Budget Model Development

Feb. 11-16: Comments on budget model report

PDF version of this file.

Comments received on the second report of the Budget Model Development Committee

With responses indented and italicized

Staff Comment

Referencing the below Tuition Revenue proposal for Distance Education, I would like to better understand how each statement is different from the current handling of these revenues.

1. By saying colleges will pay CECS for "any services they use" seems to be stating that a menu of services will need to be developed and the colleges may choose what services they would like to pay for. Is this the intent?

   In my opinion this would adversely affect the representation of the University to our potential students -- for example, if a college chooses not to participate in marketing and representation at professional distance education forums it would be difficult and would not present a unified approach to represent one college and not another. Maybe the compromise would be to have "core services" that colleges must participate in and "auxiliary services" that they can choose to participate in or not.

   The concern again would be that there would be conflicting messages -- CECS handles some colleges' distance education course set up, registrations, whatever the service is and some colleges would handle their own. This seems like it would also be confusing for the Registrar and other University offices CECS works with, as well as additional resources necessary for training and maintaining databases/information and records.

2. By stating that all tuition for non-credit bearing courses will be allocated to CECS also seems to be a change from the current process. I believe revenues beyond (CECS and other) services and costs for a non-credit course currently revert back to the college. If the revenue goes to CECS won't this discourage colleges from initiating offerings of new non-credit courses? This appears to be in direct conflict with trying to "link allocation of resources with a unit's responsibilities" and "not providing appropriate incentives to undertake new or increase levels of activities". If there is no incentive for colleges to increase their participation in non-credit courses, will CECS be allowed to secure non-ISU faculty and educators?

I look forward to your response. Thank you.

"Distance education. Tuition revenue for credit bearing courses offered at a distance will be distributed to the college offering the course as indicated above with colleges paying Continuing Education and Communication Services for any services they use. All tuition revenue for non-credit bearing course will be allocated to Continuing Education and Communication Services."

Thank you for taking the time to review the second report and for the good questions.

The committee needs to look at this area in more detail.

We have discussed the concept of "core" vs. "auxiliary" services per your suggestion below and this may be a good place to apply the concept. A couple complicating factors we discussed are that not all courses available at a distance (via the internet for example) are offered through CECS and that more full-time residential students are registering for CECS courses. The committee wants to encourage growth in credit and non-credit course offerings offered at a distance, aggressive promotion of these courses, and see that the tuition revenue is directed in a way that supports and incents this growth.

The second report includes our early thinking but there is much more that needs to be done with respect to CECS. We will set a time to meet with CECS leaders to work through these and other questions.

Thanks again for your interest and input.

Faculty/Administrator Comment

I continue to be disturbed by the implications of the new budget model outlined in the Second Report. Here are two additional questions.

1. How is something as basic as classroom assignment resolved with the facilities chargeback concept articulated on page 8? My concern is free flowing access and support for teaching without regard to collegiate 'jurisdictional' classroom boundaries.
   1. I teach a large lecture -- there are now only 6 rooms in the university that can support it. I have taught in many of the large halls. MacKay 117 is within HSC real estate, Design 100 is in Design's, Hoover 55 is in Engineering's, Curtiss 127 is in Ag's, Marston 207 is in Engineering's, MoleBi Auditorium is LAS space, and the old LeBaron lecture hall was in HSC. Since all large courses are 'vagabonds' to some degree and need to be assigned on an as needed basis -- how are commonly shared rooms to be figured into the calculus of 'space assigned' to the colleges? (Even at present, depending upon the degree of private funding, rights of first use are granted to the home college; but this has relatively minimal impact. It would seem to me that the new model would exacerbate the practice of building 'protected' spaces solely for collegiate use.)
   2. I teach upper division studio -- with a dedicated room 24/7 of about 1200 sf for 16 students, and modest equipment needs. How does the 'rent' charge for this compare to say a physics or chemistry lab that is far more expensive in terms of equipment investment and maintenance expense, though used by more students during the typical class periods. And how is dedicated research space factored into the equation? The calculus is based upon 'space assigned' but does not factor in type of space or its first cost & maintenance expense.

