Schools and Administrative Units will prepare 5 Year Financial Plans as part of Planning 2024. The first year of the financial plan will, when approved, act as the Budget for the 2024/25 year.
Financial Planning will formally start in mid-March after the March Census has been taken and the data used to prepare a Base 5-Year Financial Plan. The Base plan is a starting point for planning and assumes that the current position is repeated for each of the 5 years, these will need to be amended for known and planned changes
The Financial Plan is prepared under UCD’s Financial Model whereby units are set Targets in a formulaic manner. Financial Plans are compared against the Targets and variances are shared in a formulaic manner. Plans are expected to be sustainable over the lifetime of the plan and to leave the unit with breakeven or positive Discretionary Reserves and on a sustainable trajectory. There should be clear ambitions noted for utilisation of any substantial positive discretionary school reserves.
Each year the Budget Approval process starts by setting Targets based on the prior year's Target, with adjustments in accordance with the UCD Financial Model. Plans are then developed for each unit, submitted and the first year of the plan is approved as the Budget.
See the Milestones section for an overview and Google Calendar.
The Initial Budget Pack is produced from the PBCS planning system and is available to the Head from the Planning Documents InfoHub page.
The Pack consists of the following reports:
Finance Managers will work with Heads and use these inputs to prepare draft plans. Working drafts will be published to the InfoHub site for review by Heads, and Finance Managers will liaise locally on this.
The Finance Manager will produce the Financial Plan Submission on the PBCS system.
The pack consists of the following reports:
A copy will be available to the Head via the InfoHub Planning Documents site and the Head will submit the Summary Financial Plan as an appendix to the Strategic Plan.
Brief explanations of terms are set out below. The University Financial Model is explained more fully on the Finance Office website here.
| Term | Explanation |
| Fee Income or Gross Fee Income | Income processed by UCD Registry as tuition Fee Income. The levy is not included as it is payable to the Student Centre limited company. |
| Fee Related Expenditure | Expenditure that reduces the real level of fee income earned by the university. Fee Scholarships. Fee Commission and Transfers of Fee Income to Partners are the common examples. |
| Net Fee Income | Fee Income after deduction of Fee Related Expenditure such as Fee Scholarships. It is the real fee income earned. |
| Net Direct Expenditure | A unit's own expenditure. The 'net' term mean that any direct income (ie not Fee Income, not Project Income) received by the unit is taken into account. |
| Performance Based Funding | Allocating resources to units based on performance i.e. on the level of Net Fee Income earned, compared with Target. Exceeding Net Fee Income Target increases the resources available to the unit. |
| Incentivisation | This is another term for Performance Based Funding. |
| Net Fee Income Variance | The actual Net Fee Income compared against the Target Net Fee Income is described as the Net Fee Income variance. If actual Net Fee Income is higher than the target, the variance is described as favourable. |
| Sharing of Variances | At year end the Net Fee Income variance is shared between the school (40%), college (10%) and university (50%). At year end the Net Direct Expenditure variance against Target is retained by the school (100%). |
| Discretionary Reserves | A unit's share of Net Fee Income and Net Direct Expenditure variances are transferred to a Discretionary Reserve of the school. The Discretionary Reserve is under the control of the Head of School and is available to invest or to supplement recurrent expenditure. |
| Committed Reserves | While Discretionary Reserves may be used at the discretion of the Head of School, subject to complying with the agreed Five Year Plan, there may be reserves where there is no discretion over how the reserve may be used. These are referred to as Committed Reserves. These reserves may be subject to legal restrictions - e.g. imposed by an external funder - or may just reflect internal decisions of the school. |
| University Performance Based Fund (UPBF) | The university's 50% share of additional Net Fee Income is calculated under the Performance Based Funding mechanism whereby schools receive extra resources by earning extra fee income. The university share is put into the University Performance Based Fund from where it is used to support various activities of schools, colleges, support units and the university itself. In the coming years the principal use of the Performance Based Fund will be to fund Central Pool Posts, thereby improving the Staff/Student ratio. |
| Term | Explanation |
