ACADEMY OF ECONOMIC STUDIES

BUDGETING METHODS

Professor : Andreea Ponoric Students: Cocuti Raluca Manta Andra Stoica Anamaria Tocaci Anamaria

Bucharest 2012

Contents

Contents..................................................................................................................... 2 1. INTRODUCTION....................................................................................................3 2. ACADEMY OF ECONOMIC STUDIES......................................................................3 3. STANFORD UNIVERSITY.......................................................................................6 3. OXFORD UNIVERSITY.........................................................................................11 4. HEIDELBURG UNIVERSITY..................................................................................15 5. COMPARISON BETWEEN UNIVERSITIES..............................................................17 6. CONCLUSIONS...................................................................................................20 7. BIBLIOGRAPHY...................................................................................................20 Official website of Stanford University, [Online] available at http://www.stanford.edu/, accessed May 29..........................................................20 Unknown author. (2010). 6 Alternative Budget Models for Colleges and Universities, [Online] available at http://www.hanoverresearch.com/2012/04/6alternative-budget-models-for-colleges-and-universities/, accessed on 01/06/2012. .............................................................................................................................. 20

1. INTRODUCTION
The budget is a plan that includes how much and when money will be spent and also how an organization gets money thus helps plan the income and expenses of the organization. The budget can be read by several different persons, each looking at it in a different way and doing something different with it, so that is why it is important to make a budget that will impress everyone. This paper presents a practical incursion in the different budgeting methods of several universities, based on case studies on Bucharest University of Economic Studies from Romania, Stanford University, Oxford University and Heidelburg University. We have approached in this paper the possibilities of reporting the budget, by identifying and evaluating realistically and completely of all the indicators used as revenues and expenses. Starting with the presentation of the budget and its components for each university, we have analyzed the indicators of the budgets in relation with the unique characteristics of each organization which provides education, as well as with the quality of the management activity. In the end we present a comparative conclusion regarding the different budgeting methods used in the 4 universities: -Academy of Economic Studies -Stanford University -Oxford University -Heidelburg University

2. ACADEMY OF ECONOMIC STUDIES

The Bucharest University of Economic Studies has several indicators based on which the revenues and expenses are reported: -the number of students from the Bachelors, Masters and Doctors programs with full frequency having budgetary financing; -the number of students from the Bachelors, Masters and Doctors programs paying tuition fees; -the number of students from Bachelors program distance learning; -the number of students from postgraduate studies; -the level of the average cost per student; -the level of financing per student equivalent; -the number of employees, out of which personnel with basic norm in AES; -the total payroll; -the existent material base, composed by education spaces, hostels, cafeteria, and equipment necessary for the educational process; -the balance from the year-ended; -the financing from the year-ended; If in 2003 the budget was unique, starting with 2004, the economic-financial management has been oriented more and more on projects and budgets at the level of the structures subordinated to the university. There have been built budgets on financing sources, on research centers, Masters programs, Doctoral and postgraduate school, territorial centers, distance learning, hostels and cafeteria. Also, the project management has been implemented.

Revenues The annual revenues have increased with 3.8% in 2011, as compared with 2010. Analyzing the structure of revenues in 2011, we can see that the weight of the revenues from the base activity was 59.77%. The revenues from base financing had registered a decrease of 16.62% compared to 2010. The renegotiated institutional contract, concluded between The Ministry of Education, Research, Youth and Sport, provides at base financing the amount of 44,071,710 lei, which has been cashed in until the end of the year. The budgetary policy of the university has as objective to stabilize and consolidate the financial situation, but the effect of a prudent approach is felt, which lead to the accumulation of important amounts at the end of budget years, allowing the development even in under-financing conditions, by keeping funds necessary to cover expenses. The budgetary allocations weighted 11.66%, out of which 3.59% for investment projects. In the last year there has been a substantial decrease of revenues for financing the investment projects, as an effect of the economic crisis. The revenues from research activity accounted for 11.10% and registered an increase from the last year with 28%. We can observe a decline, in the last year, of the revenues from hostels and cafeteria activities with 1.86%. Starting with 2008, AES has started implementing projects with financing from irredeemable funds in value of 26,619,843 lei. Considering the nowadays global economic context, well-defined strategies must be implemented in order to increase the weight of this type of financing in the total volume of revenues, which for now account for 14.24%. In 2008 AES had the best state financing, more exactly 58% public funds from the Ministry, and in 2011 the value decreased until 35%. This financing is calculated with respect to the average cost per student, which decreased in 2011 with 0.97% compared to 2010, and the financing decreased also, with a value of 9.79%. The average cost per student was in 2011 4,060 lei, and the financing equivalent to it was 2.618 lei, meaning that the difference between the two was covered from other sources of financing. The degree of coverage of expenses from other sources except the ones concluded with the Ministry was in value of 65.8%.

