Is there such a thing as a “rock star” in the world of budgeting?
In a recent meeting with Kelly Ratliff, UC Davis’ associate vice chancellor for budget and institutional analysis, Ratliff explained that the three-year-old budget model implemented at UCD has indeed made her staff “rock stars.”
In fact, the model — which was based on University of Washington’s budget — has gained attention from many other universities. UCD’s budget office has now shared its successes with the universities of Utah and Tennessee, Dominican University and UC San Diego, among others.
In a sit-down with the project manager for the new budget model, UCD’s principal budget analyst Jason Stewart, he explained it as follows:
“The state was cutting funding, tuition was going up,” Stewart said, and Chancellor Linda Katehi wanted a more transparent budget.
“When the chancellor made the decision to do this budget model, we didn’t know when the next cut may be coming from the state. So there was a lot of uncertainty,” Stewart explained.
So what is unique about this new way of budgeting?
The general fund for the university has always been a mix of state dollars and tuition, Stewart explained. And there wasn’t much need to know which pile of money was bigger. But in the past six years, UCD has had to shift from the state portion making up most of its budget to tuition being a greater slice of the budget pie.
Stewart said that many schools in the Midwest faced this shift years ago, so looking at their budgeting strategies made sense. Universities of “Michigan, Illinois, Indiana and Minnesota all have some version of it.”
And Katehi had some experience and familiarity with models like this from her tenure at the University of Illinois.
“Essentially the chancellor said, ‘We need to be more in a position to determine our funding,’ ” Stewart said. “That was sort of her challenge … ‘We will rethink how we allocate resources at UC Davis.’ ”
The old model for UCD was “incremental budgeting … meaning you got what you got last year, and now a little more.”
From there, the UCD budget office would allocate funds to the deans, and the deans to the departments.
To make it “easier for people to understand where money is going and why,” Stewart said, a more incentive-based model was implemented.
“The incentive side of it is to get people to where they better understand where the revenue is coming from, what’s driving the revenue … then hopefully they can counterbalance cost with that,” Stewart said.
To be more specific, Stewart explained, a dean is now put in the position of knowing “if I add a (course) section of this many students that is this many credit hours, the funding will come … do I want to do that or not?”
Continued Stewart, “The whole idea is that if you know that if you do X activity, that Y revenue will flow, then you can make a decision about whether or not you want to do that activity.”
Thus far the budget office has seen “a richer dialogue between provosts and deans,” Stewart said.
Other university deans and provosts are intrigued by what UCD has done, and the “conversations range from philosophical to specifics. People ask questions like ‘Now that you’re incentivizing student credit hours, are departments creating huge classes with hundreds of students? Are they getting rid of their small classes?’”
Another concern is that “if revenue comes because of student credit hours, then people might begin to create their own brand of something … for example, writing for engineers,” Stewart said. And meanwhile, your traditional English department is being siphoned off.
But the university doesn’t want departments to chase the dollars by making up their own programs. To control for that, the Academic Senate has to approve classes, and would not, for example, allow every department to have its own brand of a writing course.
Additionally, “the provost, and by extension this office, has a role to hear the questions and concerns people are raising,” Stewart said. The budget office has spent the summer looking over data to see if there have been changes in behavior, watching to see if incentives are being taken too far.
And behavior can change in a good way, as well.
“People are still making decisions, still having conversations,” Stewart said. “You don’t push the people out of the process. What we think it does is change the conversations. We think we are seeing that at UC Davis.”
Stewart also believes a university has an obligation to “small courses that we must have, we have to have … entire departments or disciplines that need additional support that we don’t expect to just get by on their tuition.”
“We have to keep in mind how do we pay for those things, but they have value.”
— Reach Tanya Perez at firstname.lastname@example.org or 530-747-8056. Follow her on Twitter at @enterprisetanya