| Budget | The approved financial plan for the year. The Budget is approved by the Governing Authority, usually at the June meeting preceding the start of the financial year in October. While units prepare a Five Year Financial Plan, it is only the first year that is formally approved to become the Budget for that year. The additional years indicate the trajectory of the unit and provide very significant context for assurance that the plan is sustainable, but are not themselves subject to formal approval. However an unsustainable plan may prevent approval of a plan for the year, requiring further work until the plan is sustainable. |
| University Budget | The financial plan presented to the Governing Authority is a plan for the entire university, and represents income and expenditure of hundreds of millions of euro. It is composed of plans for each unit (approx 100 units) and for the institution itself. The Governing Authority's role is governance and so, although the plan has been through an extensive and detailed process, the Proposed Budget is at a summary rather than detailed level for each unit. The Budget approved by the Governing Authority is referred to as the University Budget and is regarded as being fixed for the year. The University Budget must be broken down to further detail (the Operational Budget) at cost centre and detailed account level and there is some flexibility in adjusting the detail during the year. Typically the University Budget is approved at the end of June, and Heads of unit are notified of the formal approval shortly thereafter. |
| Operational Budget | The approved University Budget must be broken down from unit level (ie from an overall plan for a school or support unit) to cost centre level. Much of this work will already have been done in preparing the budget submission. The detailed budget is referred to as the Operational Budget. The Operational Budget must agree to the University Budget, but the Head of Unit may approve adjustments during the year in consultation with the Finance Manager, for example moving budget between cost centres. The individual elements of the Operational Budget cannot be regarded as independent of, or overriding, the formally approved University Budget. For example, where there is an overspend or income shortfall in one cost centre, it is not appropriate to spend up to budget level in all other cost centres. This would result in the unit exceeding it's University Budget. Regular review of the University Budget is important and the Quarterly Outturns process is the formal mechanism for doing so. In this process Finance Managers prepare a full-year Forecast which is compared against the University Budget. Finance Managers provide Heads with a Management Pack of reports and meet with Heads to discuss the current and forecasted position. |
| Target (or Budget Target) |
The Target is set formulaically for units. The primary driver of the Target is the previous year's Target. Targets are also normally adjusted to reflect pay rate increases in Year 1 of the plan. Planning is therefore expressed in constant, Year 1, costs. In addition, Targets for Schools may be adjusted to reflect expected Net Fee Income performance, with both the Net Fee Income and the Net Direct Expenditure Targets adjusted in proportion with the university financial model. Because the adjustment is formulaic, the School ends up in the same position (ie with the same Reserves) whether the Target is adjusted or not. The Initial Budget Pack includes a report setting out the calculation of the Target and the Finance Managers are available to explain any element of the Target. |
| Static Target |
Performance Based Funding utilises a formula to adjust the Target for a unit. At the start of the planning cycle the Target is calculated and the same Target is used for each of the 5 years of the planning cycle. These are referred to as Static Targets. In reality, over the 5 years of the plan, Net Fee Income performance is likely to vary from the current level and each year a new Target will be calculated per the UCD Financial Model. |
| Dynamic Target |
Rather than using the Static Target throughout the 5 year planning horizon, the PBCS system adjusts the Target from Year 2 onwards dynamically, per the UCD Financial Model, based on the preceding year's plan. This replicates what will happen in reality if the plan is achieved. A School's net position - as measured by Reserves at the end of the period - will be exactly the same whether a plan is compared against a Static Target or a Dynamic Target. With Static Targets the Transfers To/From Reserves will be larger, whereas with Dynamic Targets some of the transfers are dynamically incorporated into the Targets. A worked example illustrates this. |
| Submission (or Budget Submission) |
The plan that is prepared by a unit is referred to as the Budget Submission. The plan is entered on the Planning and Budgeting system (PBCS) by the Finance Manager based on discussions with the unit Head. The Budget Submission Pack reports the details of the submission and is available to the Head via the (opens in a new window)Finance Documents menu on InfoHub. The financial plan is supported by 2 detailed plans - the Staff Plan and the Student and Fee Income Plan. |
| Staff Plan |
