Incentive Based Budget Model Overview

Transcription

1 Incentive Based Budget Model Overview

2 Background: Changes at CU Denver Since 2008 Intentional Focus on UG Enrollment Growth and Increased Student Diversity Fall 2008 End of Term to Fall 2016 End of Term o UG Headcount grew by 22% (8,571 to 10,490) and New Freshman grew by 33% (1,106 to 1,473) o UG Students of Color as % of Total grew from 30% to 45% and Pell Grant Recipients as % of Total grew from 24% to 36% SEHD, CAP, SPA have created and grown UG programs Facilities Upgrades and Additions New facilities: Science Building, Business School, Student Commons, Wellness Center Major renovations: CU Denver, LSC and North Classroom buildings Number of Instructional Faculty increased by 13% (from 1,034 to 1,169 in Fall 2016) Full-Time Tenure Track grew from 335 to 373 (11%) Added 26 degree programs (9 UG and 17 G); Discontinued 2 G degree programs Number of Graduate Students decreased by 6% (from 4,595 to 4,305) State Support as a % of Total Budget declined from 17% in FY2009 to 11% in FY2018 2

3 Today s Higher Education Landscape Declining State Support Spending Pressures Continue to Grow Increasingly Reliant on Resident Undergraduate Tuition Limited Tuition Pricing Power Little Room for Strategic Investments Need For a New Incentive- Based Budget Model Inside Higher Ed s 2015 survey of college business officers found that 45% of institutions have significantly changed their approach to resource allocation in the past four years (1) Approximately 14% of all institutions and 21% of public doctoral institutions use an incentivebased model (2) Effective budgeting leads to the distribution of useful information, data-informed decisions, and the effective utilization of institutional resources (1) Source: Inside Higher Ed Survey of College & University Business Officers; May 2015 Over the past 10 years, University leadership has made a number of strategic decisions to ensure institutional resilience when faced with cost and revenue pressures The CU System Office granted us $5M to give base-building raises and make strategic investments to improve our financial stability. This annual grant sunsets in 10 years CU Denver employs Incremental Budgeting through FY18 and will implement Incentive- Based Budgeting in FY19 (2) (2) Adoption rates from the 2011 Inside Higher Education Survey of College and University Business Officers; Percentages do not add to 100% due to hybrid budgeting models 3

4 What Does This Mean: The Budget Squeeze and the Case for Change Declining State Support Increasing Reliance on Resident Undergraduate Tuition Limited Tuition Pricing Power Spending Pressures Continue to Grow Most of the Budget is People Annual Compensation Increases Responding to these challenges has prompted the shift from the historical incremental budget approach to an incentive-based budget model 4

5 Current Budget Development Process General Fund Focus Tuition Fees State Appropriations Incremental Budgeting - each Budget Unit receives the same +/- incremental change Click below for Incremental Budgeting Meaning, Advantages and Disadvantages com/budgeting/incrementalbudgeting CLAS CAP SPA CEAS GS SHED BUS CAM Central Support 5

6 New Incentive-Based Budget Development Process All Fund Focus 100% to assigned school/college Allocated via metrics 1 Projected Revenues Differential Tuition Extended Studies Auxiliary Activities Gifts Indirect Cost Recoveries (F&A) Main Campus Tuition State Appropriations 2 Estimated Expenditures School/College Specific Expenditures Central Support Unit Allocations 3 Mission Enhancement Fund Subvention Participation Fee (D1Tuition+State appropriation+icr+d2+d3+differential tuition)*rate Strategic Initiatives Available Resources for the Coming Fiscal Year School/College Budget Allocation 6

7 Incentive-Based Budget Development Process All Funds Focus Example The purpose of this slide is to show the flow of funds in budget development. Step 1: Projected Revenues Step 2: Estimated Expenditures Step 3: Mission Enhancement Fund Steps 1, 2, and 3 lead to the budget targets for each school and college Year 1 Budget for School/College Explanation All Funds Revenue $1,000 All Funds Expense ($800) Unit Margin Before Central Support Unit Costs $200 This target is developed from General Fund, Auxiliary, and Restricted Fund Fiscal Year Forecasts. General Fund Revenues are allocated to the Schools and Colleges based on Metrics 1 Schools and Colleges expense targets developed from prior year budget with mandatory cost increases added in Share of Central Support Unit Costs ($300) This cost is allocated to each School and College based on Metrics 1 Net Margin After Central Support Unit Costs ($100) Mission Enhancement 15% ($150) Net Margin After Mission Enhancement Fund ($250) Subvention $250 Net Margin After Subvention $0 1 See Appendix for Detailed Metrics Explanation Mission Enhancement Fund created through a common fee on selected revenues generated by Academic Units. MEF used to support the University s strategic priorities and operations. (MEF is 15% in this example) Subvention is allocated to Schools and Colleges to help them support the Mission of the University. Subvention is expected to be reduced over time <--This results in the same General Fund Target to the Schools and Colleges that they would have received during incremental budgeting in Year 1. The goal is to beat or exceed your budget targets 7

