FAQ

Incentive-based budgeting is a management philosophy which aligns budget allocations with the University’s strategic mission. The University’s budget authority and financial and operational responsibilities are delegated to schools and colleges, divisions, and other units.
These decentralized models result in increased transparency and empower local leadership to make data-driven decisions.
In an incentive-based budget model a framework is created to direct funding to the units generating the revenue, then charges are assessed to cover the unit’s share of centrally borne expenditures like administrative and common service and support.

The primary goal of this initiative is to create a budget model that is transparent, data-driven, supports entrepreneurship, innovation, and collaboration, and aligns resources needed for the University’s strategic mission.  Units are empowered take greater ownership over their revenues and expenses to drive tactical growth and spur innovation.

While our current, incremental, budget model has served us well through a period of sustained enrollment growth, a new model is needed as we seek to better align resources with strategic priorities. The budget model, and associated budget process, should:

• offer greater transparency and insight into resource allocation decisions,
• create incentives for Deans to be more entrepreneurial,
• and provide a pool of resources which will help support campus-wide strategic initiatives.

Redesigning and implementing a budget model requires significant analysis and coordination. Huron has partnered with over 65 institutions on the design, assessment, and implementation of budgeting and financial planning models. They have a wealth of knowledge on budget design; we are partnering with them to ensure we work effectively and stay on our timeline.

The Steering Committee was chosen to ensure representation from schools and colleges, central administrative units, and existing shared governance committees. Throughout the process, we will further engage the campus through focus group sessions, meetings with subject matter experts, and a town hall.

• Alignment with Mission:
  • The budget model should align with the core mission, Strategic Plan and represent institutional values.
• Financial Authority, Responsibility and Accountability.
  • The budget model should enable and encourage budget management, responsibility and accountability across units.
• Transparency and Trust:
  • The budget model and resource allocation process should be transparent, offer consistent communications, and foster collaboration to instill trust between decision-makers and stakeholders.
• Equitable Resource Allocation:
  • The budget model should provide an equitable, mission driven, opportunity for resources to be allocated across units.
• Role of Support Units.
  • The budget model should encourage growth of net resources while also recognizing the role of support units in promoting student success and other mission critical outcomes.
• Clear and Consistent Decision-making:
  • The budget model should incorporate improved infrastructure and data-informed decision making, providing and understandable link between resource allocation and revenue generation.
• Entrepreneurship:
  • The budget model should encourage innovative practices while ensuring that the necessary budget allocation to existing core and general education are sustained.

In RCM models, revenues, based on customized activities or drivers (e.g. credit hours instructed), are allocated directly to the unit generating those activities. Units that do not generate revenues are funded by a subvention fund, which is a determined contribution from each revenue-generating unit to fund University support activities (e.g. IT). The subvention fund also allocates a strategic pool of resources to the University leadership to fund key institutional priorities. It is important to note that in initial RCM implementation, the allocation methodology stops at the school/college level meaning it is the Dean’s discretion as to how funds are allocated within a particular unit.

There are several avenues for campus involvement and input:

1. Steering Committee - The Steering Committee was charged with creating an incentive-based budget model that fits UCCS’s needs. The committee is made up of a diverse set of campus members from several colleges and roles. One of the jobs of each Steering Committee member is to solicit feedback from his/her constituents so that their opinions can be considered during key model decision points.
2. Deans Meetings – Representatives from Huron and relevant UCCS leadership (as needed) will meet with the Deans and Business Officers from each school and college individually throughout the project. The meetings are meant to both introduce Deans to incentive-based budgeting principles generally and the one that UCCS will be operating under. These meetings provide opportunities for Deans to ask questions and voice their opinions on model decision points.
3. Open Forum – We will hold an open forum during the development of the incentive-based budget model so that anyone on campus to be provided an update on the process and voice their comments and questions.
4. Focus Groups – We will work with schools and colleges, administrative units, and shared governance committees to arrange additional listening sessions and solicit feedback, comments, and questions from campus stakeholders.
5. Submission of Questions through the Website: The Budget Office will monitor the mailbox established specifically to receive questions, concerns, and comments that are sent by campus stakeholders. Additionally, the website will be updated to share report-outs from the Steering Committee, project milestones, and maintain the FAQ.
6. Governance Committees – During the infrastructure phase of the budget implementation, governance committees will be established to maintain and support an efficient budgeting process year over year. Membership on these committees will allow for ample opportunity for members of campus to be actively involved in the yearly budgeting process.

Huron expects this initiative to span 24 weeks from November 2019 to April 2020 and encompass at least 7 Steering Committee discussions, as well as a Dean’s Retreat with the Steering Committee.
 

The University plans to run a parallel process in Fiscal Year 2021 to gauge the effectiveness and efficiency of the new model, with a full shift in Fiscal Year 2022.

Many institutions have elected to redesign their budget models to become more incentive-based and decentralized. Websites for recent budget model redesign initiatives include:

• University of Nebraska – Lincoln
• University of North Dakota
• University of Texas – San Antonio

Additionally, many large research institutions have utilized incentive-based and decentralized budget models for decades. These institutions include:

• Indiana University Bloomington
• University of Pennsylvania
• University of Michigan