# Presentation: 100771

## MBWG FY 2007 Central Service Funding Recommendations

- NIH IC Directors
- October 12, 2006

- Management and Budget Working Group

## Discussion Points

- Background
- Recap of Budget Retreat
- Central Services Facts of Life and FY 2007 Overview
- MBWG Review Process
- MBWG Funding Recommendations
- Steering Committee Recommendations

- Management and Budget Working Group

## MBWG Membership

- Members
- Dr. Stephen Katz, co-chair
- Ms. Colleen Barros, co-chair
- Dr. Duane Alexander, Director, NICHD
- Dr. T. K. Li, Director, NIAAA
- Dr. Betsy Nabel, Director, NHLBI
- Ms. Camille Hoover, EO, NCCAM
- Ex Officio:
- Dr. Raynard Kington, DD, NIH
- Mr. Ken Stith, Director, OFM
- Mr. Andy Baldus, Acting Director, OB
- Staff:
- Mr. David Heller
- Mr. Jack Mahoney
- Mr. Yehuda Schmidt

- Management and Budget Working Group

## Funding Sources by Office/Activity

- Management and Budget Working Group

## Recap of Budget Retreat

- At the budget retreat in May, we said that:
- The major cost driver for Central Services funding is space:
- The Cost to Acquire It – People and Price
- The Cost to Heat and Cool It
- The Cost to Maintain It
- Despite budget constraints, census levels are continuing to increase, driving the need for more space.
- Over time, this will result in an increasing proportion of Institute/Center funding being spent on these activities unless a fundamental change occurs.

- Management and Budget Working Group

## Additional Cost Driver not Discussed at Budget Retreat

- Increasing census levels are likely to be driving the demand for other services in addition to space.
- While FTEs have been relatively constant between FY 2001 and 2005, the number of “bodies” has been increasing.
- It is possible that total demand for services is more likely related to numbers of “bodies” than either FTEs or IC operating budget levels.

- Management and Budget Working Group

## Central Services Facts of Life at the 30,000 Ft. Level

- ICs are already seeing an increasing proportion of their IR/RMS funding being spent on Central Services activities – 28% in FY 2001; 32% in FY 2005.
- Within the total pool of Central Service activities,  many are outside of MBWG budgetary control.
- Space Costs, Consolidations, DHHS Taps, Security all are increasing faster than growth of IR/RMS.
- Remaining Services growing at approximately same rate.
- Central Service providers are confronted with increases in demand for services at the same time ICs are seeking greater constraints on Central Service funding.
- Not all costs can be anticipated during the budget formulation process.

- Management and Budget Working Group

## FY 2007 Overview

- FY 2007 budget submissions reflect this reality with new challenges.
- Submissions included:
- Implementation of the ORF MEO.
- Enterprise Systems and CSR requirements.
- Smart Card requirement.
- High Priority service programs such as Ethics and HR.
- Double digit increases projected for Leases.
- Status quo (no assumed increase in demand) for remaining programs.

- Management and Budget Working Group

## MBWG Budget Review Process

- Followed the premise that the role of the MBWG is to integrate priorities; the Working Groups are to perform detailed budget review.
- For FY 2007, the MBWG requested FTE and dollar information, by fund, for commitment base, FY 2006 level, FY 2006 level-2%, and an optional professional judgment budget.
- Presentation provided by Working Group co-chairs.
- Appeal process following initial review to ensure that the MBWG did not overlook any major issues.
- Unusual as several appeal items submitted as a consequence of recent imperatives.
- Required integrated ranking of new items together with items initially recommended.

- Management and Budget Working Group

## MBWG FY 2007 Funding Recommendations 

- (Dollars in thousands)

-  Recommendations for items “above the line”
-  Represent a 3.5% increase – FY 2007 PB for IR/RMS is increase of 0.5%
-  Primary drivers are Facilities Use and Rent (MEO, etc.), Utilities, CIT FFS NIH Services, and IT Systems.

-  Three items considered “below the line” by MBWG.
-  Leases (includes Bayview) – should not be offset by reductions to NIH-wide services; continued growth of costs merits concern, however
-  CIT FFS Outside Sales – Represents no cost to NIH
-  ORF Passthroughs – New dedicated maintenance for BSL 3/4 and incorporating GRC/RML into MEO.

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- Management and Budget Working Group

## MBWG FY 2007 Funding Recommendations

-  OD
- Increases primarily for Ethics (3FTEs), HR (22 FTEs), OFM audit capability, and OMA support for A-76 activities.
- Support risk management initiative but recommend funding from OD appropriation.
- CSR – Maintains same level of operations and funds FY 2007 costs of pilot projects begun in FY 2006.
- CC – Continues program of cost savings but provides funding for some equipment replacement.
- ORS – Funds recommended to support the “Smart Card” as well as upgrade of audio visual equipment at Natcher.
- ORF – Provides updated costs for operating MEO; incorporates GRC and RML into MEO; provides for new maintenance requirements; and funds dedicated maintenance for BSL 3/4 labs.
- CIT/Enterprise Systems
- Provides “Smart Card” funding for CIT as well as anticipated expansion of fee-for-service business to both NIH and outside organizations.
- Enterprise System funding assumes elimination of use of Contingency Funding for yearly operating costs; and provides new funding for “CRIS II” and KMDC Change Management support.

- Management and Budget Working Group

## Examples of Reductions made by Working Groups or MBWG

- Funding to increase CSR’s SRA staffing ratio to 1 per 80 RO1 equivalents.
- Funding for eRA development efforts so as to focus program on core operations activities.
- Funding for new mass spectrometer.
- Funding for Energy Control equipment for buildings not totally equipped.
- Additional support for OFM financial statement analysis and reconciliation.

- Management and Budget Working Group

## Steering Committee Recommendations

- Approve Funding Recommendations
- Have MBWG coordinate the development a recommended strategy, through modeling, to address long term Central Services cost issues. This includes:
- Tasking the FWG to identify known lease commitments over a multi-year period and develop alternative options to current leasing policies and their potential impact.
- Tasking the MBWG to assess current staffing patterns to better understand their impact on demand for Central Services and their cost.
- Tasking the pertinent Working Groups to identify lower priority services for potential elimination.
- Tasking the MBWG to assess potential alternatives to targeting Central Service increases to the projected increase in IC RMS/IR funding.

- Management and Budget Working Group