The fiscal year budget process applies to all the Divisions as well as the Department, and serves as the overall financial plan for the coming fiscal year – July 1 through June 30. Each Division enters their budget information into a plus data access template following expectations set by both the School of Medicine’s Dean’s Office and the Department of Medicine. The budget is each Division’s best projection of revenue and expenses for the fiscal year.
Division revenue comes from eight main sources – clinical revenue, contracts and grants, gift and endowments, state and local funding sources (state FTEs, city contract funds, etc.), indirect cost recovery, Medical Center support, Department support, and Dean’s office support. The first step towards creating the new budget is reviewing all current and pending revenue streams of the Division and making appropriate adjustments in the upcoming year’s projections based on the best available information available to the Division Manager. For example, when budgeting in the area research administration, begin with the Division’s current grant portfolio, identify which grants are scheduled to end in the next fiscal year, which grants are scheduled to begin, and which grant applications are still pending to make the projections.
Profee target setting is required for all UCSF Health clinical divisions. wRVU target setting is an estimate for the total wRVUs that will be generated by all clinical faculty members in all the division’s cost centers. The wRVU estimate should be based the physician’s clinic schedule and the average amount of wRVUs generated per outpatient clinic session or the weekly wRVU average for inpatient time spent on the service. We receive a different dollar per wRVU based on the physician’s specialty. Once the best wRVU projection is made for each service, the Division Manager can then apply the appropriate dollar per wRVU value to get the projected clinic revenue for the fiscal year. In addition, clinical revenue for inpatient services funded by a staffing model is added based on the dollar per FTE times the cFTE needed to cover the service. Alternatively, some divisions use a staffing model approach as opposed to the wRVU model. Their estimates will be based on a set dollar amount for each week of the clinical service.
The second portion of the budget is projecting expenses for the coming fiscal year. The most common expenses include salary and benefits for existing and new personnel, operating costs, division investments (such as construction, etc.), rent, equipment, supplies, and services. There are several approaches to projecting expenses. For salary and benefits, the first step is to confirm the effort levels of existing personnel, ending personnel appointments, and new hires. Then project their salary and benefits, including agreed upon escalation rates for cost of living, promotions, equity increases, and benefit rate increases. Supply, equipment, and services expenses should be based on need. Straight-line projection estimates based on the previous year can be used if there are no major changes in business need.
Once the best available revenue and expense projections are calculated, business decisions will need to be made regarding the division’s business plan for the future. For example, if revenue exceeds expenses, does the division want to look into additional long-term investments for itself (i.e. increased faculty support, new equipment or furniture, etc) or simply retain potential funds in their reserve account to be used at a later time. Conversely, if the projected expenses exceed the projected revenue, the division will need to decide what steps will it make to balance the budget. For example, will it use its reserve accounts, reduce staffing levels, or make a request to the Department or the Dean’s Office for additional support. Once a plan is made, the budget is submitted to the Department and the Divisions discuss their plan with the Department in their annual budget meetings.