Expenses The expenses are presented having the same structure as the revenues, in order to have data compatibility. The expenses related to irredeemable funds financing were in value of 36,468,470lei, greater than the revenues registered. Still, this does not represent an inefficient utilization of funds. The procedure imposed by legislation is registering the expense, requesting their refund and registering the revenues only when the refund is disposed, therefore a gap between spending and registering the revenues is created.

As we can see, most of the expenses come from the activity of the university, education. Here, we have expenses with: - 77% - personnel - 18% - equipment - 0.018% capital - 0.03% - scholarships The small weight of capital expenses is the result of the policy sustaining development from budgetary sources. As a conclusion, we can state that: -the revenues from current activities were greater than the expenses with 1,197,662 lei, meaning the budgetary execution ended with budgetary surplus; -the weight of expenses for the base activity in the total expenses is 57.88%; -the weight of expenses from the base financing in the total costs is 23%, compared to 30% in previous years; -the expenses with personnel make the programs with irredeemable financing a source of revenues for the personnel which initiate and participate at this type of programs; -the weight of capital expenses in this programs bring important input to the modernization and development of the material base of the university. It is necessary for the future strategies to allow identifying solutions for allocating supplementary amounts for the endowment of educational spaces and accommodation, these being indicators of quality when receiving funds for each university.

3. STANFORD UNIVERSITY
The Leland Stanford Junior University, commonly referred to as Stanford University, is an American private research university located in Stanford, California. It is recognized as one of the worlds leading universities. Budgeting at Stanford is a complex process that takes place throughout the whole year and it occurs at almost every level within the university. Stanfords budget can be seen as mix of thousands of smaller budgets, which are managed by the areas that are governed by them, with the supervision of the provost or chief budget officer of the university. Although there are some general principles and guidelines to which the budgets must adhere, schools and other units are allowed a great freedom in the development and execution of their budgets. During the annual general funds budgeting process, each budget unit met with the Budget Group, the provosts budgetary advisory body comprised of senior faculty and administrators, to review the status and impact of last years budget reductions, to review the impact of mitigating a smaller portion of the endowment payout decline in 2010/11 than in the prior year, to discuss strategic directions, and to hear requests for incremental general funds. At the end of the process, the provost makes allocation decisions based on the units presentations, consultation with the Budget Group, and a final forecast of available general funds. Therefore, the universitys budgeting practice is to keep units prior year general funds allocations in place and then make further additions or reductions based on programmatic necessities. In other words, Stanford University uses a traditional budget model called incremental budgeting, in which budget proposals and allocations are based upon the funding levels of the previous year. This type of budgeting is used because it is easy to implement, it provides budgetary stability and it allows the university to plan multiple years into the future. Stanford also uses, to some extent, another budgeting method known as priority-based

budgeting, since every year the university identifies its most important priorities in terms of money allocation. Thus, additional financial resources are allocated in accordance with the ranking of the priorities. Stanfords budgets are developed and managed according to the principles of fund accounting. Revenues are segregated into a variety of fund types, and the use of revenues is governed by the restrictions of the fund. For instance, donations are put into an individual fund that can be used only in accordance with the wishes of the donor. Other types of financial aids, such as those received from government agencies, foundations and outside sponsors are also deposited in separate, individual funds. Therefore, the university is able to spend the funds appropriately and by respecting the donors desires. Cash resources are classified into fund groups, which are subject to different legal and management constraints. There are four different categories of funds: 1) Current Funds, which include revenue to be used for operating activities e.g., tuition revenue, sponsored research support, endowment payout, and other investment income; 2) Endowment Principal Funds, which include all of Stanfords endowment funds, both those restricted by the donor, and those designated as endowment funds by university management; 3) Plant Funds, which include all funds to be used for capital projects, such as construction of new facilities or retirement of indebtedness; and 4) Student Loan Funds, which include those funds to be lent to students.

