1. Productivity Funding Understanding the Student Credit Hour (SCH) Funding Model at the University of Utah Please click with your mouse button to advance through these slides.

2. The following slides provide an overview of the Productivity Funding (often referred to as SCH Funding) model at the University of Utah. A brief description of the process is presented, followed by a multi-year example. If you have further questions, please contact Mark Winter in the Budget Office at 585-3982, or mark.winter@utah.edu.mark.winter@utah.edu

3. Student Credit Hours (SCH) are used for a variety of institutional analysis and reporting needs. It is important to realize that Budgeted SCH are only used internally to calculate and distribute funding designated as productivity funding. Budgeted SCH numbers will likely never match SCH numbers used in other analysis and reporting needs for a variety of reasons. The most common reasons for differences are noted below. You can not compare Budgeted SCH numbers with SCH numbers obtained from the Institutional Analysis website, or class rosters obtained from the Registrars office. Budgeted SCH numbers are taken from a download of student data at the end of the third week into the Semester (Summer Semester census is taken at the end of the semester). We exclude contract courses and courses that AOCE offers through its direct pay mechanism. The former are self-sustaining and therefore not included in SCH calculations within the budget model. The latter, which AOCE uses to balance the curriculum at the off-campus sites, are assigned to AOCE within the budget model. In addition, we exclude all students who were dropped for non-payment of tuition, House Bill 60 students, any student not taking the course for credit, and any student with an official withdrawal from the course before the census date. Study Abroad courses are listed separately and are handled by the International Center. Other adjustments are occasionally made based on unique circumstances or agreements. Once the SCH numbers have been adjusted for Budget purposes departments are notified by email that they have been posted on the web for review (If you do want to be added to this distribution list, please contact Joyce Garcia in the Institutional Analysis office at 581-6135). It is critical that you use this opportunity to verify the accuracy of the numbers we have compiled. After this review period is completed Budgeted SCH numbers are considered final and further adjustments require the approval of the Associate VP for Budget and Institutional Analysis. Calculation of Budget SCH Totals

4. Please note: (1) The Office of Budget and Institutional Analysis (OBIA) does not maintain records of SCH agreements. If you are uncertain about SCH agreements in your department or college, OBIA suggests working with the person(s) responsible for such arrangements. Often SCH agreements are informal and undocumented. (2) Because of this, OBIA can only be responsible for reassignment of SCH. OBIA will not (and cannot) make decisions about SCH agreements or disagreements. If there are disagreements or negotiations pertaining to SCH distributions, they need to be handled internally, agreed on by all departments/colleges affected, and approved by the Associate Vice President for Budget and Planning before OBIA can make reallocations. If you have questions about these procedures please feel free to contact Mark Winter, Manager of Budget and Planning, or Paul Brinkman, Associate Vice President for Budget and Planning Calculation of Budget SCH Totals

5. Viewed from a departmental perspective, the first step is to examine carefully the student credit hour (SCH) data supplied three times a year by OBIA staff. Each department needs to ensure that it is receiving the SCH taught by its faculty, unless other arrangements have been made. If there are contested SCH, perhaps because a course was team taught or taught by a faculty member with a joint appointment, it is up to the departments involved to resolve the issue and convey the agreed upon distribution of SCH to staff in OBIA. Once all agree as to the attribution of SCH to particular departments, OBIA staff take the next step which is to calculate the difference in student credit hour production from the prior year to the current year. That difference in SCH is calculated at four levels of instruction (see below). The dollar value of the change in SCH as determined by the SCH x dollars-per-SCH calculation, summed across the four levels, is then added to the current amount of productivity funding. Amount paid per SCH by course level LD = $60 per SCH (course #s 1000 to 2999) UD = $70 per SCH (course #s 3000 to 5999) BG = $85 per SCH (course #s 6000 to 6999) AG = $95 per SCH (course #s 7000 to 7999) Remote Site Incentive SCH are paid at 1.5 times normal rate. Interdisciplinary Courses SCH are paid at 1.5 times normal rate. A. Revenue Side

6. At the point in time when this funding model was first adopted, FY 2000, SCH generated in FY 1998 became the base year for the productivity calculation. The difference between SCH generated in 1999 and SCH generated in 1998, multiplied by dollars-per-SCH, determined the initial amount of growth funding. In addition, academic units that generated SCH through AOCE were allocated funds based on those SCH multiplied by the same dollars-per-SCH structure (i.e., money was taken from AOCE and given to the academic units). Together the growth funds and the AOCE-related funds comprised productivity funds, which were allocated to the deans at the start of FY 2000. The rationale for adopting a lagged model was that it mirrored the states approach to funding changes in enrollment, i.e., institutions received increased appropriations in the year following enrollment growth. Note: 1) SCH is calculated as the number of students registered as of the census date times credit hours per student, course by course. For example, a three-hour course with 40 students registered at census yields 120 SCH). 2) What is added as incremental funding may be a negative number depending on the change in credit hours by level of instruction. 3) While the calculation of productivity funding is undertaken at the department level, all productivity funds are sent to the deans of the respective colleges who then allocate the funds as they see fit. A. Revenue Side -Continued