8 Strategic Planning and Budget Calendar 8

9 Faculty/Staff Success and Student Success = Financial Sustainability Faculty/Staff Success 1% increase in student persistence = $1M in revenue Student Success Persistence here is defined as the number of students who enroll during a fiscal year and then return for the following fiscal year, excluding those who graduate 9

10 How to Succeed in the New Model Contain costs Grow and leverage nontuition revenue streams Utilize central services in lieu of local duplication of services Reallocate resources to high priority and high impact activities Increase credit hour production 10

11 How Faculty and Staff can Contribute to Success Advance Student Success Increase student persistence and completion Enhance student advising Elevate the learning experience through guided pathways, corequisite instruction, and learning assistants Expand online offerings Increase ABC pass rates Sequence courses for faster graduation (maximize summer) Increase efficiencies Optimize utilization of space, i.e. take advantage of weekends, evenings, and summer Increase course fill rates Collaborate with other schools, colleges and administration Contain costs and reallocate resources towards growth areas Identify areas for business process improvement Maximize external funding opportunities Grow extramurally funded research Increase executive education and corporate training Strengthen relationships with alumni and donors 11

12 Resources Budget Office website: Take advantage of our Education Advisory Board (EAB) subscription Sample Webinars Sample Studies Implement ideas from the Undergraduate Experiences Symposium Take advantage of Skillsoft Courses available through UCDAccess Basic Budgeting for Non-financial Professionals Business Analysis and Strategy Analysis the Budgeting Essentials course series. Operating Budgets: Stop the Gaming Take advantage of Lynda.com Courses available for free while working for CU Denver Principles of effective budgeting Strategic Planning Foundations Read Collaborative Strategic Planning In Higher Education 12

13 APPENDIX SLIDES New Budget Model Deeper Dive For faculty/staff that want to really peel back the onion of the incentive-based budget model 13

14 Goal: Implement a Strategy-Focused Budgeting Process How do we expect to end the year? What course corrections do we need to implement? Assess and Recalibrate Prior Year Results and Environmental Scan Start of FY Are we on track with our strategic plan & performance? How do year-end financial results impact CY forecast? What does this mean for our funding envelope for the new FY and budget process? Strategic Discussions Do we agree on the performance objectives for the academic and central units (financial and nonfinancial metrics?) Final sign-off and communication of metrics, rationale & expectations Year-round Critical Enablers Data Access and Reliability Fact-Based Decision-Making Analytic Staff Capabilities Where are we on strategic plan? How is our organization performing? What new initiatives will move us forward? What can we improve or divest? Finalize Budget Financial Plan Development What initiatives will we fund? What subsidies are needed? What savings/efficiencies will we implement? Shifts and Trade- Offs Decision- Making How do our strategic discussions change our financial plan (operating and capital)? What is the ROI on our initiatives? What $$ savings/efficiencies can we realize? What funding envelope can we support? 14

15 Current State versus Future State Universities are exploring new ways to update their budget models to become more decentralized, resulting in greater accountability at the school and college level. In response to this shift, we have articulated the transformation between the incremental budget model and the incentive-based budget model Current Budget Model: Incremental Funds flow centrally and distributed to Academic Units (centralized) Resources are allocated incrementally Few incentives for schools and colleges to grow revenue and reallocate costs Low understanding of the internal economy Limited strategic conversations between Central Administration and the Schools and Colleges Future Budget Model: Incentive-Based Funds flow to Academic Units (more decentralized) Academic Units keep majority of their revenue and give up some for central costs and central pool Majority of the revenue growth stays with units High understanding of the internal economy Increased accountability on Schools and Colleges to meet or exceed budget targets Strong central leadership and relevant feedback from key stakeholders will ensure that the budget process is equitable for all units and allow for mission-critical and strategic growth. 15