The university uses a sophisticated financial accounting system to set up the individual funds, to record each financial transaction and to track fund balances. The aggregate of all Stanfords smaller budgets is called the consolidated budget for operations and it is not centrally managed in the corporate sense. The university also has general funds that can be used for any university purpose. The consolidated budget for operations provides a management-oriented overview of all non-capital revenues and expenditures for Stanford University in the fiscal year 2010-2011. It is based on forecasts and it only includes revenues and expenses for current operations. It does not include plant funds, student loan funds, or endowment principal funds, although it does reflect

payout of endowment income. The 2010/11 consolidated budget for operations shows total revenues of $3,842.7 million and expenses of $3,650.8 million, resulting in a net operating result of $191.9 million. However, after estimated transfers, primarily to plant funds, the consolidated budget shows a surplus of $84.5 million.

Revenues: As seen above, a large percentage of the universitys revenues come from student income. Stanford expected to generate $554.4 million in tuition and fee revenue in 2010/11, a 3.8% increase over 2009/10, slightly higher than the general tuition rate increase due to a small increase in student numbers. While total tuition and fees represents only 14% of Stanfords total revenue, it is 58% of general funds. In addition to supporting faculty and staff salaries and other direct academic program needs, tuition plays a crucial role in funding infrastructure, support services, and other operational activities. For the combined room and board rate there was an increase of 3.6% for 2010/11, bringing the undergraduate rate to $11,876. The funds were used to support asset renewal programs related to fire, life safety and code compliance and the new East Campus Dining facility. The budget for sponsored research support was projected to be $1,150.7 million in 2010/11. This figure includes the direct costs of externally supported grants and contracts, as well as reimbursement for indirect costs incurred by the university in support of sponsored activities. Sponsored research was projected to generate 30% of the universitys consolidated operation revenues in 2010/11 and is Stanfords largest source of revenue. The university has received $190.4 million of ARRA (Recovery and Reinvestment Act) stimulus funding, which was spent over the two-year period of 2009/10 and 2010/11. Health care services income was budgeted to be $518.6 million in 2010/11, a 4.7% increase over the projection for 2009/10. The majority of this income was in the School of Medicine, including $398.9 million paid by Stanford Hospital and Clinics and Lucile Packard

Childrens Hospital. $41.5 million was generated by the Stanford Blood Center, as well as $18.6 million of hospital payments to the Medical School for rent and use of the library and other nonclinical programs and services. Expendable gift income in support of operations has increased by 10% from $150.0 million in 2009/10 to a total $165.0 million in 2010/11. Expendable gifts are those immediately available for purposes specified by the donor and do not include gifts to endowment principal, gifts for capital projects, gifts pending designation, or non-government grants. Net Assets Released from Restrictions are those funds that will become available for spending as specific donor restrictions are satisfied. In 2010/11, this income remained flat at $75.0 million. Total investment income, Stanfords second largest source of revenue, was expected to increase by a mere 0.7% in 2010/11 to $904.8 million. This amount includes endowment income as well as other investment income. Total endowment income includes payout from individual funds invested in the Merged Pool as well as specifically invested endowments (e.g., oil and mineral rights), and rental income from the Stanford Research Park and other endowed lands. Endowment payout to operations in 2010/11 was expected to be $758.1 million, a decrease of 10.9% over 2009/10. Other investment income in 2010/11 came from four main sources: Payout on the expendable funds pool ($88.5 million) and income earned on unexpended endowment payout separately invested in the endowment income funds pool ($5.0 million), Investment income distributed to support the operations of the Stanford Management Company and the real estate division of Land, Buildings and Real Estate ($29.8 million), Interest income on the Stanford Housing Assistance Center (SHAC) portfolio ($12.7 million), and Security lending and other interest income ($10.2 million). Expenses

