Hyperion Financial Management (HFM) and Reporting Project

August 19, 2014

Agenda

Brief Overview of RCM

Hyperion Financial Management (HFM) Project goals

Projects Module

Review of Proposed New Chart of Accounts

Closing Comment/Next Steps Planning and Budgeting

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Responsibility Center Management • A budget model promoting financial responsibility at a

unit level

• Works most effectively in an environment of transparency and accountability

• RCM is a tool – academic leaders have responsibility for using the system to advance the missions of the University

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What Are The Benefits Of RCM?

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• Increases transparency of the budget process • Makes clearer the direct and indirect (university-wide and

campus) costs of operating the schools and the university as a whole

• Better aligns resources with the units that generate and control them

• Creates financial incentives for schools to increase revenues and reduce costs while supporting the university’s mission

• Encourages schools to develop multi-year budget plans • Provides academic leadership with better data and funds to

balance needs of units, set academic priorities and advance strategic initiatives

RCM is an academically focused, decentralized budget model that:

University-wide Support For Successful RCM

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• Academic leaders (President, Chancellors, and Deans) shape allocations to advance the overall strategic vision and to ensure the academic health and integrity of the whole

University-wide coordination and funding are needed to fulfill public missions of a university

How Does RCM Work?

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REVENUE • Tuition and Fees • F&A Return • Other Income

RESPONSIBILITY CENTERS • Schools • Research Centers • Auxiliaries

DIRECT & INDIRECT COSTS • Direct Expenses • University-wide Support Units • Campus/Division Support Units

Revenues are credited to the Responsibility Center

that generates them

Schools must then pay for their direct expenses as well as a share of the expenses to fund the

Support Units

Allocation of Costs University-wide Cost Pools

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General Administration

Academic and Student Support Libraries

Research Support Information Technology Facilities

Outputs from RCM

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The major output from RCM is data that can be used for many types of analysis

• Comparisons across units • Administrative cost and effectiveness

benchmarks • Space utilization

Time Frame

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DESIGN (FY13)

-Read available RCM literature and researched RCM models at other universities -Determined indirect cost pools and developed methodologies to allocate these costs to the revenue generating responsibility centers

PREPARATION (FY14)

-Advisory committees formed to discuss preliminary RCM budget model -Develop preliminary budget model -RCM budget model is continually refined and fine tuned based on committee feedback

TRAINING & TRIAL RUN (FY15)

-Training will be provided through information sessions, small focus groups, hands on computer labs, and documentation -A trial run of RCM will be implemented on paper and run parallel to AFB -Assumptions will be tested and “tweaks” made

FULL IMPLEMENTATION (FY16)

-RCM will be fully integrated into the general ledger

Hyperion Financial Management (HFM) Project Goals Standard reporting across the University System

• Consolidate external and management reports Feed data from Banner and RIAS (Oracle) into HFM to produce consolidated

enterprise-wide reports • Define a new consolidated chart of accounts (all segments & values)

Initially, to be used within HFM to consolidate Oracle and Banner financial results

In the future, to be used University-wide as part of the ERP implementation • Develop the crosswalk between the existing general ledgers and the

new COA • Align monthly financial closing processes

Reduce or eliminate the need for existing shadow systems

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Projects Module- Subledger Supporting the GL

• The plan is to implement Projects at the same time as the new GL.

• Project Examples: Capital projects, Grants, Gifts, Start-up projects or other projects Transactions for these examples are entered through the projects

module, using a project number that translates to the COA segment values.

• Projects contains information that is project-specific and that

is not contained in the GL COA.

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Account Code Combination

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Unit (RC) (3)

Location (3)

Org (4)

(Natural) Account

(5)

Fund Type (3)

Business Line (4)

Activity (4)

Future (5)

Project 123

Definition– Unit (Responsibility Centers) • Unit (Responsibility Center Groupings): School, Institution,

Center and/or Central Unit which is required to produce a balanced Balance Sheet.

• Establish this as the balancing segment.

Each transaction must balance; debits equal credits within the unit.

Would require due to/from relationships if data needs to be transacted between units, such as between SEBS and SAS. The system would generate the due to/ due from transactions

automatically.

Financial Statements: Profit/Loss and balanced Balance Sheet

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Definition – Location • Location: Identifies the area where the revenue and/or costs

were incurred including onsite, off-site, online and foreign locations.

Useful in identifying true costs for a responsibility center when

spread across multiple locations. Can be used for identifying clinic locations or specific locations

where work is being performed.

Financial Statements: Profit/Loss and partial Balance Sheet

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Definition - Organization • Organization (Department): A business area which owns

people and space. Values are not responsibility center/ unit specific. Reduce redundancy. Example: Dean’s Office. Provides the flexibility to see total cost for a single organization

across the university. Requires commonality including language (value description)

and purpose (use) for each value.

Financial Statements: Profit/Loss and partial Balance Sheet

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Definition – Fund Type • Fund Type: Identifies the funding source used to acquire

goods and services.

Unrestricted Restricted Endowment Plant Loan Auxiliary

Financial Statements: Profit/Loss and potentially a secondary balancing segment.

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Definition – (Natural)Account • (Natural)Account – Expenditure type that is the equivalent of

our current natural accounts (i.e. salaries, supplies, etc.) Review of existing values

Eliminate unnecessary values with no recent activity

Identify needed values that would enhance reporting.

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Definition – Business Line • Business Line: Required to be populated to identify the specific

line of business (or mission) being offered. The lower values are to be determined. Examples of high level values are: Instructional Research Healthcare Public Service Other

Financial Statements: Profit/Loss and partial Balance Sheet

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Definition – Activity • Activity: To identify total activity of high-level,

interdisciplinary and strategic initiatives that span across multiple responsibility centers/units.

Values will be determined by the President, Chancellors, and Deans.

Financial Statements: Profit/Loss and partial Balance Sheet

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Closing Comments – Next Steps

Relationship to RCM

Hyperion Planning/Budgeting Project

ERP Reimplementation Plans

Questions

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