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Resourcing the Mission: The New Internal Financial Model. Why Create a New Model?. Changes in the Environment Greater competition Economic and fiscal realities Pressure to grow Expectations for accountability, transparency and efficiency. Why Create a New Model?. - PowerPoint PPT Presentation
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Why Create a New Model?
Changes in the Environment•Greater competition
•Economic and fiscal realities
•Pressure to grow
•Expectations for accountability, transparency and
efficiency
Why Create a New Model?
Answering the Tough
Questions•Is UVa, as an institution, and are the schools individually, meeting our aspirational goals and potential?•Are revenue streams being maximized?•Are costs being managed in the best possible way?•Are academic programs and centralized services adding value to those we serve?•Are deans empowered to improve and grow their schools?•Are schools and central administration collaborating and aligned?
What is the current model?
• Centrally collected and distributed tuition, state appropriations and unrestricted funds
• Incremental allocations to “base” budget• Pockets of self-sufficient and revenue
sharing activities• Limited ability of schools and
administrative departments to determine and fund their own priorities
2011-12 Budget
Uniquely UVa• Identify the guiding principles:
Incentives, Transparency, Accountability, Simplicity, Innovation, Quality
• Focus on empowerment and decision-making.
• Communicate transparently; encourage participation.
• Align responsibility and accountability.
• Assess the readiness of all schools and units.
• Establish reliable, shared data source/ reporting system.
Shifting the Budget Conversation
Great universities are transforming traditional, appropriations-based budgeting ….
…to an effective resourcing processengaging a broader community in collective strategic decisions
about shared priorities.
Focus on Central
Financial Control
Focus on Central
Financial Control
Resource Planning Allocation
ManagementAccountability
Resource Planning Allocation
ManagementAccountability
What is the new model?• Resource Centered Management (RCM), Activity
Based Budgeting (ABB), and similar models decentralize and align authority, responsibility, and accountability.
• Schools and administrative units (revenue centers) are responsible for generating their own revenue and managing their own expenses.
• Administrative service centers that are not revenue producers may be financed via subventions (charges to revenue centers)
• i.e., charges for information infrastructure, utilities, space, etc.
• Models such as these create incentives to control costs, improve productivity, and enable entrepreneurial activities.
September to December
January to March
Year roundQuarterly reporting and variance analysis
April to June
July to September
What is the new budget cycle?
Awareness: Opportunities • Provides new potential to diversify and increase local revenue
streams.
• Facilitates local participation in decision making.
• Enables effective joint ventures between deans and central administration.
• Provides a means to understand the true cost of services.
• Encourages efficiencies and competitive, valuable services.
• Provides a framework for the University community to embrace and align to school and institutional priorities.
Awareness: Fears and Risks
• “Us versus Them”
• Having a financial rather than academic focus.
• Misaligned incentives place department and school goals over University goals.
• Disparities in capacity to achieve goals or service standards.
• Inability to manage budget and new responsibility centers.
• How will tuition sharing work?
• Disincentives for interdisciplinary teaching and research.
• Duplication of courses across the institution for tuition generation.
• Fear of ending up with less fiscal capacity than today.
The shift will likely take 18-24 months, and consists of a planning and preparedness phase, a testing phase and an
implementation phase.
Assessment and Preparedness
Policy and Model Development
Communication and Consensus Building
Building, Testing and Reporting
Adoption and Adjustment
A Roadmap for Change