budget model redesign steering committee ......1. introduce steering committee members and huron...

© 2019 HURON CONSULTING GROUP INC. AND AFFILIATES. ALL RIGHTS RESERVED. 1 © 2019 HURON CONSULTING GROUP INC. AND AFFILIATES. ALL RIGHTS RESERVED.

BUDGET MODEL REDESIGNSTEERING COMMITTEE MEETING #1

December 19, 2019

© 2019 HURON CONSULTING GROUP INC. AND AFFILIATES. ALL RIGHTS RESERVED. 2

Draft: For Discussion Purposes Only

Discussion TopicsHuron is pleased to partner with UCCS on this important budget redesign initiative and proposes the following goals for today’s conversation:

Meeting Agenda

1. Introduce Steering Committee members and Huron team

2. Provide overview project plan, timeline, and approach

3. Review background on University budgeting

4. Discuss interview themes and facilitate guiding principles brainstorming

5. Outline next steps


STEERING COMMITTEE

3



Steering Committee MembershipThe University has established a Steering Committee to provide guidance for the initiative, to monitor project status, and to validate the opportunities presented.

Steering Committee Membership

Tom Christensen, Provost & Executive Vice Chancellor for

Academic Affairs (Co-Chair)

Chuck Litchfield, Vice Chancellor, Administration & Finance

(Co-Chair)

Kevin Laudner, Dean, Helen of Arthur E. Johnson Beth-El College of

Nursing and Health SciencesGeorge Reed, Dean of School of Public Affairs

Rob Block, Associate Dean of College of Business Alex Ilyasova, Associate Dean of College of Letters, Arts & Sciences

Laura Edwards, Finance Manager of College of Engineering and

Applied ScienceApril Keller, Finance Manager of College of Education

Dale DeBoer, Associate Professor of College of Letters, Arts &

Sciences and Chair of University Budget Advisory Committee

Sylvia Mendez, Associate Professor & Department Chair of College of

Education and Faculty Assembly Appointee

Carlos Garcia, Interim Vice Chancellor of Student Success Corrie West, Director of Development of University Development and

President of Staff Association

Suzanne Scott, Executive Budget Director, and Enid Ruiz-Mattei, Associate Budget Director, will serve as ex-officio members of the steering

committee.

The Steering Committee will be supported by members of Huron who will assist in assessing the current

state of budgeting, developing a financial model, and engaging with campus stakeholders.



Steering Committee ChargeThe success of the Budget Redesign Initiative is dependent on the guidance, feedback, and recommendations provided by the Steering Committee.

Purpose:

▪ The UCCS Budget Model Redesign Steering Committee is the principal governing body responsible

for guiding the development of a new, all-funds resource allocation model that best aligns with

UCCS’s strategic direction and institutional culture and values.

▪ Steering the project from start to completion, the Committee members will ensure the achievement

of project goals and outcomes.

Responsibilities:

▪ Reimagine UCCS’s budget philosophy and guiding principles to align resource allocation with the

university’s strategic direction

▪ Recommend a budget model structure including revenue and cost allocation methodologies and a

supporting governance infrastructure

▪ Champion campus involvement in budget model development, including opportunities for

participation and feedback from campus

▪ Report project progress in accordance with the project plan to the Chancellor


PROJECT APPROACH AND TIMELINE

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Understanding of Your NeedsHuron understands that UCCS hopes to develop a new budget model that will help align its financial resources with strategic priorities.

As UCCS proceeds with its budget model redesign initiative, the University is seeking:

▪ To develop a budget model that promotes more effective use of resources and allocates funds in a

manner that aligns with the University’s core mission and strategic priorities

▪ To promote student success, stimulate strategic growth, encourage innovation, entrepreneurship and

collaboration, and support institutional excellence

▪ Effective incentives for both academic leaders and campus administrators

▪ Increased transparency and greater correlation between decision making responsibility and the

investment of financial resources

Huron understands that UCCS has engaged with a consulting partner to:

▪ Develop a clear understanding of the institution’s model redesign goals

▪ Build out a pro forma budget model according to the redesigned parameters desired by the University

▪ Facilitate communication, constituency engagement and stakeholder education surrounding the new

model and its relevant process, policy, and operational implications



Huron’s ApproachHuron takes an iterative approach to develop a pro forma budget model using actuals financial data from UCCS’s most recent fiscal year (FY2019). We seek to engage the Steering Committee to first help establish the philosophy guiding the model before deciding on allocation rules.

