From Survive to Thrive: How UCLA Uses Synario for Cash and Investment Planning

UCLA Case Study

From Survive to Thrive: How UCLA Uses Synario for Cash and Investment Planning

6 min Read

Highlights from UCLA's use of Synario

  • The University of California, Los Angeles (UCLA)'s Treasury Department quickly implemented Synario and explored options to make unrestricted cash more available for areas of the university hit hard by the pandemic.
  • The Treasury Department built a model containing various scenarios and alternative assumptions to show that UCLA’s liquidity position provided a more positive outlook than previously thought.
  • UCLA found that they could make allocation decisions to move today's surplus unrestricted cash into long-term investments expected to provide higher returns and contribute to revenue generation without impacting debt service.
  • Synario quickly became the UCLA leadership's go-to tool to analyze the financial feasibility of strategic projects and initiatives.
  • Modeling in Synario permanently changed the role of UCLA's Treasury Department. They are now considered a credible voice involved in both the ideation of strategic initiatives as well as the final analysis and decision-making.

UCLA, saw a grim horizon when the COVID-19 pandemic struck with full force in March of 2020. As its medical center and research organizations responded to the global health crisis, a severe strain on liquidity was projected over the next 18 to 24 months. Additionally, with resources earmarked by UCLA’s campus and academic leadership to make strategic capital and mission-based investments, the financial and investment ramification of the pandemic stretched beyond the headline impacts on students, enrollment, and auxiliary units.

UCLA’s Treasury team was tasked with uncovering as much unrestricted cash for the university chancellor to utilize to navigate through the immediate impacts of the pandemic. However, it was quickly recognized that moving cash or liquidating investments to generate immediate unrestricted cash would have lasting impacts on the ability of the university to sustain its long-term capital and mission-based investment plans. The Treasury team not only needed to find funds to pass over to the UCLA chancellor, but they also needed to understand how changes in today’s liquidity could impact UCLA’s ability to make future debt payments, fund strategic initiatives, or even weather future black swan events.

UCLA Treasury turned to Synario to model, analyze, and present these mission-critical questions, and their analysis shifted the perception of UCLA’s pandemic trajectory and permanently changed the role of the Treasury department.

UCLA-Case-Study-Building

Modeling Changes to Cash in Synario

UCLA needed assurance that the institution had sufficient funds to meet critical pandemic-generated operational and financial needs. UCLA Treasury was tasked to quantify its unrestricted cash and understand what the utilization of that liquidity could mean for the university in the future.

With an accelerated Synario implementation, UCLA Treasury easily incorporated what they knew into their financial model, including upcoming state and federal stimulus payments, debt issuance, and committed cash outflows. These known financial assumptions allowed the Treasury team to set a baseline for their financial projections.

Using Synario’s user-friendly alternative assumption tables, UCLA Treasury then added in resource requirements for strategic objectives, like maintaining workforce headcount and salaries, and expected cash outflows, capital project borrowing, and committed funds for mission-based investments.

“In Excel, we only had two or three levers that the chancellor was able to pull and that was effectively how much money was he going to give to the provost and how much money he could borrow. But when we put it into Synario, we were actually able to model more. We were able to look at what happens if we slow down capital spend, if we were able to get debt financing, how would that impact our cash, and what that investment could do.”
– Dave Tseng, Senior Treasury Manager, UCLA

Additionally, UCLA Treasury incorporated alternative scenarios using the model’s built-in scenario manager to allow UCLA’s CFO and financial leadership to explore the impacts of the Chancellor and Provost’s projected spending on their allotment of unrestricted funds (underspend, overspend, and on-budget).

UCLA modeled various projects and initiatives in Synario, turning them off and on to see the immediate impact on debt service, long term returns and unrestricted liquidity.

By turning projects on and off via the toggles mentioned in the graphic above, UCLA's financial projections and ratios would update automatically, giving them a dynamic view into the future. Click the graphic above to expand it.

These graphics are for explanatory purposes only and do not reflect UCLA's actual financial standing.

Available Cash and a Better Outlook

As information emerged that the university’s strain on liquidity was not as severe as originally projected, UCLA Treasury was quickly able to update their Synario financial model to show an updated and more positive outlook.

