Why make the change?
The previous budget model is referred to as a historical or incremental model in that allocations are based on the prior year’s activities. In addition, increases to a unit’s budget largely reflected how well a unit leader could convince others of that unit’s value or was the result of the unit’s ability to generate revenue through other services and fees.
A historical funding model supports the status quo and doesn’t encourage a unit to be responsive to changing needs of students, the research community, or the KU community.
The previous budget model also didn’t acknowledge the importance of modernization, innovation, efficiency or enrollment growth or decline. Finally, the change was part of Chancellor Girod's longer-term vision for the university to ensure it would be able to grow stronger in the ever-changing financial landscape of higher education.
What are the goals of a new budget model?
First and foremost, the new budget funding model should help the university support university wide priorities and strategic initiatives. Additional goals include:
- The model should encourage efficiency measures within units — greater financial accountability.
- It should also adjust accordingly as units grow or contract over time, or experience other changes.
- The model should be flexible enough to align with goals developed through strategic planning.
- Finally the model should promote desired outcomes. It should communicate — through financial support — the importance of university wide strategic priorities and the expectation that all units actively participate in endeavors tied to university wide strategic priorities.
How will the new model affect the FY 2020 budget?
It won’t affect allocations for FY 2020. This year will serve as a shadow year for the new budget model. Unit leaders and individuals in KU’s budget and finance offices will be able to see what see and compare both the current historical model and the Priority Centered Management Model to ensure the new model performs as intended. The shadow year will allow budgeteers to collaboratively work with campus leaders to adjust the model if it delivers unexpected results. The year will also help unit leaders begin planning for anticipated changes as a result of the new model implementation.
How has KU traditionally spent its funding?
The base budget for the Lawrence campus is roughly $450 million in state allocations and tuition revenue. KU’s budget has been historically allocated in these main categories:
55% - instructional services
13% - academic support
9% - institutional support
9% - physical plant, central services
5% - student aid
5% - research support
4% - student services
How does the model prevent units from competing with each other?
There are a few mechanisms in place that remove incentives for outright competition for funds. The process also incorporates incentives that promote greater collaboration.
Student Credit Hours - the funding formula takes into account both the unit where courses are taught as well as where students consider their home department. Students who have dual majors in different academic units will be counted among the majors for each academic unit (at the school or college level) represented.
The use of subsidy in the academic unit formula allows rebalancing of revenue and helps ensure that no single unit is left stranded by the model. The allocation of the subsidy pool is guided by metrics as well as the discretion of the provost. Some academic units may require long-term subsidy, while others may require a short-term subsidy due to enrollment shifts or other market forces.
During the first few years of implementation of the new budget model, guardrails will limit extreme shifts, both positive and negative, in allocations to units.
The academic unit evaluation process also incentivizes faculty and staff development, student success and outreach and engagement. Often, the success of these pillars happen as a result of cross-campus collaboration and synergies that result from cooperative behaviors.
Finally, the annual evaluation process will involve review by deans and vice provosts, who are acutely aware of collaboration and cooperative activities on campus as well as counterproductive behaviors that may have far-reaching effects. Along these lines, one of the other strategic priorities is outreach and collaboration. Those units engaged in collaboration will be viewed more positively for this activity.
How does this Priority Centered Management Model affect our ability to collaborate?
Elements throughout the model as well as the academic unit funding formula recognize and give credit for collaborative efforts. Some examples include several factors within the academic unit funding formula such as objective and subjective metrics that are tied to research activities, other strategic priorities and student success. Subjective metrics in the academic unit formula account for 18% of a unit’s annual allocation before subsidy and guardrails.
Will there be training to better understand the model?
Yes. The KU Budget Office is using its regular meetings with budget officers across campus to ensure they are trained and have opportunities to ask questions about their responsibilities and activities under this new process.
A regular model review every few years could result in some modifications. If and when modifications are made, budget officers will be kept informed and will have the opportunity to discuss new procedures and the potential impact.
Individuals who don’t regularly work with budgeting activities can request a one-on-one or small group meeting during the Provost’s office hours. To request an office hours meeting, send an email or call 785-864-4905.