23/2021 24

SOM Draft Intended Outcomes § Fair and equitable compensation levels and practices § Rewards for faculty excellence and productivity in all components of UCSF’s mission § Sustainability of compensation under a range of financial scenarios § Clarity for faculty on the objectives for and management of department/ORU compensation plans 2/23/2021 25

SOM Draft Scope of Principles l Competitive Benchmarking l Good Standing l Scale l Additional Negotiated Compensation l Incentive/Bonus Compensation l Outside Income l Transparency l Administration l Grievances/Appeals 26 2/23/2021 26