The salary and benefits line in the consolidated budget for operations represents total compensation, which includes academic, staff, and bargaining unit salaries, fringe benefits, tuition benefits for research and teaching assistants, and other non-salary compensation such as bonuses and incentive pay. Total compensation in 2010/11 was budgeted to be $1,987.8 million, a 4.7% increase over the year-end projection of $1,898.8 million. This increase is driven by the approved merit programs for faculty and staff, additional salary allocations for equity and retention, as well as projected headcount growth of 1.0% for faculty and staff. Total SLAC (Stanford Linear Accelerator Center) expenses in 2010/11 were expected to be $345.7 million, a 6.1% increase over the projection of $325.7 million for 2009/10. SLACs budget is made up of $211.5 million in compensation expense and non-compensation expense of $134.2 million. Stanford University was expected to spend a total of $217.4 million on student financial aid for undergraduate and graduate students in 2010/11, $19.8 million of which were projected to come from general funds. Total budgeted financial aid was a mere 0.6% above the projected total for 2009/10, as a result of undergraduate aid decreasing and graduate aid increasing. Other operating expenses make up about one-third of the total expenditures in the consolidated budget and were projected to increase slightly by 3.1% to just over $1.1 billion in 2010/11. The principal components include: materials and supplies ($268.0 million, of which about one-third are laboratory supplies); contracted outside services, which includes research subcontracts ($183.0 million); internal debt service ($170.6 million); food, entertainment, and travel ($97.4 million); external payments for facilities and equipment operations and maintenance ($97.4 million); capital equipment and library materials purchases ($75.8 million); external payments for telecommunications and utilities for campus buildings ($49.4 million); student stipends ($51.3 million); services purchased from the hospitals ($48.0 million); and rentals and leases ($33.3 million). Transfers Once current expenses are netted from current revenues, funds are also transferred between units, between fund types, and out of the consolidated budget for operations. The end results are the changes in fund balances, representing what is expected to happen to available fund balances. The schools, administrative departments, and central administration authorize movements of funds out of operations to create other types of assets. These transfers to and from assets vary widely from year to year, and a single transaction can greatly affect these numbers. General funds The general funds budget is an essential element of the consolidated budget because general funds can be used for any university purpose, and they support the necessary administration and infrastructure for all core activities at the university. The main sources of these funds are student tuition, indirect cost recovery from sponsored activity, unrestricted endowment income, and income from the expendable funds pool. Each school receives an allocation of general funds, which support both academic and administrative functions. General funds revenue in 2010/11 was projected to be $958.4 million, a $74.9 million increase over the expected level for 2009/10. The largest general funds allocation was made to endowment mitigation. Most academic units support their operations with a combination of funding sources that are pooled in their operating budget. In 2009/10 the provost decided to mitigate the 10% decline in restricted endowment available to support the operating budget with an allocation of $20 million in base

general funds, which offset roughly 75% of most units decline in payout. In 2010/11, $19.3 million in general funds have been allocated to offset roughly 50% of the 15% decline the units will experience in their endowment payout available to support the operating budgets. The first priority in the 2010/11 general funds allocation process was to fund a competitive salary program. The incremental cost to general funds of the combined salary and benefits program was $15.7 million. The universitys generous undergraduate financial aid program was not reduced as a part of last years budget reductions. Growing costs in that program coupled with payout declines in endowed financial aid funds, however, require a build-up of base general funds on top of increased efforts to fundraise additional scholarships in order to continue the programs strength. That build-up starts with $10.0 million allocation, with an incremental $1.0 million per year planned for the next five years. Incremental facilities costs are of $6.2 million and include service incremental operations and maintenance, utilities, and debt service on new buildings which came on-line during 2010/11. The university reserve increased with $4.25 million. This allocation brings the university reserve to $20 million, nearly restoring the $5.0 million that was cut during last years budget reductions. This base reserve is intended as a buffer against sharp declines in general funds. Other significant sums of money were allocated as a form of graduate student support, faculty support, academic support and other allocations.

