1. Review of SOM Allocation Process New Faculty Orientation Session September 15, 2010 G. Allen Bolton, MPH, MBA Sr. Associate Dean for Administration & Finance

2. SOM Revenues - $567 Million (FY08) Values are in millions

3. Mission-Aligned Budgeting Began in FY03 in SOM Missions:Teaching Research Patient Care Budget Sources: Tuition IER HSF ASETF Grants Hospital

4. SOM State Funding Distribution (FY08)

5. Purpose of the ASETF (state) Allocation Process  Align state funding with appropriate missions of the SOM and its departments  Develop a model that helps the Dean evaluate the performance of departments with regard to teaching, research and space utilization  Propose methods to identify and correct inequities in the historic allocation of state funding to departments

6. Allocation Model for SOM/JHS Depts 7.5% for departmental infrastructure 7.5% based on faculty FTEs 35% based on graduate, professional, postdoctoral, and resident teaching efforts 35% based on research productivity 15% left for the Dean’s discretion, including $300,000 set-aside for “quality” awards Space costs are factored into final allocation Legislative earmarks are respected outside of the model Basic and Clinical departments are treated the same in the model The Model is a guide for allocation decisions

7. Teaching Subcomponent of the Model  Teaching (35% overall) -Graduate teaching : credit for graduate students registered/mentored; # of didactic credit hours; # PhDs conferred -Medical teaching : credit for # of course or clerkship directors; faculty contact hours in MS1&2; contact weeks in MS3&4; mentorship of scholarly activity -T-series & R21s: credit for NIH training grants -Post-docs & Residents : credit for headcount -

8. Research Subcomponent of the Model  Research (35% overall) -Total expenditures : credit for total expenditures on extramural funding as a market share across the School – incentivizes grant getting -Extramural salary coverage : credit for extramural salary support as a market share across the School – incentivizes collaboration on grants

9. Accountability for Space  Space is assigned to departments and charged back at three different rates per square foot per year: research space (~$24), admin space (~$15), and clinical space (~$18)  If a department generates sufficient indirect costs to cover the space costs assigned to them, it is held harmless in the allocation  If a department does not cover its space costs via generation of indirect costs, the ASETF allocation is reduced accordingly

10. What About Quality?  15% (~$7.65M) of the allocation of state dollars to departments is based on Dean’s discretion – primarily now determined by quality and special circumstances as discussed with the Dean by the chairs.  In FY09, the Dean also instituted a $300,000 “quality” pool that is divided among six (6) exemplary departments

11. SOM State Appropriation History: Includes Operations and Special Program Support

12. State Support: Principles for FY09-FY11  Protect core missions Education Research Patient Care/Service  Continued investment in areas of strategic priority – we still have some resources for faculty recruitment  Assessment of primary revenue streams (i.e., IER, HSF/Health System, Philanthropy) for new opportunities to improve operations and strategic growth  Improve productivity and efficiency where possible

13. State Support: Strategies for FY09 - FY11  Capital projects and renovations without a dedicated funding sources will be deferred, unless they are of a life-safety nature  Soft hiring freeze (staff)  Maintain utility costs at a constant level Prices are escalating at 8+% per year Faculty and staff must take responsibility for more efficient utilization Temperature and light control is a big factor Other ideas???

14. “When written in Chinese, the word "crisis" is composed of two characters. One represents danger and the other represents opportunity.” John F. Kennedy Looking Ahead

15. A Glass Half-Full Perspective  Every other medical school will be negatively impacted by the current economy – some will figure out how to weather, and even competitively strike, during this down time  UAB ranks 14 th in “support from parent institution” among 125 medical schools

16. So,  Our Allocation Model is complicated, but tested and transparent  We believe that we are rewarding the behaviors that fulfill the School’s mission  The SOM and its departments are well supported relative to our peer institutions

17. But, Is There Enough Institutional Funding In Departmental Budgets to Support Growth  Yes, if we are Productive & Efficient: -extramural funding thresholds are met and maintained (probably 55-70%) -faculty reasonably participate in teaching (Medical School and Graduate School) -departments are efficiently operated (i.e., spending less than 35-40% of state funding on things other than faculty salaries

18. Questions? Thank you!