The Tale of a New Budget
Model in 16 Months
Kelly M. Ratliff
University of California, Davis
UC Davis – Campus Facts
Davis
Founded in 1905
Students as of fall 2012: 33,000
4 colleges, 6 professional schools
23 intercollegiate sports (NCAA Division I)
21,700 employees
(4,000 faculty & 17,700 staff)
101 undergraduate majors
90 graduate programs
8th ranked public university by U.S. News & World Report
Member of the Association of American Universities
1st in Sierra Magazine 2012 “Cool Schools” Survey
Research funding:
• 15th among U.S. ranked public universities
• 22nd among public and private universities
Responsibility Center Budgeting
 Attribute revenue to generating unit
 Units more responsible for funding activities
 Create incentives
 Improve student experience
 Identify and pursue new revenue
 Manage resources with eye to long-term returns
 Adoption
 Common with major private universities
 Relatively few public universities adopted before late
2000’s
 Pace by publics increased since financial crisis
Primary Elements
 Revenue
 Tuition
 Indirect cost recovery
 State appropriation
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Support for common goods
Cost allocation
Role of center and units in funding in future
Cultural and organizational issues
State Revenue vs. Student Fees
Before Funding Streams
UC Office of
the President
Revenue
Allocations
Tuition
& ICR
10 UC
Campuses
After Funding Streams
UC Office of
the President
Expenditure
Assessment
Tuition
& ICR
10 UC
Campuses
Response to Fiscal Crisis
“We can either accept that permanent reductions in
state support will define a new status quo for UC
Davis,… or we can take control of our destiny by
developing new strategies and adopting new
budget models that will move the campus forward in
the coming years.”
Chancellor Linda P.B. Katehi
July 22, 2011
Response to Fiscal Crisis
Letter to the Council of Deans and Vice
Chancellors
“During the 2011-12 academic year, I will
continue to work closely with you on the new
budget process and model that we will begin
implementing for the 2012-13 academic
year.”
Provost Ralph J. Hexter
July 29, 2011
Fact-finding Trips
May 2011: University of Michigan
 Most important takeaway:
 Do you want a revenue
distribution model or a cost
allocation model?
October 2011: University of Washington
 Solidified our decision to focus on
revenue distribution
UC Davis Revenue: $3.4 billion
2012-13 Estimates
Includes Medical Center
UC Davis Revenue: $2.1 billion
2012-13 Estimates
Excludes Medical Center
Relied on Existing Stakeholder Groups
No formal steering committee. To develop the model,
we relied on:
 Regular working sessions with the Provost
 Council of Deans and Vice Chancellors
 Assistant Deans and Chief Operating Officers
 Academic Senate, especially the Committee for
Planning and Budget
 Department Chairs
 Anyone or any group that invited us to present
Enter the White Paper
 Key communication tool for developing the
model
 One paper per topic
 Main modules: UG tuition, indirect cost recovery and
provost allocation
 Related projects: systemwide assessment, benefits
decentralization
 No blank slate discussions
 Assumed a range of practical options
 Starting place for discussion was version 1
 Consulted and issued revised versions
 Used common data sources and known metrics
Role of the Budget Office
 Data and modeling expertise resides in budget office
 Formulas more about gaining buy-in than actual
technical work
 Groups can get distracted by technical dimensions
 Putting technical burden on budget office allows
larger campus conversation
 Focus on new implications for management,
decision-making, authority, and accountability
Major Elements of New Model
 Phase I for 2012-13
 Undergraduate tuition revenue
 Indirect cost recovery
 Provost allocation – setting the baseline and
deciding future funding levels
 Related projects:
 Benefit decentralization
 Application of Funding Streams assessment
 Bridging strategies
 Revitalized annual budget meetings
Major Elements of New Model
 Phase I details
 Undergraduate tuition revenue
 After return-to-aid, 70% to units & 30% to Provost
 Portion to units
 60% student credit hours
 30% degree majors
 10% degrees awarded
 Indirect cost recovery
 2012-13: 34% to units & 66% to Provost
 Goal of a 40%-60% split
Major Elements of New Model
 Future phases
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Faculty resources
Graduate tuition revenue
Revisit allocation of professional tuition
Self-supporting degree fees
Summer session
Capital and space resources
Initial Model
 Step 1: Existing baseline budget of
general funds (GF), support from central
benefits pool (CBP) and indirect cost
recovery (ICR)
 Step 2: Baseline budget recolored per
new model; undergraduate tuition
revenue (UGTR) and provost allocation
(PA&GT)
 Step 3: Estimates for 2012-13
Note: Provost allocation includes graduate
tuition – will disaggregate in future phase
Key Success Factors
 Support of campus leadership and enlistment of
external expertise
 Relied on existing committees and stakeholders
 Revenue distribution instead of cost allocation
 Use of transition and bridging strategies
 Previous initiatives to increase unit autonomy
 Use of common and easily available data sources
 Awareness that budget changes are as much
cultural as technical
Some Parts Already in Place
 Most institutions will already have elements in
place, such as:
 Professional programs
 Self-supporting degrees
 Existing ICR distribution programs
 Rules about unused balances
 Pathways to a new model may not be so far
 These models do not remove Provost from budget
allocation decisions - may refocus the process
Issues and Concerns
 Do we understand the implications of these
changes?
 Not everyone feels there was enough
consultation
 Some worried about too much change,
others worried that change was too
incremental
 Unrelated concerns may get associated with
the new model
 Dean’s office relative to departments
How’d We Do?
 Advancing Chancellor’s Goals
 Conversations shifting from focus on state funds
 Student-centric university
 Activities are linked with revenue flow
 Having new conversations with deans
 They are doing the math – comparing revenue to
cost
 Managing their portfolio of programs
 Budget information available sooner, better budget
modeling tools
Resources
 Budget and Institutional Analysis
 budget.ucdavis.edu
 Incentive-Based Budget Model
 budget.ucdavis.edu/budget-model