Philosophy

Structure

Allocation Rules & Incentives

Customizations and Local Adaptions

Flo

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f D

ec

isio

n P

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s

▪ Philosophy – reflects the university’s desired financial

management model, considering elements such as

centralization, authority, accountability, and

responsibility (today’s discussion)

▪ Structure – reflects the elements of the model with

respect to scope of funds, categorization of operating

units, presentation of data, etc.

▪ Rules – reflects how the model will portray the

institution’s internal economy and drive behavior

▪ Customizations – reflects model tweaks to address

operational realities, institutional culture, and local unit

needs

Each SC meeting will help further define elements of the budget model. A model with preliminary allocation rules

will be shared with Deans and other campus stakeholders in order to solicit additional feedback.


Campus Outreach and Engagement

Huron expects this initiative to span 24 weeks and encompass at least 7 Steering Committee

discussions, as well as a Deans’ Retreat with the Steering Committee.

Week: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Week

Beginning:

Nov

4

Nov

11

Nov

18

Nov

25

Dec

2

Dec

9

Dec

16

Dec

22

Dec

30

Jan

6

Jan

13

Jan

20

Jan

27

Feb

3

Feb

10

Feb

17

Feb

24

Mar

2

Mar

9

Mar

16

Mar

23

Mar

30

Apr

6

Apr

13

Task 1A

Current State

Assessment

Task 1B:

Model

Development

Task 2:

Model Eval &

Engagement

Task 3:

Implement &

Infrastructure

Anticipated Steering Committee Discussions

Throughout the timeline, we anticipate having several rounds of meetings with Deans, administrative unit

leadership, and other campus stakeholders to share information and collect feedback.

Project Timeline

Anticipated Deans’ Retreats

Anticipated Campus Open Forums


Note: Dates are not finalized for SC Discussions, Retreats, and the Open Forum; the meeting schedule is subject to change based on SC, leadership, and campus feedback


At each Steering Committee meeting, members will engage in conversations around the philosophy,

structure, allocation rules, and governance and infrastructure associated with a proposed budget model.

SC Meeting Discussion Theme Questions to Answer/Topics of Discussion

1Philosophy How decentralized should budgeting authority be? How closely should the model

reflect economic reality?

2Structure How should institutional units be classified and treated (e.g. faculty/school,

administrative & support, auxiliaries)?

3

Tuition What is the appropriate balance of allocating tuition on the basis of instructed credit

hours vs. department enrollments?

State Appropriations What activities (e.g. instruction, advising, research, central support) should state

appropriations be allocated to support?

Research Support How should growth and increased quality of the research enterprise be incentivized

and subsidized?

Scholarship, Aid, and Waivers What types of financial aid and scholarships should be charged directly to

faculties/schools and what should remain as a central cost?

Engagement with Deans, administrative leadership, the Working Group, and other campus stakeholders will further

help solicit feedback on proposed elements of the budget model.

Key Meetings



SC Meeting Discussion Theme Questions to Answer/Topics of Discussion

4

Cost Pools How many cost pools should be established? How much detail should be available

about administrative overhead costs?

Cost Allocations What metrics should be used to allocate administrative overhead costs?

5

Subvention Funding How large should the subvention (“strategic investment pool”) pool be? How should it

be funded, and how should strategic investments be allocated back to the institution?

Ad Hoc Revisit or address SC questions and concerns

6

Campus & Dean Feedback Discuss and address feedback from Deans and campus in preparation for Deans’

Retreat

Model Sensitivity How responsive should the model be to one-year changes in institutional activity? For

example, how long should changes in enrollment, instruction, or research activity take

to affect model allocations?