3. OXFORD UNIVERSITY
Known as the oldest English- speaking university in the world, Oxford is an independent and self-governing institution which comprises the University and the colleges. Thirty-eight colleges are related to University in a federal system, but due to the fact that each college is also independent and self-governing, their financial results are not consolidated into the University financial statements. Oxford University is an exempt charity institution, established for charitable purposes through the Act of Parliament or by Royal Charter. It is considered as exempt because they were supervised or accountable to Parliament. Even though it is outside the jurisdiction of the Charity Commission, the usual legal rules are applicable to charities in English Law and to general provisions of the Charities Acts. The Universitys governing bodies are the Congregation and the Council, the Congregation being the legislative body of the institution and it is compound of all academic staff, certain research support staff, librarians and administrators. The Council is the executive governing body of the institution having as members the Charity Trustees of the University and being advised by a range of committees: Education Committees, General Purposes Committees, Personal Committee, Planning and Resource Allocation Committee, Research Committee, Financial and Audit Committees. The Planning and Resource Allocation Committee forms part of the Academic Administration Division and advises Council on planning, budgets, forecasts, resource allocation and different financial arrangements and in the same time monitors performance against plans and budgets. a) Resource Allocation Resource allocation is realized by Joint Resource Allocation Advisory Board (JRAAB) and is an expert body that makes recommendations to Council concerning Joint Resource Allocation

Method (JRAM). JRAM represents the method used to determine how to split the funds received for teaching and research between the Colleges and University. The funds that are distributed to Colleges are computed using Collegiate Funding Formula, while the funds that are distributed inside University are distributed between divisions, each of them being fully responsible for the funds received. b) Planning cycle Planning at Oxford consists in describing the objectives, principles and the structure of the cycle and also the timetable of the planning and resource allocation. The Universitys planning system can be divided in 3 main activities: i) Long term strategic planning a 5 year strategy is established with the corresponding objectives ii) Operational planning and budgeting plans and budgets for the forthcoming year are established. Yearly, operational plans are presented and they provide information for performance management process. iii) Performance management involves the delivery of plans and budgets that include performance indicators and management information. Starting from these reports, the forthcoming years operational plan is developed and also the strategy is reviewed. Revenues The total income that Oxford recorded in 2010-2011 was 919.6 million pounds, greater with 4,5% than the previous year and the largest source of income is represented by research grants and contracts with a 41 % contribution.

There are several types of sources of income out of which Research Grants and Contracts are the most considerable totaling 376.7 million pounds, increasing with 2.6% than the previous year. They are considered recurrent income being accounted for on an accruals basis and included to the extent of the completion of the contract or service and any payment that is received in advance is registered as being a liability.

Grants from Higher Education Funding Council for England (HEFCE) represent the second largest source of income of Oxford University. It amounts 200.3 million pounds, encountering a decrease with 1.3% due to the current international financial situation. Academic Fees represents 22% from the value of total income, amounting 152.7 million pounds. It is represented by the fees that the students are paying during the current year. Scholarships are accounted as expenditure and they are not deducted from income. Other Income represents 17 % from total revenue sources and includes the donations received for capital projects and endowment, the income and expenditure account which comprises gains from research activities and the income from the sale of goods or services that are supplied to external customers. Investment income represents only 3% from the total sources of income, but is the sector that registered the highest percentage increase (25%), totaling 31.3 million pounds. It is represented by income from fixed asset investment, cash and current asset investment and they Expenses Total expenses were in 2010 -2011 908.2 million pounds, larger with 2.7 % than the previous year and the largest amount of money is spent on staff costs including research, 53%.

This time, the highest percentage from the total expenses is represented by Staff Costs including Research and it totals 53 % , which amounts 479.3 million pounds, registering an increase of 2.2% reported to the previous year. This increase in staff costs is the result of an annual negotiated pay settlement of -4.%, also due to an increase in the level of the salaries annually, at which we can add early retirement charges. In 2011-2012 , Oxford University intends to reduce the cost and staff number. Other operating costs represent 15% out of total expenses and they amount 381.4m pounds, encountering an increase of 5.9% than the previous year. The main reason for this increase is the fact that the number of students that were receiving scholarships increased, this generating a higher utility cost.