The improved outlook combined with the ability to see multiple different outcomes and optional responses in Synario eased tensions surrounding UCLA’s financial outlook as well as its ability to weather the impact of the pandemic and maintain its commitment to fund critical initiatives in support of its mission.

“I think right at the onset of the pandemic the question was, ‘does the chancellor have money?’, and we were able to answer that. As a result, we got to present our findings to the chancellor and say here is how much we think we have and here are levers that you can pull that would allow you to get more if you need more… that resolved a lot of the concerns and tensions at the time.”
– Dave Tseng, Senior Treasury Manager, UCLA

Once the questions around the adequacy of UCLA’s liquidity were put to rest, the CFO asked how they could continue to generate more unrestricted income over the next ten years. The additional unrestricted cash could provide the buffer necessary to weather increases in expenses and commitments; in an uncertain or fluctuating budget environment.

Moving Cash to Maximize Investments

UCLA Treasury was tasked with using Synario to analyze if a reallocation of surplus unrestricted cash into longer-term investments could provide the University with reliable revenue generation over the next ten years without affecting liquidity metrics, such as Days Cash on Hand (DCOH).

“Effectively, we were able to model ‘if we do not have as much cash burn as we were expecting, can we take all of that excess cash and invest it in longer term portfolios and how does that impact our liquidity outlook over the next ten years.”
– Dave Tseng, Senior Treasury Manager, UCLA

Prior to using Synario, the Treasury team would complete this type of analysis in a stand-alone Excel-based financial model. They found that, although easy to assemble, the financial model proved fragile, subject to version risk, and difficult to interact with for UCLA’s senior leaders.

With Synario, UCLA Treasury is able to consolidate all of the team’s forward-looking analysis into one location while offering an unbreakable and interactive financial model for senior leaders and stakeholders to explore.

“Let’s have a tool that we can effectively replicate what our excel model can do, throw a bunch of controls on it, and no one can break it… instead of having standalone excel sheets sitting here, there, and everywhere, we just have one central location to do it.”
– Dave Tseng, Senior Treasury Manager, UCLA

Especially surrounding analysis dealing with available liquidity and future investments, allowing senior leaders and stakeholders to easily adjust a financial model and ask what-if questions reduces risk and creates a more holistic view of what the future could hold.

The left side of the above Synario graphic shows interactive inputs for various drivers that influence UCLA's working capital projection. By selecting or typing in different amounts for those drivers, UCLA's Treasury department was able to explore how changes in different external and internal factors might change future fund amounts. Click on the graphic above to expand.

These graphics are for explanatory purposes only and do not reflect UCLA's actual financial standing.

Ad Hoc Strategic Analysis

UCLA Treasury found that as UCLA’s leaders and stakeholders became accustomed to asking what-if questions and receiving fast, informed answers; new strategic questions began to come forward.

“Is this crazy or is this doable?” is a question that UCLA Treasury is being asked more often now that Synario provides the framework to quickly update and explore UCLA’s financial options. The treasury team is seeing more invitations to UCLA’s leadership ideation sessions because of their ability to rapidly turn around informed answers. Additionally, they are finding themselves more involved with the actual decision-making surrounding mission-critical questions, rather than simply receiving the request to fund an already-made decision.

Synario gives us a much more scientific approach to prove out our analysis and say “given what we know today, we feel pretty comfortable that we are going to be able to maintain a certain level of liquidity and still be able to do all of these initiatives that have a cash impact.” And that wasn’t always the case in the past when the analysis was done on someone’s spreadsheet that got lost somewhere.
– Dave Tseng, Senior Treasury Manager, UCLA
Moving Forward with Synario

Moving Forward with Synario

When asked if they would recommend Synario to other higher education finance departments, UCLA Treasury responds with an affirmative “we would and we have.”

They describe that not only is Synario flexible enough to answer any planning or modeling question, but the experience and expertise of the Synario Client Service Department helped UCLA’s Treasury team see how they could model UCLA’s challenges in new ways.

See how your higher education institution could benefit from Synario by scheduling a personalized demonstration with a Synario Account Executive.