Model Infrastructure Does the institution currently have the professional and technological resources to

manage a sophisticated, decentralized model? What additional investments are

necessary?

Model Governance Who will influence changes to the model ruleset and who will govern committees that

address concerns related to administrative service delivery, space management,

academic quality, etc.?

7Model Sensitivity, Infrastructure, and

Governance

Continue discussions related to model sensitivity, infrastructure, governance

Key Meetings (continued)



Additional Engagement


Meeting Focus Topics of Discussion

Dean Meeting #1 – Model Orientation Discuss and solicit feedback re: preliminary model design and allocation rules

Dean Meeting #2 – Model OverviewContinue discussing and soliciting feedback re: model design and allocation rules and model

governance and infrastructure

Campus Open ForumPresent proposed model design and allocation rules; engage in question-and-answer sessions with

campus community

Deans’ RetreatsMeet with Deans and Steering Committee to conduct walkthrough of model design, discuss and

address outstanding concerns

Department Chair MeetingsStructured per preference of Deans – meet with School and College department chairs to discuss

model redesign efforts

Administrative Unit Leadership MeetingsMeet with Administrative Unit leadership to discuss cost pool allocation rules, governance, and the

budget model implementation process

Focus Group MeetingsMeet with School & College and Shared Governance representatives to solicit feedback re: model

design and allocation rules and model governance and infrastructure

Beyond regular meetings with the Steering Committee, Huron will engage with a range of campus

stakeholders. These meetings will begin in February after a preliminary model structure is determined

and continue through April.

RESOURCE ALLOCATION

OVERVIEW


The changing needs of higher education have resulted in increased economic pressures; evolving

student desires force institutions and leaders to act differently.

▪ Institutions are working diligently to reframe budgeting as a way to develop new resources, promote

desired activities, and funnel resources to strategic priorities

▪ A 2016 Inside Higher Ed Survey reported that 47% of U.S. institutions surveyed have changed their

budget model in the past four years with 35% of those who have not changed their institutions

model planning to do so

− 21% of those surveyed say their institution uses a Responsibility-Centered Management (RCM)

budget model

▪ Recent changes have resulted in more inclusive strategies that acknowledge the powerful impact

engaged faculty and staff can have on institutional resources

▪ With enhanced inclusiveness, universities have needed to produce more timely, comprehensive,

and insightful data and reports

▪ Ultimately, universities appear to be adopting hybrid budgeting models that are highly customized to

institutional cultures and goals

Recent Trends in Budgeting



Resource Allocation Models Overview

Universities are increasingly

pursuing strategic resource

allocation initiatives in order to

better align funding with strategic

priorities. Institutions may utilize several

different forms of budgeting to fund

different activities, including

incremental, formula, performance,

and incentive-based budgeting.