16 Incentive-Based Budget Model Structure Academic Units CAM BUS SEHD CLAS SPA CEAS CAP Academic Unit Total Auxiliary Unit Total CSU Total Pass Through Restricted Model Total Revenue Tuition Student Fees State Appropriations & System Funding Grants and Contracts ICR and Earned Revenue Sales, Services, Enterprises and Misc. Rev. Fund Balances Total Direct and Allocated Revenues Expenditures Direct Expenses Operating Indirect Transfers Total Direct Expenditures Central Support Unit Allocations Academic and Student Affairs Central Support and Administration Graduate School Facilities Deferred Maintenance Commitments & Obligations Research Library Total Central Support Unit Allocations Total Direct and Allocated Expenditures Icon Legend Academic Units Revenue & Direct Costs Central Support Unit Allocations Participation Fee Subvention Unit Margin Mission Enhancement Fund Participation Fee XX.X% 11.5% 4 Unit Margin Subvention Mission Enhancement Funds Distribution Unit Margin after Subvention Strategic Initiatives Distribution 5 Remaining Mission Enhancement Fund 16

17 1. Unit Organization A more decentralized model than existed before requires the identification of units to serve as the drivers of revenue-generating activities; other units are expected to support activities of revenue generating units. Academic Units Generally defined by the following characteristics: Central Support Units ( CSUs ) Generally defined by the following characteristics: 1. Ability to influence revenue generation 1. Less opportunity to influence revenue 2. Receives allocation of central unit costs 2. Provides services and/or support to Academic Units 3. Accountable for performance, retaining both surpluses and shortfalls 4. Contributes to and may receive distributions from the Mission Enhancement Fund ( MEF ) Academic Units Include: 3. Accountable for operating within an expense budget (net of any specific direct revenues) 4. Responsible for providing optimum service and may be held to service-level agreement expectations Central Support Units Include: School of Business College of Arts & Media Academic & Student Affairs Commitments & Obligations College of Engineering & Applied Science College of Liberal Arts & Sciences Central Services & Administration Facilities Management & Debt Service School of Public Affairs College of Architecture & Planning Graduate School Research & Sponsored Programs School of Education & Human Development Library 17

18 2a. Allocable Revenues (D1 & State) CU-Denver s historic split between instruction vs. academic support expenses served as a starting point to consider all allocable revenues: undergraduate tuition, graduate tuition, and state appropriations. CU-Denver s Share of Spending on Select Operating Expenses 1 79% 78% 78% 79% 79% 79% 21% 22% 22% 21% 21% 21% F12 F13 F14 F15 F16 5 YR AVG Instruction Academic Support Tuition Allocated to College of Instruction + Recognizes direct costs of instruction - Incentive for course competition and redundancy - Misaligned incentives for academic advising 0% College of Instruction 100% 100% College of Record 0% Tuition Allocated to College of Record 50/50 60/40 65/35 70/30 75/25 79/21 100/0 + Promotes recruitment and retention - Does not recognize direct cost of instruction - Can lead to holding company mentality Stronger incentive to College of Record supports CUD s cross-disciplinary program objectives CU-Denver s historic 79/21 split between instruction vs. academic support was the starting point for allocating revenues 1 This analysis represents a proxy of estimating support costs between instruction and university support to school of instruction and school of record based upon data from the FY15-16 DC Budget Data Books 18

19 2a. Allocable Revenues Distribution (Continued) During preliminary Steering Committee meetings, a split of 80% instruction and 20% record was suggested. After further review and discussion, a split of 65%/35% was determined for all allocable revenues: undergraduate tuition, graduate tuition, and state appropriations. Decision Background: + The costs of instruction must be recognized by a majority portion of the tuition dollars going to the school of instruction. + However, the incentive for the schools to focus on recruiting students to their majors both internally and, more importantly, externally is vital to the financial stability of the undergraduate tuition revenue stream. + Thus, a portion of D1 tuition revenue and state appropriations should go to the school/college of record. Splitting revenue between instruction and record is also intended to encourage units to develop new programs, refresh existing programs, and curb unhealthy competition between academic units. + For the sake of consistency and simplicity, the Working Group has recommended that all allocable revenues (i.e. undergraduate tuition, graduate tuition, and state appropriations) be treated with the same split. + The Budget Year Allocable Revenue Projection will be allocated to the Schools/Colleges based on actual metrics from two years prior. E.G., FY19 Budgeted Revenue is allocated based on FY17 actual credit hours 19