   3. Another simple item: if I need media, I contact ITC -- they come and modify the room I teach in (special equipment beyond the basics already in place has been provided over the years in 4 separate rooms). In the future, with the payment for service model -- does the charge go to the host college or to the college offering the course? Either way, are we prepared for the calculation structure to accommodate this?

      In today's university, the spaces in which we teach and do research are fixed -- it is the purposes and people who are fluid -- in the current budget model, at least the core of such facilities is a central service.

2. While our current budget is not perfect by any means, the new model appears to be worse as a management and reward tool in many respects, and it still fails to address, or overreaches, some basics:
   1. Base budgeting inequities with respect to teaching obligations (I.e., underfunding and the reliance upon lecturers to meet core obligations. While dollars do move to courses being taught (a positive attribute of the plan) it is not the case that merely assigning $ by major or credit hour will resolve this, for we still will have base underfunding. This may simply cause the lecturer needs to crop up in different locations. Same amount of mercury -- just in a new constellation of bubbles. Also, to accomplish this feature does not require a wholesale revision to the entire budgeting process.)
   2. Base budget inequities with respect to comparative national salary structure
   3. Central underwriting of centers that were created to be income generators through contracts and grants
   4. Lack of ability to have resources flow to growth programs (Distributing a share of tuition $ by major or credit hour will help to address this, but to accomplish this feature does not require a wholesale revision to the entire budgeting process.)
   5. Lack of reward for entrepreneurial efforts to increase research (More overhead coming back to the PI and host college will help to address this, but to accomplish this feature does not require a wholesale revision to the entire budgeting process.)
   6. The freezing of certain fees to the detriment of various programs while others have been granted special fee and or tuition status -- a split in the "one fee for all" applying to some colleges and not to others. This process provides compounded positive income streams to those with special status, and leaves the faculty and students of the others behind.
   7. The use of fees to make up for lack of central funding support. Not all fees necessarily meet the test of being fees for service, and once set, they have been slow to be changed to meet changing needs across the campus.
   8. If the historic base budget has problems, why do we not look at a 'zero base budget' construction process, not just for the 'service' centers as proposed, but for the colleges themselves.

Thanks for this next set of questions.

The committee's current thinking:

Staff Comment

Thanks for your questions. See our responses below.

Budget Development Committee: If I understand the proposed model and diagram correctly, interest income earned on the unspent balances in general fund accounts will go into the Institutional Fund.

Yes this is correct. Presently, the president makes decisions on how this interest income is spent. This doesn't change in the model under consideration.

Is it correct to assume that Non General Fund Revenues include endowment interest?

Yes

Given that assumption, is it also correct to assume that those funds will continue to reside within the unit generating them?

Yes

In this new budget model, what is the relationship between the Special Appropriations Units and those who receive funds through them, yet report directly somewhere else? For example, there are cases that a unit reports to the Vice Provost for Research (Research & Economic Development Fund) and receive funding indirectly through a Special Appropriation Unit. Will the units reporting directly to the VP for Research (for example) receive their funding directly from that office in this new model? Or will the Special Appropriation Unit be a second layer with the ability to further reduce or increase the level of funding based on the general principles of the model?

Special appropriation units will continue to receive directed federal and state appropriations in full as required by law which also prevents these funds from being intermingled with General University appropriations and revenues. The proposed model does direct a proportion of indirect cost recovery (IDC) revenue to the units where the research is being conducted. So, when a research project is carried out within a special appropriation unit, that unit would receive a share of IDC. Beyond that, increases in the budgets of special appropriation units will need to occur through other means, e.g., Cooperative Extension in recent years has adjusted their fees to increase revenues.

Faculty Comment

I am concerned about two issues regarding the proposed budget model.

