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1 Budget Model Update #2 Resources Implementation Team.

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Presentation on theme: "1 Budget Model Update #2 Resources Implementation Team."— Presentation transcript:

1 1 Budget Model Update #2 Resources Implementation Team

2 2 Budget Model Principles/Issues The budget allocation process must support the academic plan, and focused on quality. The process must be transparent and require accountability. The process must be easy to administer, and not costly to maintain. The process must reflect the principles of shared governance. The process must balance the redirection of funds for new initiatives with the goal of providing sufficient funds for ongoing efforts - provide budget stability.

3 3 Recommendation - Scope of the Budget Model  Auxiliaries, Regional Higher Education, and OU-COM should not be a part of the budget model.  Rather, they should be assessed a fee based on the costs of services used by those areas.  For example, HR functions, facilities costs, registration, finance/payroll, etc.

4 4 Revenue Attribution Recommendations 1. Attribution of Undergraduate Tuition 2. Attribution of Graduate Tuition 3. Attribution of Out-Of-State Surcharge 4. Attribution of General Fee 5. Attribution of Subsidy 6. Attribution of Success Challenge 7. Faculty Staff Fee Waivers 8. Multi-Year Averaging 9. Attribution of Indirect Cost Recovery 10. Attribution of Other Revenue

5 5 Undergraduate financial aid should be subtracted. Tuition should be allocated using a combination of credit hours and enrollments (FTE headcount). Credit hours should be allocated to academic units based on weighting that reflects the differential cost of instruction across disciplines. This can start with the current weighted student credit hours but the weights should be reviewed. There is no specific recommendation as to the proportion of these two factors, but credit hours should be used for the bulk of the attribution. 1 – Attribution of Undergraduate Tuition

6 6 2 – Attribution of Graduate Tuition Graduate tuition should be allocated in the same way as undergraduate tuition (combination of credit hours and headcount with credit hours weighted for cost of instruction). Tuition attributed to the unit is reduced by the fee waivers given by that unit.

7 7 3 – Attribution of Out-Of State Surcharge If the university wants to create an incentive for recruiting out-of-state students and if units are able to differentially engage in activities to attract those students, the out- of-state surcharge could be attributed differentially to units based on their proportion of out-of-state students.

8 8 4 – Attribution of the General Fee The general fee should be used to directly fund the costs associated with specific activities (student health/wellness, athletics, student affairs, etc) Some units will be entirely funded on the general fee which will require fee increases when units costs go up and which will tie the budgets of those units to enrollment increases (and decreases) Information on the breakdown of the general fee should be publicized and readily available to students and parents.

9 9 5 – Attribution of Subsidy Subsidy should be allocated to the academic units exactly as it is earned using 2- or 5-year FTE productivity. Any subsidy earned beyond credit hour production (i.e. as part of the guarantee) should be attributed in proportion to the rest of the subsidy. Doctoral subsidy will be subject to the cap.

10 10 6 – Attribution of Success Challenge Subsidy should be allocated to the academic units exactly as it is earned using 2- or 5-year FTE productivity. Any subsidy earned beyond credit hour production (i.e. as part of the guarantee) should be attributed in proportion to the rest of the subsidy. Doctoral subsidy will be subject to the cap.

11 11 7 – Faculty/Staff Fee Waivers Fee waivers for faculty/staff and their dependents will be treated as a common benefit to be shared across units. Waiver amounts will be subtracted from tuition (separately for undergraduate and graduate) before the tuition is attributed to the units.

12 12 8 – Multi-Year Averaging To build in budget stability, multi-year averages should be used when calculating credit hours and headcounts This will help smooth changes in unit budgets during periods of enrollment changes. It also will provide some buffering during the transition to the new model.

13 13 9 – Attribution of Indirect Cost Recovery Funds Allocation of Indirect Cost Recovery from funded research should be evaluated to determine how much should go to units vs. centrally. One possibility is for 100% to go to the units but this would leave nothing for investment in university-wide initiatives such as funding research that might not be eligible for grant funding. The other option is to divide it between the Principle Investigator, the unit and the central VP for research. In this case the proportion must be determined.

14 14 10 – Attribution of Other Funds Other sources of funds include interest income, overhead payments from Regional Campuses, Osteopathic Medicine and Auxiliaries like Dorm & Dining. These could be allocated to related support units against their costs. This would then reduce the costs that would be charged against academic unit revenues. Alternatively they could be held centrally to fund reserves or university-wide priorities

15 15 Cost Allocation Recommendations* Allocation of Facilities Costs Allocation of Research Costs Allocation of Academic Support Costs Funding University-Wide Priorities *Still being finalized within the committee

16 16 1 – Allocation of Facilities Costs Costs for utilities, facilities maintenance and custodial services should be allocated to units in proportion to the amount of space each units “owns” Non-assignable space (hallways, bathrooms, closets, etc) would not be “counted” Classrooms could be released to central scheduling (registrar) and associated costs could then be shared by units in proportion to use (credit hours)

17 17 2 – Allocation of Research Costs Costs for the operation of the VP of Research should be funded by units generating and receiving indirect cost recovery funds. This could be done in proportion to funding received or proposals written or a combination.

18 18 3 – Allocation of Academic Support Costs Costs for the operation of academic support units should be allocated to the academic units on the basis of a few allocation factors such as number of students, number of employees, size of budget or size of expenditures. The key will be to select meaningful factors while keeping the number at a minimum.

19 19 4 – Funding University-Wide Priorities A percentage of revenues will need to be captured centrally to fund university-wide initiatives and critical reserves. This can be funded by capturing certain revenue sources that are not allocated to academic units Or it could be funded by academic units in proportion to a factor such as size of budget or expenditures.

20 20 General Recommendations* No-Change Conversion Quality Metrics Governance and Oversight *Still being finalized within the committee

21 21 1 – No Change Conversion The conversion to the new system should result in no changes to unit budgets in the first year. This would be accomplished with an adjustment that adds or subtracts from the unit budget to bring it to zero The critical decision will be what to do with this adjustment going forward – freeze it forever vs. change it over a period of time

22 22 2 – Quality Metrics At the same time we are monitoring productivity and financial information, academic units must also be evaluated in terms of quality metrics Examples of metrics include entry metrics (ACT, GRE), class size, grade distribution, type of instructor, attainment of learning outcomes—all in relationship to baseline performance. Quality of community engagement, service learning, honors program, and other academic enrichment programs should also be monitored.

23 23 3 – Governance and Oversight Build oversight (in keeping with institutional shared governance) into the system Academic Leadership Council Budget Planning Council Space review committee University Curriculum Council Faculty Senate Finance Committee Budget review for support units College Advisory Committees

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