Budget Model Change Designs Approved

Quick Take

Dr. Pestello has approved three changes to budget management, as recommended through the Budget Model Initiative; deans and vice presidents will be given more flexibility and ability to invest in priorities and growth.

The Budget Model Initiative

Since it was launched, the Budget Model Initiative has been coordinated by Doisy College for Health Sciences Dean Mardell Wilson, Ed.D. (co-sponsor), Vice President for Student Development Kent Porterfield, Ed.D. (co-sponsor) and Director of Financial Planning and Budget Brianne Burcke (project manager).  In the spring semester, the Budget Model Phase 1 team summarized the basic components of the University’s budget model in an effort to provide transparency and increase shared understanding of the current resource allocation process.  About 350 people attended three forums last spring. Note: The presentation materials and Fuze.com recordings are from spring are still available on the Operational Excellence program website. 

After this descriptive study phase was completed, the Budget Model Initiative advanced to a second phase to redesign central aspects of the budget model and to address a defined set of difficulties. 

Putting Our Budget Model in Context

As the Budget Model Phase 2 team carried forward the work, they made some important observations, which may help our community put their work in context:

  • The existing budget model did not cause SLU’s current financial situation.
  • Like SLU, most universities use an incremental budget model, an approach based on historical expenses with incremental amounts added for salary increases, improvements, new hires and capital projects, among other needs. 
  • Many universities combine traditional incremental budgeting with elements of other models in a hybrid approach (e.g., incremental plus methods that allocate revenue), emphasizing the highly individualized approach across institutions. There are many varieties of incremental budgeting in practice across the country.
  • Based upon our understanding from other institutions that have completely changed budget models, it takes a minimum of 3 years to implement completely new models.  Furthermore, a radical overhaul of the budget model would likely require different systems and personnel to support it.
  • The annual budgeting process can be more open, with information shared more widely across leadership to ensure transparency and to promote alignment of priorities. 
  • Budget development at SLU should be a systematic, predictable process that considers the academic and student support priorities of the University, as well as the necessary administrative support to address those priorities
  • Another key priority is to develop budget practices that not only provide incentives for growth, but also allow greater flexibility in stewardship of limited resources. 

Budget Model Changes

Dr. Pestello approved recommendations from Provost Brickhouse and CFO Heimburger, which were prepared by the Budget Model Phase 2 Initiative team.  The changes are:

Spend Management: Allow unit-level leadership (dean or vice president) to move funds between personnel and general expense categories within a fiscal year.  For example, budgeted funds associated with an open position could be converted to professional development (e.g.: training and conference travel) for faculty/staff or new software to advance a research project.  A Rapid Results Team will be created in spring 2018 to streamline the bureaucratic approval processes that could impede full, easy implementation of this new approach.  While this solution provides much-needed flexibility to unit leaders, they must exercise discipline, accept accountability, apply decisions consistency, as well as collaborate with faculty to assure good stewardship of the University’s limited resources.  This will go into effect during the next fiscal year, beginning July 1, 2018.

Unspent Fund Distribution:  Activated when the University achieves a 1% operating surplus (~$8 million), this change allows colleges and schools to carryover unspent funds (unrestricted personnel and general expense) from one fiscal year to the next -- 50% of unspent funds can roll-over into a designated fund and be available for budgeting in future years.  Thus, deans can retain dollars that could be saved and/or spent on a variety of strategic investments, such as faculty start-up packages, specialized instructional technology, research equipment, etc.

Revenue Sharing:  As part of an effort to incentivize innovation and revenue growth from academic programs and to promote a culture of fairness, revenue sharing is now available in three core areas for growth.  The split of net revenue (after direct expenses) is shown below. 

  • Continuing Education/Non Credit (70% College, 20% SLU, 10% Provost)
  • Summer [for credit] (40% College, 40% Provost, 20% SLU)
  • New/Expanded Graduate Programs – (40% College, 40% Provost, 20% SLU)

As part of the Budget Model Initiative implementation phase, a team will be formed to consider program development guidelines, methods for calculating growth, and accounting system adjustments needed to simplify tracking.  Designated funds accumulated by revenue sharing will also need to be budgeted annually by the deans.  Through successful strategies that expand the reach of SLU’s academic programs, there is significant potential for direct reinvestment into schools/colleges and student learning experiences.

Q&A Sessions

This month, the Operational Excellence program coordination team hosted seven Q&A sessions open to all members of the SLU community.  The team fielded some comments and questions about these budget model changes at the sessions.  Drs. Wilson and Porterfield are presenting at the open Faculty Senate general meeting tomorrow (November 14; 3:30 PM, LRC Pitlyk Auditorium) to share process and results of the Budget Model Phase 2 initiative team. The Budget Model Phase 2 team plans to host a couple of Q&A sessions in December or January to gather information that can help guide the implementation plan stage.  The team will be seeking the community’s knowledge and input about what systems or practices need to be addressed so that the full potential of the budget model changes can be realized. 

Thank You

We are grateful for the time and expertise of people selected by Provost Brickhouse and CFO Heimburger to serve on the Budget Model Phase 2 team.  They contributed diverse work experience and perspectives on the budget model and budgeting process.  The team worked through a number of issues and uncovered a number of areas that need attention in a future initiative.

Sponsors
Mardell Wilson, Ed.D., Dean of Doisy College of Health Sciences
Kent Porterfield, Ed.D., Vice President for Student Development

Project Manager
Brianne Burcke, Director of Financial Planning and Budget

Members
James Fisher, Ph.D., Professor, John Cook School of Business and Chair of Faculty Senate Budget Advisory Committee
Kerry Ryan, J.D., Associate Professor, School of Law
Donna LaVoie, Ph.D., Associate Dean, College of Arts & Sciences
Stacey Barfield Harrington, J.D., Assistant Provost
Gary Whitworth, Associate Dean for Finance, School of Medicine
Matthew Christian, Associate Vice President and Chief of Staff, Office of Vice President for Research

Feedback

As always, your comments and ideas are welcome. You can email the program team or use the online feedback form. You may also contact your colleagues who are working on any of the active focus areas; initiative team rosters are found on the program website

Your Operational Excellence Program Coordination Team

Eric Armbrecht, Ph.D., Associate Professor – Co-Leader 
Doug Williams, J.D., Professor – Co-Leader 

Libby Gallogly – Project Manager  

Justin Daffron, S.J. – Growth  
Clayton Berry – Communications  
Brianne Burcke – Finance  


About Operational Excellence
Launched in February 2016, Operational Excellence is an institution-wide initiative designed to make SLU more efficient and effective, and identify opportunities for increased revenue and growth — all to enable the priorities identified in the University's strategic plan. The program stems from Initiative Five of the strategic plan that calls for us foster a culture of excellence, effectiveness and efficiency deeply rooted in our institutional mission and Catholic, Jesuit values.