7. Beginning in the fall of 2006, the SCH funding model changed from a lagged to a real-time approach. It is worth noting how this change will affect the timing of fund transfers to the colleges. In the past, productivity funding was calculated in the spring and productivity funds were transferred at the beginning of the following fiscal year, with no change occurring until the next budget cycle. Under the new process, there are two times in each years budget cycle when fund transfers occur. The first time is in July at the start of the fiscal year, based on the prior years SCH production and any price level increases or any other adjustments to the prior years funding (e.g., some funds may have been hardened and thus removed from the SCH budgeting process). The second transfer happens in February or March and is an adjusting entry based on actual SCH number for the year. This entry may result in funds being transferred to your College or funds being transferred out of your College. In an effort to provide information to assist with your planning and budgeting an estimate of this transfer will be prepared in late October and sent to your College. This number is provided early enough in the year to allow you to adjust spending patterns as necessary to deal with additional or reduced funding. A. Revenue Side -Continued

8. Productivity funding can be used for any legitimate Fund 1001 purpose. The only limitation is that productivity funds may not be used to hire a benefits eligible employee (faculty or staff) or to increase the salaries of benefits eligible employees without the permission of the Senior Vice President for Academic Affairs. Any request to hire a benefits eligible employee or to increase salaries of such employees will entail discussion of the impact of such actions on the benefits pool. A department chair should expect to be required to use some of the productivity funding to pay for benefits as well as salary in such cases. B. Expenditure Side

9. College Total SCH $'s $0 $500 $1000 $1500 $2000 $2500 $3000 $3500 Yr. 1Yr. 2Yr. 3Yr. 4Yr. 5 In the graph above, the academic unit has increased its SCH in Year 2 and therefore will receive additional productivity funds in the form of growth funding going into Year 3. At the beginning of Year 3, the unit will receive $500 more than it received at the beginning of the previous year, or $2,500 in total. Calculation of Funding: Yr. 2 amount = $2,000 + Change in Growth Funds = $ 500 Total Productivity Funds Beginning Yr. 3 = $2,500 $500 in additional SCH funding calculated this period. C. An Example -Continued

10. College Total SCH $'s $0 $500 $1000 $1500 $2000 $2500 $3000 $3500 Yr. 1Yr. 2Yr. 3Yr. 4Yr. 5 Calculation of Funding: Yr. 3 amount = $2,500 + Change in Growth Funds =($1,000) Total Productivity Funds Beginning Yr. 4 = $ 1,500 Again SCH levels are calculated at the end of the year. In the graph above, the academic unit generated fewer SCH in Year 3 and therefore will lose productivity funds in the form of negative growth funding going forward. At the beginning of Year 4, they will receive $1,000 less than they received the previous year, or $1,500 in Year 4. $1000 loss in additional SCH funding calculated this period. C. An Example -Continued

11. Given the change from one productivity funding adjustment per year to twice per year, the example above is a simplified representation with respect to the new process. The underlying approach, however, is appropriately represented. The budget model reacts to changes in SCH production. Each successive adjustment in productivity funds, in concert with the number of SCH being generated, becomes the starting point for measuring the change in SCH production and the attendant change in the funding associated with SCH going forward. The funding allocated by means of the SCH funding model is best viewed as being soft because the amount of the funding varies in response to SCH production. At the same time, it should be noted that during the period when base budgets were being reduced in the early years of this decade, funds allocated through the SCH funding model were not reduced. D. Summary

12. The following slides provide an example of the budgeted SCH reports which are distributed to Colleges each year. Brief explanations are provided, however, if you have specific questions or need clarification, please contact the Budget Office at 585-3982. E. SCH Reports

13. SCH Reports

14. SCH Reports are sent to the Deans Office in each College. Each report shows the SCH totals by department, level and semester. SCH totals from the current year and prior year are included as well as the difference and the related financial calculations.

15. SCH Reports Prior Year and Current Year SCH Totals for each Department are shown in these columns.

16. SCH Reports Change in total SCH and calculated Growth Pay are shown in these columns.

17. SCH Reports A Summary Report is provided with total dollars calculated for each department.

18. SCH Reports Totals by Department are Shown in these columns. Beginning Prod Funds is the total productivity funds at the beginning of the Fiscal Year. This is last years ending totals. Budget Change is the amount increased by additional appropriations during the legislative/budget process. New Growth is the total of growth funds based on the change in SCH for the current year. It is positive if there is a net increase in SCH and negative if there is a net decrease in SCH. The adjustment column is used for rare manual adjustments. The final column is the total Productivity Funds for the new year.

19. SCH Reports If sufficient growth funds exist and have been recurring for several years, Colleges can request to have them hardened which moves them out of the productivity funding model and places them in permanent base funds. When productivity funds are hardened a portion of those funds must be reallocated to the benefits pool to cover benefits. The amount that is taken for the benefits pool will be negotiated by the College with the Senior Vice President of Academic Affairs, or Health Sciences. Total amounts to be transferred to the College are shown in the column titled Pass July 1, XX Prod Funds (where XX equals the fiscal year). The mid year adjustment which is made in March is also listed. This adjustment is the amount of productivity funds either earned or lost during the year since the original estimated amount was transferred in July. The final column shows the total expected transfer to be made at the beginning of the new fiscal year. This amount can be thought of as a pre-payment for productivity funds for the coming year, which assumes you will have the same exact SCH in the new year as you did in the prior year. It is not a payment for SCH that you earned during the current year.

20. Please call Joyce Garcia at 581-6135 (j.garcia@obia.utah.edu) with questions related to SCH counts and reallocations. Please call Mark Winter at 585-3982 (mark.winter@utah.edu) with questions related to budget related calculations and reports. Questions?