20 2b. Differential Tuition Differential tuition refers to the premium or additional dollars charged to the published tuition per credit hour, which the Working Group has broken out as a separate line item in the new budget model. Decision Background: + Differential tuition is generated for courses in both the School of Business, the College of Arts & Media and the College of Engineering and Applied Sciences + As differential tuition represents the added programmatic costs to the school, these revenues will be directed 100% to the school of record 20

21 2c. D2/D3 Revenue The Working Group recommends that the new budget model include D2/D3 revenues in the base calculation for the participation fee and leave the amount of Central Support Unit costs allocated to these programs at the Schools and Colleges discretion. Decision Background: + D2/D3 revenue will be directed 100% to the school of record + Unrestricted revenues should have equal treatment in the model to allow Schools/Colleges the freedom to: - expand programs based on academic merit and market opportunities without complicating margin analysis - reduce administrative burden by simplifying the accounting treatment + D2/D3 programs should share in the support of campus-wide costs and strategic initiatives + Central Support Units serve all programs in some regard (e.g., accounting, billing, registration, HR) and are assessed according to consumption metrics without regard to fund source. The Schools/Colleges are free in the model to assess their fund sources according to their own judgement on internal service utilization 21

22 2d. Institutional Aid In the original version of the budget model, the Working Group allocated Institutional Aid to the Academic Units as a percentage of tuition revenue. However, after discussions with various stakeholders, the model was updated to allocate institutional aid based on the Academic Units proportional undergraduate student headcount. Decision Background: + Institutional aid reflects the financial support that the Campus provides to its students, which is not inclusive of scholarships given by the Academic Units + ~92% of institutional aid is used for undergraduate students. As such, allocating this cost based on a consumption metric for total tuition revenue would not be appropriate; therefore, the metric was adjusted to UG student headcount + The Budget Year Allocable Institutional Aid Projection will be allocated to the Schools/Colleges based on actual metrics from two years prior. E.G., FY19 Budgeted Institutional Aid is allocated based on FY17 actual UG student headcount 3a. Other Revenue Line Items All non-tuition revenues (i.e., Student Fees, Grants & Contracts, ICR & Earned Revenue) are attributed to the Academic Units as generated. 22

23 3b. Allocable Revenue vs Direct Revenue Allocable Revenue Direct Revenue Undergraduate Tuition Graduate Tuition State Appropriations Tuition Differential Indirect Cost Recoveries Program Fees 23

24 4. Central Support Unit Costs The costs of operating Central Support Units are allocated to the Academic Units via cost pools, each with its own allocation driver. The Working Group has updated the Central Support Unit allocation metrics based on discussions with various stakeholders. Central Support Unit Academic & Student Affairs Central Services & Administration Commitments & Obligations Facilities Management & Debt Service Graduate School Library Research & Sponsored Programs Final Proposed Allocation Metric Faculty HC (50%) / Total Student Credit Hours (50%) Faculty HC + Student HC Student Credit Hours 80% Assigned Square Footage / 20% Student Headcount Graduate Student Headcount Student Headcount + Faculty Headcount Sponsored Research Expenditures (Modified Total Direct Costs) *The Budget Year Allocable Central Support Unit Costs Projections will be allocated to the Schools/Colleges based on actual metrics from two years prior. E.G., FY19 Budgeted Central Support Unit Costs Projections are allocated based on FY17 actual metrics 24

25 5. Allocation Metrics Timing An incentive-based model requires clear definitions for the fiscal year timing of dollars and variables used in allocation calculations. Based on the timing of data collection and the balance between obtaining responsive and stable metrics, the Working Group has made the following recommendations: Illustrative Allocation Formula and Fiscal Year Timing Recommendations Total Revenues/Costs to Allocate x Variable Total Unit = Variable Total University Unit Revenue/Cost Allocation Budget Development Recommendation Treatment of Actuals Recommendation Explanation Revenues to Allocate Costs to Allocate Variable Budgeted Revenues (forecast) Budgeted Costs (forecast) Two Year in Arrears Year-End Actuals Revenues Budgeted Costs (forecast) Two Year in Arrears Using real-time revenues allows aggregate impact of change (e.g., enrollment increase/decrease) to reach units in year. Also supports better transparency and understanding of University financial picture. Allocating real-time expenses to academic units over-complicates inyear planning. Allocating real-time expenses can lead to distrust in the model, particularly if central units exceed budgeted expenses. Allocating resources using same two-year-in-arrears data used in budget development allows units to better plan for different scenarios within a fiscal year. 25