A detailed post-by-post plan is prepared as part of the financial planning process. Approval of the Budget by the Governing Authority extends to the supporting Staff Plans. The financial plan, and the supporting staff plan, are prepared for a five year period and sustainability over the five years is a critical part of the review and approval process. Staffing decisions can have large and multi-annual (perhaps over a very long timeframe) impact, so strict controls are applied to ensure that the approved Staff Plan is complied with. In exceptional circumstances, and supported by appropriate justification, posts outside of the Staff Plan may be approved via the Authorised Variation mechanism. |
| Student and Fee Income Plan |
A detailed Student and Fee Income plan is prepared and entered onto PBCS by the Finance Manager. The plan is driven by planned changes in Registrations to Majors and assumptions that translate the registrations into planned FTEs and Fee Income for the School. A separate strand of the planning process covers this activity here. |
| Authorised Variation |
An Authorised Variation to the approved Staff Plan may be granted in exceptional circumstances, and must be supported by appropriate justification. Finance Managers complete an Authorised Variation Request form and submit it for consideration by central UCD Finance Office staff. |
| Adjustments Cost Centre ( or 'Q' cost centre) |
As explained above, the University Budget is broken down to a lower level of detail which is described as the Operational Budget. The sum of the detailed Operational Budgets must equal the overall University Budget for a unit. Adjustments to the Operational Budget may be made during the year by the Head of Unit in consultation with the Finance Manager. Usually these adjustments are nuetral overall, for example when moving budgets between 2 cost centres. There may also be changes to budgets that are neutral overall, but represent variances from the University Budget. For example, if additional income is to be received and spent, the Head may wish to increase the Direct Income budget and also the NonPay budget. The overall Net Direct Expenditure Operational Budget would match the University Budget, but there would be opposite variances for both Direct Income and NonPay. Rather than permit variances between the University Budget and the Operational Budget, we post adjustments to a special cost centre so that the University Budget and Operational Budget always remain synchronised. This cost centre is known as the Adjustments cost centre. The code for the cost centre will be the same as the unit code, but starting with a 'Q' rather than an 'S' and so the cost centre is sometimes called the 'Q' cost centre for the unit. No other types of budget or expenditure may be used with this cost cente, it is just used for adjustments. A worked example illustrates the use of the Adjustments cost centre. |
The current Targets act as the base for setting new Targets, with standard adjustments applied as below.
| Element | Explanation |
| Base Net Fee Income Target | The Target for the current year is the starting point in setting the Target for the new year. |
| Adjustment regarding Current Year Net Fee Income | If Net Fee Income is expected to match Target for this year, no adjustment to the Base Net Fee Income Target is required. If the Net Fee Income earned this year is higher than this year's Target, then a favourable variance will occur and the school will receive Performance Based Funding to increase its Reserves. In most cases, schools plan on maintaining the higher level of fee income and wish to spend the associated Performance Based Funding. Therefore an adjustment is applied to the Base Net Fee Income to bring it up to the level of Current Year Net Fee Income, and the Net Direct Expenditure Target is also increased. If a school does not expect the higher level of fee income to be maintained, it may request that the adjustment be reduced or removed, once the initial Target has been issued. The Net Direct Expenditure Target will also be adjusted, in proportion. If the Net Fee Income earned this year is lower than this year's Target, then an unfavourable variance will occur and a charge against the school's Reserves will be made. In most cases the school will aim to put in place measures to restore the lost fee income and so no adjustment to the Current Year Target is applied when setting Targets. If a school does not believe that the Target is achievable, it may request an adjustment to be applied, once the initial Target has been issued. The Net Direct Expenditure Target will also be adjusted, in proportion. |
| Net Fee Income Target | The Base Target plus or minus the Adjustment equals the Net Fee Income Target. |
| Element | Explanation |
| Base Net Direct Expenditure Target | The Target for the current year is the starting point in setting the Target for the new year. |