Other research costs represent 15 % from the total expenses and are represented by the costs of the research projects that are developed inside Oxford University and that are using internal sources. Depreciation represents 6% from total expenses increasing from 51.6 million pounds in 2009/10 to 53.3 million pounds in 2010/11 due to the completion of new buildings, out of which Earth Sciences Building and the Swindon Book Storage Facility have to be mentioned. JRAM payments to colleges represent 5% from total expenses and includes the amounts of money that Oxford University is donating to his 38 colleges, money that are spited according to a Collegiate Funding Formula. Budgeting method The budget for the forthcoming year is established by Planning and Resource Allocation Committee, which has the responsibility to advise the Council regarding plans, financial issue and budgets. Due to the complexity of this institution there are plenty of activities that need to have allocated a certain budget. In order to assure that the correct cost/price is established for a certain project/ activity, Oxford University uses Full Economic Costing, which is a methodology for computing the total costs for undertaking a certain project or activity in a sustainable manner. One of the most important sources of founding of the Oxford University is represented by the funds received from Higher Education Funding Council for England (HEFCE) and public sector agencies. These funds received from before mentioned institutions are obtained based on the performance indicators of the Oxford University. These performance indicators are published by the Higher Education Statistics Agency (HESA) and they are covering areas such as student retentions, success rate, and research performance. Basically they are gathering data regarding students, staff and finance data. The way Oxford University receive its funds is closely related with the budgeting method that it is using: performance-based budgeting. This method connects the performance information with the allocation and management resources. Starting from the performance indicators that are provided by HESA, the university develops performance measures that will track the achievement of the initial indicators. Starting from these performance indicators, the budget is detailed, allowing in this way to align the spending plan with performance reporting at the time the budget is started. At the end of each budget period the result of the project can be established using those performance measures that were mentioned in the budgeting process. Due to the fact that these performance measures are basically the same from one year to another, Planning and Resource Allocation Committee maintains a database with the performance indicators corresponding to each year, in this way being easier to analyze the evolution of the university. The Strategic Plan of Oxford University emphasizes a series of objectives are expressed according to the desired performance indicators. In order to accomplish the objectives presented in Strategic Plan, Oxford University, will have to perform several activities like: a) Continuous improvement of financial planning and resource allocation The budgets for recurrent activities will be established for three-years planning cycles instead of yearly cycles as it is in this moment. Under the same strategic plan objectives, the University is re-considering the way costs are recognized, emphasizing not on the value of the costs but more on the place these costs are incurred. By knowing the cost of teaching, research and services, the institution will obtain a better allocation of the income to budgets. The advantage of balanced

budgets would be larger funds for strategic investments in capital projects, equipment and staff motivation. b) Improvement of income distribution The funds obtained from Oxford University Press and other sources will the subject of a planned distribution having as final objective an improvement in the way costs are apportioned. c) Better knowledge of cost distribution Understanding the level of the cost for teaching or for research, Oxford could estimate better the way activities have to be structured. Knowing the cost of education for a student, it can be established a certain number of students to be enrolled in such a way that a profit can be obtained.