26 6. Mission Enhancement Fund & Subvention One of the most critical elements of an incentive-based budget model is the creation of University Revenues, or a Mission Enhancement Fund, to address Academic Unit subvention, university priorities, and revenue growth strategies. Mission Enhancement Fund ( MEF ) Overview Rationale The sum of the parts is not optimal for the whole The University as a whole needs the ability to act as one entity with respect to key initiatives Fund Principles Fund can be a useful management tool to help fund long-term initiatives by advancing capital, provide critical subsidies to kick-start initiatives, and prompt specific actions from Deans, as a few examples Fund size should enable leadership to steer, which will ultimately benefit the University as a whole Funds provided to any unit should never be viewed as an annual entitlement, though multi-year agreements are possible Fund should be funded from a diverse revenue portfolio rather than a single source to provide relative stability Initial MEF contributions will be set to ensure neutral starting points at implementation; thus the MEF needs to generate funds sufficient to balance all revenue unit shortfalls in the first year 26

27 6. Mission Enhancement Fund & Subvention (Continued) In the new budget model, a participation fee is applied to select revenue sources which will be used to fund subvention and the strategic initiatives. Below is a table of the selected revenues: Revenue Undergraduate Tuition (Net of Institutional Aid) Graduate Tuition Differential Tuition Extended Studies Tuition Revenue (D2) State Appropriations Sales & Services Other Revenue Program, Course, and Student Fees Grants & Contracts F&A Recovery Pass-through monies (e.g. Pell Grants) Investment Income Endowment Earned Income Distribution Gifts MEF Inclusion? Yes Yes Yes Yes Yes Yes Yes No No No No No No No + The initial MEF budget rate for FY18 was 15.66% + For FY19, the MEF budget rate was adjusted to 15.0% 27

28 6. Mission Enhancement Fund & Subvention (Continued) A participation fee of 15.66% on select revenues ensures sufficient funding exists to cover all losses. 120% 110% % of Shortfall Covered by Subvention Funds Losses Covered 100% 90% 80% 70% 60% 50% 40% 30% 20% A participation rate of 16% generates a funding pool of $30.77M to cover subvention of $30.11M in year 1, leaving approximately $653K for strategic initiatives. At a participation rate of 15.66%, enough revenues are collected to cover all subvention, but no resources are made available for strategic investment. 10% 0% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 16% 17% Participation Rate 28

29 6. Mission Enhancement Fund & Subvention (Continued) While subvention is set on an annual basis, Academic Unit Leadership will meet with the Chancellor/Provost/CFO to develop rolling 3-year guidance, which will prevent a formulaic dollar-for-dollar reduction in subvention in relation to positive margins and/or prior-year carryforwards. Decision Background: + While it is expected that the degree to which subvention occurs will generally decrease over time, this change is not based on a formula, but data-informed, strategic decisions. As such, an increase in revenues would not necessarily result in a formulaic and corresponding decrease to subvention. + The degree to which a school is subvented is neither inevitable nor constant over time. While it is desirable to increase strategic initiative funding and decrease subvention as the model incentives take hold, subvention itself should not perceived as a negative, but rather an acknowledgement of cost differences in strategic programs across academic units. + Conversations with Chancellor/Provost/Denver VCAF during the initial budget setting process will inform the proposed subvention requirements over a rolling 3-year timeframe. Huge swings in subvention between years are not anticipated. + While agreements are subject to adjustment in the event of large, external shifts to anticipated revenues (state funding cuts, tuition freezes etc.), rolling subvention plans provide time for Deans to realize multi-year growth and cost reduction strategies without substantial changes in subvention. 29