While incentive-based models have

become more common, institutions

still favor models which offer a

higher-degree of central control


INTERVIEW THEMES


Interview Participant List+ Martin Garnar, Dean of Kraemer Family Library

+ Harper Johnson & Team, IT office

+ George Reed, Dean of School of Public Affairs

+ Rex Welshon, Interim Dean of College of Letters, Arts, & Sciences

+ Jessi Smith, Associate Vice Chancellor for Research

+ Rob Dougherty, Executive Director – Physical Plant

+ Kent Marsh, Associate Vice Chancellor of Campus Planning

+ Jevita Rogers, Senior Executive Director of Financial Aid

+ Chuck Litchfield, Vice Chancellor for Administration & Finance

+ Carlos Garcia, Interim Vice Chancellor for Student Success

+ Kevin Laudner, Dean of College of Nursing & Health Sciences

+ Valerie Martin-Conley, Dean of College of Education

+ Don Rabern, Dean of Engineering & Applied Sciences

+ Tom Christensen, Provost

+ Venkat Reddy, Chancellor

+ Martin Wood, Senior Vice Chancellor for University

Advancement & Development

+ Kelli Klebe, Dean of Graduate School

+ Charles Sweet, Vice Chancellor for Strategic Initiatives

+ Mathew Cox, Executive Director of Enrollment Management

+ Nathan Gibson, Athletic Director

+ Susan Taylor, AVC Undergraduate Education & Planning

+ Robyn Marschke, Institutional Research

+ Jacqueline Gatlin, Director of Student Financial Aid

+ Carolyn Rupp, Controller

+ Eric Olson, Interim Dean of College of Business & Robert Block,

Associate Dean

+ Suzanne Scott, Budget Office Executive Director

13

8

6

Senior Leadership

Deans

Chancellor & VCs

Interviews by Employee Type



Interview Insights: Culture & Strategy and Governance

Culture

▪ Institutional culture was described as “nimble” but at a cost of

effectively coordinating on key strategic programs

▪ The ability to incentivize, encourage, and manage interdisciplinary

programs was cited as a cause for concern

Strategy and Governance

▪ Selection and determination of distinguished/priority programs

remains unclear

▪ While administrative services are predominantly centralized, there

are pockets of administrative services funded directly by schools and

colleges for their specific benefit (e.g. IT support, greater general

admin support)

▪ Questions emerged regarding governance for administrative and

academic support unit cost pool allocations

“We are the biggest small campus you can find”

“I am a firm believer that checks and balances need

to be in place to ensure that budget models

emphasize collaboration”

“If academic programs are growing, how will

funding be allocated to ensure support units can

continue to provide quality service?”



Interview Insights: Empowerment & Growth

Entrepreneurship

▪ Interviewees described a history of entrepreneurial activity, including

the growth of degree offerings and revenue sharing models

associated with Extended Studies and online course offerings

▪ The delegation of reserves management, including annual spending

plans, provides senior leadership with a degree of flexibility and

independence

Enrollment & Retention

▪ Undergraduate enrollment growth goals have not historically been

discussed at the school and college-level

▪ There exists a lack of clarity around responsibility for undergraduate

retention

Growth Constraints

▪ Physical space limitations were identified as a barrier to enrollment

growth in some programs and resulting in limited classroom capacity

▪ Limitations on research space and limited stipend/waiver capacity

negatively impacts graduate students

“Enrollment growth has masked the need for good

data”

“Huge enrollment growth has been a blessing and a

curse”

“Adding a new program is one of the only ways to

add more to the base”



Interview Insights: Infrastructure

Budget Process

▪ Requests put forth in ABRs have minimal impact on incremental

budget increases

▪ History of incremental budgeting has resulted in faculty numbers not

keeping up with enrollment and instruction demands, increasing

reliance on adjunct support

Budget Management

▪ The quality of financial data is generally judged as good, but the

capability and capacity of financial support within specific

departments varies

▪ Sources-and-Uses reports have caused confusion and have not

served as management tools or been clearly tied to future funding

decisions

Data & Technology

▪ The sharing of non-financial data and tracking of interdisciplinary and

collaborative activities is difficult

“Our data infrastructure could be described as

nascent at best”

“We’ve got every system you can imagine and

none of them talk to each other”

“Budget management in my department might be

described as spend… reconcile… oops”

“People are ready for change and clarity”

“Each group gets a very thin slice of the pie each

year rather than intermittently receiving a large

enough increase to fund improvements.”


GUIDING PRINCIPLES



Importance of Guiding PrinciplesAs UCCS considers the possibilities for alternative budgeting models, it is valuable to create a set of guiding principles to inform the development of a new model and communicate its objectives.

A Principles-Based Approach to Model Development:

▪ Describes the vision for the desired future state

▪ Establishes priorities for the desired future state

▪ Informs rules for revenue and expense allocations in the new budget model

Developing guiding principles is a critical first step in UCCS’s budget redesign initiative that will

inform decision points surrounding the development of a new incentive-based budget model.



Guiding Principles – Example 1The following budget redesign principles were adopted by a large, private research university.

A budget model should…

• Translate the University’s strategic goals into management and operating plans, focusing on

advancement of the academic mission and enhanced collaboration across the institution.

• Align budgetary authority with responsibility and accountability, providing clear justification for

funding levels and promoting equitable decision-making and treatment.

