UC Berkeley:
CSS Funding Model
A New Approach to Campus Shared Services ‘Pricing’
David DeClercq
(510) 664-9296
david.declercq@berkeley.edu
Preface
The CSS Funding Model includes the following:
1. A comprehensive plan to fund CSS operations.
2. A new Indirect Cost Recovery Sharing Model.
All Divisions are projected to be ‘as-good’ or ‘better-off’ financially.
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Our Current Situation
Our Goal:
Simplify and standardize key administrative tasks in order to generate cost
savings that will be re-invested in teaching, research, and public service.
Our Challenge:
Produce an operational plan to fund CSS, given highly variable costs, no
reliable data or enterprise-wide systems, huge historical funding distortions,
and a financial structure with more than 14,000 different ‘flavors’ of money.
Our Obstacles to Cost Standardization:
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Divisions have achieved different levels of efficiency.
Some Divisions are more complex than others.
Divisions offer different service levels and serve different populations.
Divisions have invested (or not) differently in administrative services.
Divisions pay employees differently.
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Principles & Objectives
Design Principle:
Develop a Funding Model Framework that is as follows:
• Simple/Transparent: easy to explain, understand, and implement.
• Automated: minimize administrative work.
• Incentives: build appropriate incentives that drive good decision-making.
Objective:
Develop a rational financial model that will enable Berkeley to make more
strategic financial decisions in support of Access and Excellence by:
• Standardizing the cost of service delivery.
• Minimizing the distortions of past funding decisions.
• Designing a mechanism to distribute savings back to campus.
• Creating incentives that align with institutional goals.
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Our Policy Solution
Create policy that incentivizes participation by shifting financial risk to
Central Campus and leverage the payment mechanism to reduce distortion.
Academic Units
will pay 97% of
current cost.
Administrative Units
will pay 100% of
current cost.
Central Campus
bears the financial
risk that operating
cost is greater than
collections during
implementation.
Cost
Policy
Phasing
Policy
Cost and Risk Policies
solve
for variable costs, allows
time to collect better data
through operations, and
creates incentives to
participate in CSS without
excessive financial risk to
Campus Divisions.
Payment
Mechanism
Hold Cost Policy
fixed for 2 years.
Conduct a
‘Fundamental
Review’ of financial
performance.
Recommend to
campus on the
on-going, post
implementation
Funding Model.
Mechanism will
solve distortion
and complexity.
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Mechanism Options
‘Common Goods’ Framework: how to pay for goods and services
The framework considers the dollar amount, frequency, current payee, and
the marginal cost of service to identify the preferred method.
Full Cost
Allocation
Assessment
Charge
Direct
Charge
Incremental
Usage
• Calculate the cost of
a basket of goods or
services and fully
fund from Central
Campus resources.
• This is a set aside
taken prior to the
distribution of
revenue.
• Flat tax percentage
based on revenues
or expenses to
recover the cost of
goods or services.
• Often this tax is an
administration tax or
participation fee.
• Allocate costs of the
basket of goods or
services based on a
measureable factor
(e.g. headcount).
• Charge based on
cost per factor,
irrespective of actual
consumption.
• Recover cost based
on ‘per unit’ of usage
in a time period.
• Charge based on
actual ‘per-unit’
consumption.
‘Off the Top’
‘Tax’
‘Bill’
‘Price’
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Our Payment Solution
Use the mechanism to standardize cost, reduce historical distortion, provide
a means to distribute savings, and allow collection to scale with activity.
Campus Shared Services
Departmental
Administration
2% Assessment on
all non-contracts and
grants expenditure
and receive refund
for over-collection.
Academic
Divisions
Research Administration
Transfer ‘un-restricted’ Divisional
budget used for in-scope work and redirect existing ICR payments to CSS.
CSS
Provides
Service
Departmental
Administration
Transfer general
allocation budget or
a periodic bill for
Auxiliary Units.
Administrative
Divisions
Central Campus will introduce a new ICR Sharing Model.
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New ICR Sharing Model
Design Principles:
• A model based on key principles: simple, transparent, and with clear
incentives that support the research mission of the University.
• Provides a pool of resources to fund research-related expenses that
cannot be billed directly to a contract or grant.
• Avoids compliance issues at the Division/PI level.
The Executive Vice Chancellor and Provost has formed a work group to
decide on key details for the New ICR Sharing Model.
Proposed ICR Sharing Model:
• Divisions will receive up to 10% of all ICR generated by the Division.
• ICR will be distributed to various campus stakeholders by rule.
The ICR Model is funded through the a higher Federal ICR Rate.
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Impact (1/3)
Departmental Administration:
• Every Academic Division pays the same rate.
• Virtually no additional expense to collect the fee.
• Net cost to Academic Divisions will be no more than 97% of current
cost during the Implementation Phase.
• A single-rate assessment will increase financial flexibility by charging all
funds (restricted and un-restricted) in proportion to their use.
• Collection will scale automatically as Divisions grow or contract.
• Mechanism allows for savings to be distributed back to campus by
reducing the assessment rate over time.
Divisions are projected to be financially ‘as-good’ or ‘better-off.’
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Impact (2/3)
Research Administration:
• RA services will be available to all Divisions, regardless of current
Division-level investment.
• PIs already pay ICR and will not pay any additional fee to use RA.
• Re-directing ICR and adjusting un-restricted budget helps to minimize
distortions in past funding decisions – unwinds the ‘patch-work quilt’ of
RA funding.
• Standardizes RA cost structure by pooling all staff and allocations into a
single budget.
Divisions are projected to be financially ‘as-good’ or ‘better-off.’
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Impact (3/3)
Indirect Cost Recovery Sharing Model:
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Sharing of ICR is rational and transparent.
ICR generation is linked directly with payout.
Provides an incentive to maximize allowable cost recovery.
Makes resources available to pay expenses that cannot be billed to a
contract or grant.
• May reduce compliance risk.
Divisions are projected to be financially ‘as-good’ or ‘better-off.’
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CSS Financial Operations
The CSS Funding Model identifies the method for funding CSS operations;
however, CSS will be funded like all other Administrative Divisions.
Campus
Divisions
Divisions will pay the
2% Assessment
and make budget
contributions to
Central Campus.
Central Campus
Campus Shared
Services
Central Campus will
aggregate all CSS
Funding Model
payments.
CSS will participate
in the Annual Budget
Process to request
operational funding.
Over time, Central
Campus will pay out
all funds collected.
The Chancellor will
approve the annual
CSS Budget.
Campus Shared Services will be subject to the same goals and
budgetary pressures as all other campus Divisions.
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Implementation Update
As of July 2013, CSS, in collaboration with campus partners, has:
• Completed the Early Adopter Implementation.
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VC Administration and Finance (March 2013)
College of Natural Resources (April 2013)
L&S Biological Sciences (April 2013)
Engineering Research Support Organization (May 2013)
Research Enterprise Services (May 2013)
Completed the 2.0 Cohort Implementation.
Integrated more than 300 staff and a Leadership Team.
Developed comprehensive functional and service training.
Documented 100+ processes to enable process improvement.
Built-out new office space and satellite locations.
Designed and implemented a funding model.
Conducted numerous change management and outreach activities.
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Questions?
David DeClercq
(510) 664-9296
david.declercq@berkeley.edu