30 7. Carryforward Balance Treatment Steering Committee members expressed a desire to understand the treatment of year-end carryforwards in the proposed model to assess the incentives to grow revenue and drive efficiencies in delivery of academic programs. Decision Background + Carryforward balances are defined as cash that is generated as a result of differences between the school/college all-funds budget and year-end actuals + While seeking to provide strong incentives for local revenue growth and efficiencies, we also want to ensure optimal use of funds to maximize benefit for the entire University particularly when large windfalls or declines not attributable to an Academic Unit s strategy occur + A 5% threshold on carryforwards was proposed as a trigger for a conversation with the Provost/CFO on the treatment of these one-time funds (above 5% variance). The threshold is calculated on total budgeted revenues. + Historical carryforwards have (with one rare case) consistently been below the 5% threshold 30

31 8. Initial Reserve Balances Treatment Steering Committee members expressed a desire to confirm the treatment of prior year reserves accumulated and approved by the Regents prior to the launch of the new budget model. Decision Background: + Existing Regent policies have established reporting requirements for unrestricted reserves, which have been and will be followed for all reserves before and after the launch of the model + Keeping established reserves will support Academic Units with funds at the implementation of the model to manage risks + Prevents an unnecessary spend down of critical reserves + The Steering Committee reconfirmed that there will be no impact to existing local and central reserves as a result of the budget model implementation 31

32 9. Deferred Maintenance Treatment Given the risks to institutional financial sustainability posed by historical underfunding of annual deferred maintenance, but understanding the constraints of the FY17-18 budget environment, the Working Group proposed phasing in a return to industry-standard benchmarks over future years of the new model. Decision Background: + Institutional deferred maintenance reserves and annual spending are extremely low compared to building assets under management, risking long-term financial sustainability. + Renewal and replacement need to be part of annual expense planning, with debt service, depreciation, and operations and maintenance, and allocated to Academic Units in the model + The Facilities allocation currently recorded in the model only reflects a $370K annual deferred maintenance budget (against a backlog of $7.7M) and does not include an additional fee to rebuild reserves. + Because this expense is underfunded in the FY16-17 budget/actuals on which the model is based, the campus will develop a multi-year strategy to gradually raise the level of deferred maintenance funding in future budget years in line with anticipated revenue growth, and develop policies and thresholds to set the annual deferred maintenance budget and multi-year schedule to rebuild reserves to peer benchmarks. The special reserves assessment will be phased out once threshold amounts have been reached. 32

33 10. Treatment of Campus MOUs Steering Committee members expressed a desire to confirm the continued support for MOUs negotiated prior to the launch of the new budget model. Decision Background: + Because the programs supported by current MOU agreements represent institutional investments, their funding and performance against expectations should be part of the annual budget process and reflected in on-going Mission Enhancement Fund priorities + School/college expense budgets reflected in the model include costs associated with their MOUfunded programs, and thus are already included in the margins used to calculate participation fee and subvention + After the partnership year is complete, these agreements will be reflected in setting soft commitments for future years Mission Enhancement Funds 33

34 Model Management Overview Model management refers to the structure of committees that are traditionally charged with maintaining a new budget process and providing feedback for strategic budget decisions. Example Model Management Responsibilities: + Delineate decision authority and provide a forum to collect stakeholder input + Advise on topics such as university-wide strategic initiatives, central unit funding levels, and driver inputs + Review model inputs that require annual management and decision making Example Model Management Information Flow: Operational Support Teams Performs data collection and analysis to inform decisions Advisory Committees Makes recommendations to decision makers Decision Makers Determine final budget decisions 34

35 Formalize Executive Budget Committee (EBC) The Executive Budget Committee ( EBC ) will be charged with overall approval of the budget and communicating decisions to the Regents. This group and process occurs under the current model, but will be formalized and given additional responsibilities in the new model. Current Responsibilities: + Recommends a campus-wide budget to the Regents + Reviews and approves executive summary of unit financial plans, including strategic fund/subvention requests Future Additional Responsibilities & Actions: + Formalize this committee + Detail a plan of how the Mission Enhancement Fund will be used in the coming years, between covering shortfalls and investment in strategic innovation + Review and approve the detailed budget proposals from the schools, colleges, and central support units + Discuss and approve subvention amounts and 3-year soft commitments + Recommend an institution-wide budget for Chancellor s approval and submission to Regents Executive Budget Committee Chancellor Provost Senior VC of Admin & Finance Denver VC of Admin & Finance 35