• Ensure that all aspects of resource management, planning, and allocation are inclusive, data-

informed, clear, transparent, and easy to understand.

• Provide a clear connection between performance and rewards to deans and academic department

heads, incentivizing service improvement and cost reduction.

• Allow for long-term planning and analysis, including multi-year forecasting.

• Provide exceptional stewardship over the University’s financial and physical resources, while

allowing for flexibility in strategic decision making.

• Promote entrepreneurship and enhance revenue growth across the institution.



Guiding Principles – Example 2The following budget redesign principles were adopted by a large, public research university.


• Ensure that resource management, planning and allocation aligns with the University’s mission in

liberal arts, public service, and discovery as a Carnegie Doctoral Research Institution with an

international reputation for research and scholarship.

• Provide a clear link between resource allocation and the success in implementing an agreed-upon

list of strategic goals for both the University and individual units.

• Provide incentives for promoting flexibility, efficiency, innovation and entrepreneurship through

the use of data based decision making.

• Incorporate collaborative governance and stakeholder engagement to promote fiscal trust,

responsibility, accountability, and transparency.

• Use a fair and consistent methodology which balances economic reality with simplicity.



Guiding Principles – Example 3The following budget redesign principles were adopted by a large, public research university.


• Align resource allocations with the University’s Strategic Framework and vision as a research-

intensive university with a transformative student learning experience.

• Be transparent, easy to understand and promotes responsible decision making.

• Provide clear incentives for innovation, revenue generation and cost containment.

• Support strong stakeholder engagement.

• Ensure support for shared services with no ability to opt out.

• Allocate resources through a consistent, predictable and fair methodology.



Element Description

Mission▪ Reinforce that the University is committed to its core academic and research mission and that the budget model is

merely a tool to facilitate this mission

Community Members▪ Articulate the importance of the budget process to community members, and their decisions about resource

prioritization

Future / Planning▪ Focus on the reality that the budget model is not a zero-sum game, but that it is an opportunity to strengthen the

University through win-win opportunities and outcomes

Transparency▪ Model should provide full transparency, both to what decisions are made, as well as why those decisions were

made

Authority /

Responsibility

▪ The core of incentive-based models is ensuring the alignment of authority for financial management decisions and

responsibility for those decisions (e.g. feedback loops and responsiveness)

Balance▪ Balance and compromise may be required with respect to many model elements, for example, central vs. local

services and economic reality vs. simplicity

Rewards /

Entrepreneurship▪ The principles should support a culture of rewarding performance and entrepreneurial behavior

Matching▪ Matching should be incorporated to ensure revenues are aligned with the expenses incurred to generate them, not

for a profit motive, but so clarity is given to institutional subsidies

Simplicity ▪ The model and processes should be simple to use, explain and maintain

Core Elements of Guiding PrinciplesA principles-based approach to budgeting ensures that financial management practices and policies reflect institutional strategies. Below are several key elements that guiding principles typically encompass:



Discussion of Guiding PrinciplesThe selection of model variations should ideally be informed by a set of guiding principles that are used to communicate a model’s objectives.

Discussion Questions:

• What themes/elements should be represented in guiding principles?

• How should wording for principles be structured? Does any of the wording from sample guiding

principles (on previous slides) particularly resonate?

• How should wording of principles for each element be refined to reflect the desired level of

centralization vs. decentralization in an ideal model?

Considerations:

• Principles typically work best when the total amount is limited to 5-7.

• Wording of principles should be carefully thought through and refined, as slight variations in

wording can have material impacts on how to interpret what an ideal model looks like.

NEXT STEPS



Next Steps

Steering Committee Next Steps

1. Steering Committee to provide:

A. Suggestions for Guiding Principles

B. Ideas to name/brand project

2. Review Structure and Revenue Allocation materials in advance of SC Meetings #2 and #3

Huron Next Steps

1. Collect, review, and summarize suggested guiding principles and circulate for feedback

2. Begin financial modeling efforts and collaborate with Budget Office on model development

budget model redesign steering committee ......1. introduce steering committee members and huron...

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