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?
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 ….
Focus on Central
Financial Control
Resource Planning
Allocation
Management
Accountability
…to an effective resourcing process
engaging a broader community
in collective strategic decisions
about shared priorities.
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.
What is the new budget cycle?
Budget and
Planning
Assumptions
July to September
Year round
Quarterly reporting and
variance analysis
Fiscal Year Close,
Analysis and
Performance
Assessment
Budget
Management,
Monitoring and
Adjustment
September to December
Budget and LongRange Plan
Development
Budget and Plan
Approval
January to March
April to June
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.
A Roadmap for Change
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
Q&A
www.virginia.edu/resourcingthemission