36 Utilize Current CU-Denver Deans Meetings The Campus should leverage the current CU-Denver Deans Meetings by utilizing the existing structure and including supplementary budget-process meetings with additional priorities and members. Future Additional Responsibilities: + Establish this committee as the Chancellor s Advisory Committee on Budget (CACB) + Promote collaboration between academic and central support units, identify current service levels by the central units, and evaluate the funding levels required to deliver those services at desired and realistic levels + Review Mission Enhancement Fund recommendations to the EBC + At three- to five-year intervals, propose a Strategic Budget Model Review Task Force to conduct a thorough review and evaluation of all budget model components to ensure continued alignment with the University s mission, to promote desired behaviors, and to mitigate unintended consequences Chancellor s Advisory Committee on Budget Membership Provost Senior VC of Admin & Finance Denver VC of Admin & Finance CU Denver Deans CU Denver Cabinet Budget Model Sr. Director BPC Representative Faculty Assembly Representative Central Unit Representation

37 Leverage Existing Committees The Campus s ability to leverage existing committees will smooth the implementation of the new budget model. As such, the Working Group has developed strategic options for the future of these committees. Budget Priorities Committee (BPC) + Act in an advisory and communicative role between the Faculty Assembly and the Chancellor s Advisory Committee on Budget (CACB) Curriculum Oversight Committees + Provide greater oversight of curriculum across all campus-wide UG/G institutional curricula to assess their impact on both University resources and academic quality + Recommend against course/program changes that are strictly for financial gain + Review proposed curriculum changes in order to ensure there is no program duplication and to identify opportunities for cross-campus departments to collaborate + Faculty Assembly and the Deans will jointly examine all existing curriculum committees and develop a solution to address concerns surrounding course manipulation, which will then be presented to the Provost Facilities Committees + Formalize the Deferred Maintenance Committee to highlight the importance of this component of the campus financials + The existing Projects Planning Review Committee will develop policies and procedures for space management, govern the allocation and brokerage of space across campus, and distribute accurate and timely space utilization data to operating units for budget planning from the designated data stewards in Finance, Facilities and the Office of Institutional Planning 37

38 Allocation Methodology: Metric Definitions Allocation Metric Student Credit Hours Unit of Instruction Student Credit Hours Unit of Record (Major) Student Headcount (Fall) Faculty Headcount (Fall) Assigned Square Footage C&G Expenditures Metric Definitions Includes all hours taken in courses offered by the unit, regardless of unit of record. Includes enrollment of students from other campuses taking CU Denver courses (e.g., CU concurrent, Anschutz, Auraria). Fiscal year includes enrollment from the trailing summer term. Data as of end of term. Includes all hours taken by degree-seeking students rostered in the unit, regardless of unit of instruction. To avoid duplication, students are reported under the unit of the primary major (as determined by standard CU-SIS and OIRE logic). Includes CU Denver student enrollment in courses offered by other campuses. Fiscal year includes enrollment from the trailing summer term. Data as of end of term. Includes all degree-seeking students enrolled for credit, as of end of the fall term. Students assigned to a single unit using the primary major logic described above. Includes active, paid employees as of November 1 (per IPEDS and Regent reporting). Excludes student employees and student faculty. Assigned Space Data is based on room type categories as defined per the Office of Institutional Planning Shared classrooms space is allocated using utilization metrics provided by OIRE Modified Total Direct Costs (MTDC) associated with Contracts & Grants 38

39 Creating a Sustainable Financial Future University Mission, Vision, Values and Strategic Plan Financial Sustainability TOP DOWN Grow Revenues Campus units become more engaged in the process of generating and managing revenues We need to move towards a campus defined by dynamic revenue generation (versus an incremental mindset) Control Expenses Every dollar we save is a dollar that we can redeploy towards our highest priorities Every unit and every employee can do their part to operate more efficiently Improve Resource Allocation Ensure that we are doing the best possible job of allocating our scarce resources towards our top priorities BOTTOM UP 39

40 Leaders Acknowledge Necessity of Reallocation Chief Business Officers New spending at my institution will come from reallocated dollars, not an increase in revenue. 57% Agree or Strongly Agree Provosts Most new funds for academic programs will come from reallocation rather than new revenue. 66% Agree or Strongly Agree We re not seeing the same student growth that we used to, and our governor is saying that we re not going to get the tuition bump we were expecting. If we re going to do anything new, then it s got to come out of what we already have. And folks around here don t want to hear that. Chief Business Officer Regional Public University Source: EAB Business Affairs Forum interviews and analysis. 40