4. HEIDELBURG UNIVERSITY
Founded in 1386, Heidelberg University, a state university of BadenWrttemberg, is Germanys oldest university. Firmly rooted in its history, the University is committed to expanding and disseminating our knowledge about all aspects of humanity and nature through research and education. The University upholds the principle of freedom of research and education, acknowledging its responsibility to humanity, society, and nature. Development of the budget of the University of Heidelberg (including medical education), was for the year 2010 a grant of around 382.8 million (previous year: 379.9 million estimated). The grants to the medical faculty of Heidelberg is of about 209.7 million (previous year 206.7 million) included. The planning of the State of Baden-Wuerttemberg saw thus, for the University (excluding academic medicine) a grant of approximately 173.1 million (prior year 173.2 million). The reduction of the plan to the previous year is mainly due to the reduction in the approach for the initial construction ( -0.2 million) and an increase in the deposit of the Innovation and Quality Fund ( 0.5 million) on the one and the adaptation of the civil servants' salaries due (+ 0.5 million) on the other side. Resulting from the settlement process with the Ministry of Science, results an actual contribution to the University (excluding medical education) of approximately 2.3 million below the forecast. The shortfall is due to a reduction of the land grant (especially global reduction in expenditure in the amount of approx. 2.5 million), the reimbursement for additional expenses of the establishment staff (approx. 66 thousand) and a gain from the performance-oriented allocation of funds (179 thousand ), which however are only in fiscal year 2011 net income. Evidence of the use of allocations from the state budget to the University (excluding university medicine) is made by the commercial financial statements. In 2010 the attributable income from general tuition fees amounted to 13 million. The funds were used by additional teaching staff to fund additional literature, teaching-related investments in technical equipment and other measures to improve teaching and student situation. The equity of the University has increased in fiscal year 2010 through the retained earnings of 2.3 million and the removal of the retained earnings from tuition fees of 0.3 million in the balance by 2.0 million. The equity ratio is at a nearly 5% from 170.3 million to 178.6 million increase in total assets 49.7% (previous year: 51.0%). Payments for investments in fixed assets amounted to 24.1 million last fiscal year (previous year: 23.9 million). This reached a volume of fixed assets of 91.8 million (previous year: 88.0 million) or 51.4% (previous year: 51.7%) of total assets.

The following chart shows the major changes in income and expense items, compared to the previous year:

Nr. Crt. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Income from the land grant Income from special allocations of the Ministry of 14,360 Science 12,970 Income from tuition fees 95,285 Income from grants and other revenues 2,981 Increase / decrease in inventories of work in progress 19,075 Other operating income 315,139 Operating Income 46,386 Cost of materials 206,912 Personnel expenses 21,666 Depreciation 37,982 Other Operating Expenses 312,946 Operating Expenses 2,193 Gross Operating Profit 257 Net Interest Income 2,450 Profit from ordinary activities 415 Extraordinary expenses 9 Other Taxes 2,026 Net Income 305 Retained earnings from tuition fees 2.331 Retained earnings

2010 (thousands ) 170,468

2009 of (thousands ) 168.093 10.773 13.63 95.041 -2.275 18.828 304.09 44.272 196.287 22.064 35.743 298.366 5.724 624 6.348 6.134 5 209 2.3 2.509

of

Below are explained the reasons for these changes: The resulting increase in income from the Land grant comes from the increase in the budget available for equipment grants and for investing activities and large equipment. The significant increase in income from special funds of the Ministry of Science mainly comes mainly from the funds for the implementation of a national approach to data storage. The inventory changes in the contract research projects are due to increased number of ongoing projects. The change in other operating income results from an increase of the free transfer of ownership of assets, in particular by German research community. The higher cost of materials results from a substantial portion increases in energy expenditure. The increase in personnel expenses is due to a significant share in the additional expenses for non-permanent scientific staff. The increase in other operating expenses is distributed to various expense categories. The decrease in net financial result is due to an increase in interest from the effects of the provision for retirement. These rate effects are due to changing regulations. The extraordinary expenses result from the revaluation of provisions for partial retirement.

5. COMPARISON BETWEEN UNIVERSITIES

Item AES Country Stanford Oxford Heidelberg university ASE Type of Institution Stanford Oxford Romania United States of America United Kingdom Germany Public research university Private research university Exempt charity institution Description of the item

