The newly appointed VP for Planning and Finance is faced with the dilemma of reduced budget for Maintenance

and Other Operating Expenses (MOOE) for CY 2000. A meeting with the Chancellors of the different autonomous campuses was held to gather feedbacks and discuss matters that may affect allocation. MOOE Composition 1999 Ratio 2000 Instruction 602, 124 66% 403, 561 Extension 313, 801 34% 250,000 Research TOTAL 915, 925 100% 653, 561 Table 1. Maintenance and Other Operating Expenses Budget (in 1000 Php) Ratio 62% 38% 100% Difference 33% decrease 20% decrease -

In the preparation of budget, the VP should start by analyzing cost drivers for MOOE-Instruction (academic programs and UPSA), MOOE-Research, and MOOE-Extension (autonomous campuses) from previous financial statements and from inputs of appropriate officers. The differing priorities and achievements of the three University mandated functions provides a valid ground to apply the budget cut since Instruction will suffer a 33% decrease while Extension will endure only 20%. From the Chart of Accounts of the New Government Accounting System, MOOE is composed of (a) Traveling Expense; (b) Training and Scholarship Expense; (c) Supplies and Materials Expense; (d) Utility Expense; (e) Communication Expense; (f) Professional Services; (g) Repairs and Maintenance; (h) Subsidies and Donations; (i) Confidential, Intelligence, Extraordinary and Miscellaneous Expense; (j) Taxes, Insurance Premiums and other Fees; (k) Noncash Expense; and (l) Other Maintenance and Operating Activities. Nevertheless, not all of these components apply to all cost drivers at the same time. The following table summarizes the adjustments that should be incorporated in the cost drivers. Although the VP has gathered helpful data in allocating the budget, some factors may not be applicable to other MOOE compositions. Careful planning and detailed examination of the bases can anticipate further costs for the University. This also allows productive cost-sharing among the different sites since some campuses have miscellaneous revenue from their own resources that could complement the budget cut. If the financial plan is prepared from inappropriate drivers, the various functions will just result to inefficient and inequitable operations in the coming year. COST DRIVER No. of students (weighted based on education level) No. of students with laboratory subjects No. of Faculty and REPS No. of faculty, REPS, and Administrative Personnel No. of Buildings MOOE-INSTRUCTION Takes account of varying levels of difficulty in courses Applicable Not applicable Applicable Only buildings/classrooms actually used for instruction (adjusted for depreciation/age)
Takes account of decreases in licensure exam passing rates and specialization courses/core competencies

MOOE-EXTENSION Takes account of campus geographical location Not Applicable Applicable Not Applicable Only buildings/classrooms actually used for admin offices (adjusted for depreciation/age) Takes account of newly established autonomous campuses

MOOE-RESEARCH Takes account of students actually taking researchrelated courses Applicable Applicable Not Applicable Only buildings/classrooms actually used for research (adjusted for depreciation/age) Takes account of government-mandated research units

No. of Campuses

The aforementioned adjustments should be taken into account in preparing the preliminary budget. It may later be revised based on liquidity and profitability of each campus. This could be augmented by implementing a generous incentive-based scheme for above-par performances or highest revenue-generating activities. Execution of these will not only capably smoothen strategic operations of the University with regards to its financial concerns but more importantly amplify rates of satisfaction and graduates among its students.

BA 117

Case 10-4: University of the Philippines | HERRERA . PISPIS . VALDERAMOS . VERGARA