| Adjustment regarding Current Year Net Fee Income - Unit Share | As discussed above, there may be an adjustment to the Net Fee Income Target to reflect the Current Year's actual Fee Income. If so, there is a proportional adjustment to the Net Direct Expenditure Target. If the Net Fee Income Target is increased, then the Net Direct Expenditure Target is also increased; if the Net Fee Income Target is decreased, then the Net Direct Expenditure Target is also decreased. |
| Adjustment regarding Pay Rates | If the State has approved pay rate increases for the coming year, then Budget Targets are adjusted accordingly as set out below, depending on whether the faculty/staff are designated under the ECF as being Core Funded or Non-Core Funded and whether the unit is an Academic Unit or not. ECF Core Funded Faculty/Staff Net Direct Expenditure Target increases to match the pay rate increases are applied for all types of unit. ECF Non-Core Funded Faculty/Staff Academic Units are expected to avail of the Performance Based Funding mechanism to generate the funding required to cover these costs and so no adjustment is made. Admin units within the Colleges are expected to utilise their share of Performance Based Funding to cover these costs, and therefore no adjustment is made. Support Areas and Research Institutes do not earn Fee Income and so are not in a position to earn Performance Based Funding. Therefore the increased costs are covered by an increase to the Target. A small number of units in Support Areas (e.g. Applied Language Centre) do come under the Performance Based Funding mechanism and therefore do not receive a Target adjustment for these costs. |
| Mainstreaming Adjustment | In a small number of cases where units are in receipt of central income annually, it may be appropriate to 'mainstream' the funding into the budget i.e. increase the Target and cease transferring the income. This is neutral overall and can be seen as an accounting adjustment that does not affect the real budget level. The Finance Office will agree any such mainstreaming with the relevant Head. |
| Net Direct Expenditure Target | The Underlying Base Target plus or minus the Adjustments above equals the Net Direct Expenditure. |
There are no changes to the ECF targets for units in the 2023/24 planning cycle.
The university's share of additional fee income is placed in the University Performance Based Fund (UPBF). In the early years of the fund, applications for disbursements from the Fund were invited. Some of the disbursements were once-off but many were ongoing or multiannual and so are still being funded. The fund is now pre-committed for strategic purposes including the Central Pool Academic Appointments and other enablers of the university strategy. Accordingly there will be no call for funding from the University Performance Based Fund or the UPBF-Minor Works Fund.
In reality, the average Fee Income for a programme is usually a little bit different to the published fee rate because of circumstances such as students dropping out, students taking more or less than the standard number of credits etc. When planning future fee income we use the average rate rather than the formal published rate, and we use separate averages for EU and NonEU.
Central Pool Academic Appointments should be included in the Staff Plan where an appointment has been made, even if the appointee has not yet commenced.
As schools will receive income for the positions from the university, they are included at 0 cost in school plans. The FTE should be included in the local staff plan.
Potential future appointees in future years should not be included.
Central Pool Academic Appointments are expected to address the Student/Faculty ratio rather than directly add to capacity and so should not be an integral part of additional income generation plans.
Fee Income in the Base Five Year Plan is generated from the most recent census in the current year and so uses current year fee rates. If there are known increases to fee rates for next year, the Finance Manager can adjust average rates for particular Majors or for a particular level so that next year's rates are used.
Next year's pay rate increases are known with a degree of certainty and will be used in the costing of staff plans.
Given the difficulty in comparing financial numbers that include cumulative inflation, we perform our financial planning using constant rates for both costs and income. These rates are set as per next year ie 2024/25, with no further increases.
The State is providing additional funding to the higher education sector via the Human Capital Initiative. Information on the initiative is available from the (opens in a new window)HEA website. Funding is coming from the National Training Fund (NTF) and the initiative is focused on skills-focused programmes designed to meet priority skills needs.
The HEA has set conditions regarding how funding is used and these do not match with the standard UCD Financial Model. As these conditions are set by the funder, they will take precedence over UCD's own model. Broadly the 2 overarching conditions are
The additional funding for additional places will be treated in UCD as Earmarked Grant funding and will be transferred in full to the relevant school(s);
The 20% overhead funding will accrue to the university.