Heidelberg university Budgeting Body AES

Public university of BadenWrttemberg Executed according to normative acts regarding the activity of public institutions and the Law of Education and is supervised by the general manager and the chief of the financial department. Stanfords budget can be seen as mix of thousands of smaller budgets, which are managed by the areas that are governed by them, with the supervision of the chief budget officer of the university. Planning and Resource Allocation Committee: -forms part of the Academic Administration Division -advises Council on planning, budgets, forecasts, resource allocation and different financial arrangements and in the same time monitors performance against plans and budgets Division of Budget and Development, Construction and Real Estate, Safety (D3) The division is in charge of the structure and development of university planning, quality management and the Heidelberg-specific model of decentralized responsibility for resources (so-called IMPULSE project). In addition it calculates the study capacity of all courses. Revenues (54 million ): -36% tuition fees -24% ministry -14%structural funds -12%special allocations -11% research activity -3% hostels and cafeteria Revenues (3,842.7 million $): -30% sponsored research support -20% endowment income -18% student income -13% health care services -9% other income -6% expandable gifts -4% other investment income Revenues (919.6 million pounds): -41% research grants and contracts -22% HEFCE Grants -17% academic fees -17% other income -3% investment income

Stanford Oxford

Heidelberg university

Type of revenues

AES

Stanford

Oxford

Heidelberg university

Type of expenses

AES

Stanford

Revenues (315.396 mil ): - 54.05% revenues from the Land grant - 4.55% revenues from special allocations of the Ministry of Science - 4.11% revenues from tuition fees - 30.21% revenues from other grants and revenues - 0.95% revenues from ongoing research projects - 6.04% other revenues - 0.08% revenues from interests Expenses ( -35% own activity -23%base financing -10% research activity -19% structural funds -3% hostels and cafeteria -10% complementary financing Expenses (3,650.8 million $): -54% salaries & benefits -30% other operating expenses: materials, supplies, facilities, equipment, library materials -10% SLAC -6% financial aid for students Expenses (908.2 million pounds) -53% staff costs including research -15% other research costs -15% other operating costs -6% premises -6% depreciation -5%JRAM payments to colleges Expenses (313.370 mil ) - 14.8% cost of materials - 66.03% cost of personnel - 6.91% depreciation - 12.12% other operating expenses - 0.13% extraordinary expenses - 0.003 % other taxes Incremental budgeting, the budget execution ending with budgetary surplus or deficit and this is taken into account for the following year Incremental budgeting: - budget proposals and allocations are bASEd upon the funding levels of the previous year and, to some extent, priority bASEd budgeting Performance-bASEd budgeting method: - connects the performance information with the allocation and management resources - starting from the performance indicators that are provided by HESA,

Oxford

Heidelberg university

Budgeting method

ASE Stanford Oxford

Heidelberg university

the university develops performance measures that will track the achievement of the initial indicators Incremental budgeting: - the previous years budget for a department or division is carried forward for the next annual budget, adjusted for factors such as new legislative requirements, additional resources, service developments, anticipated price changes,etc.

6. CONCLUSIONS 7. BIBLIOGRAPHY
Banovic, D. (2005). Evolution and Critical Evaluation of Current Budgeting Practices, [Online] available at http://www.cek.ef.uni-lj.si/magister/banovic2695.pdf, accessed on 23/05/2012. Financial Statements of Academy of Economic Studies , [Online] available at http://www.ase.ro/ase/management/pdf/Planuri_rapoarte/2011_an/raport%20BVC.pdf , accessed on 01/06/2012. Financial Statements of Oxford University, [Online] available at http://www.ox.ac.uk/about_the_university/introducing_oxford/annual_review/financial/financial. html, accessed on 01/06/2012. Official website of Oxford University, [Online] available at http://www.ox.ac.uk/about_the_university/introducing_oxford/annual_review/index.html, accessed on 01/06/2012. Official website of Stanford University, [Online] available at http://www.stanford.edu/, accessed May 29. Official web site of Planning and Resource Allocation Department [Online] available at http://www.admin.ox.ac.uk/pras/aboutus/ accessed on 30/05/2012. Stanford University Budget Plan 2010/11, http://www.stanford.edu/dept/presprovost/budget/plans/BudgetBookFY11.pdf, accessed May 29, 2012. Unknown author . (2010) . Methods of Budgeting, [Online] available at http://www.niassembly.gov.uk/researchandlibrary/2010/0610.pdf , accessed on 23/05/2012. Unknown author. (2010). 6 Alternative Budget Models for Colleges and Universities, [Online] available at http://www.hanoverresearch.com/2012/04/6-alternative-budget-models-forcolleges-and-universities/, accessed on 01/06/2012.