1. The overarching philosophy seems to take much of the direct budget control from central administration and distribute it to the various deans. Since the President is speaking for ISU to the BoR and legislature and is directly responsible to them, I believe that greater budget control should remain centrally. I also wonder why, if formulaic distribution of funds is correct at the college level, why is it not at the departmental or program level. The control of all college funds remains in the hands of the Dean rather than distributing it based on SCHs or some other formula.
2. I worry that the formula funding will promote an environment of competition for dollars. I'm afraid that colleges will be looking to maximize profit instead of doing what is best for our students, our programs, and the university as a whole. One of the great "selling points" for ISU when recruiting students, faculty, and staff is that this is a friendly and collaborative place to work. Let's not erode that.

Thanks for your note and concerns.

Your first concern regarding presidential authority has been expressed by others. We now realize that the second report did not describe the committee's intention on this point as thoroughly as needed. This will be corrected in the third report. The concept proposed still retains strong presidential control. The level of participation, i.e., amount each college needs to pay for central administration, library, institutional fund, and the research and economic development fund, will be decided by the president. The president's decision will be informed by advice from VP's, deans, and other advisory groups, but the decision will rest with the president. The same will hold for service/utility rates. The background research and proposals will be developed by providers and advisory boards, but the president will make the final decision. It has been impressed on the committee that the institutional fund also needs to be large enough to enable the president to "steer" the institution by affecting change and rewarding quality.

The president directed the committee to work the revenue and expense allocation to the college level and let each dean decide on the methodology she/he will use within the college allowing the dean latitude on resource/expenses distribution.

The committee also wants to preserve the friendly, collaborative environment as well as one that encourages a continual increase in the quality of academic program. At the same time, we are attempting to develop a model that encourages/incents innovation and growth, links academic decisions with the resulting resource implications, and encourages efficient delivery of support services. It's a fine line to walk and we remain sensitive to this concern.

Hope that helps explain our current thinking.

Faculty Comment

Insights-RBB I have just return from a visit to Ohio State University department of Food Science and Technology. While there I made an effort to better understand how their Responsible Base Budgeting (RBB) has affected their department and college of Agriculture operation. Here are my take home points:

1. RBB has defiantly stopped almost any form of team teaching with faculty outside the home department and college.
   1. The Dean informed me of one case where he allow a ruminate microbiologist in Animal Science to teach 50% of a specific microbiology course, because it is the right thing to do for students. However, his college get no funds for this activity.
   2. Food Science and Technology faculty where helping teach some biology course until RBB. They were then terminated and replaced by Biological college some how.
2. RBB research incentive returns to the college are based on indirects collected and on past history.
   1. When RBB started, departments with poor past histories started low and are continually increasing. The dean indicated that departments starting at a lower base are doing very well in this new system.
   2. Departments with excellent past histories are being penalized for dips in indirect returned. In fact the interim chair informed me that they denied accepting a research project because it had no indirects.
   3. Department chairs informed me that the formula changes every year. Thus it is difficult to make long term plans. (I did not ask if this formula was from the college or university.)

Main take home points:

1. Ohio State University can retain all carry over funds each year. This is how they are surviving. Without this authority, this budget model will not work.
2. Funds for each course taught needs to follow the instructor home department not the course home department.
3. No one I talked with had any department jointly administered in two colleges. I do not see this being addressed in the current documents.
4. A system that reward poor department performance is unacceptable. It is unclear to me how departments that are always taking risks to expand their research program will be rewarded.
5. I encourage all department chair and deans to contact their counterparts at the four universities that are using this new model to get their question answered. Talking with the upper administration is not the best way to do this. It is the department chairs and deans that are working in the trenches and they are being forced to live with this new budget model that need to be part of our decision process at ISU.
6. The only favorable comment I heard from the Associate Dean of Instruction was that "at least education is now very important to everyone on campus."
7. One challenge was to get faculty to look beyond the dollars generated for the department by teaching large classes and to look at what is best for the department. In other words, "I make all this money for the department but my salary is only $XXX," is an outgrowth of this model.

Thank you for the report from Ohio State. This input from Deans and faculty members is very helpful and will guide future dialogue among committee members and with the consultant we are in the process of hiring. The committee is uniformly supportive of interdisciplinary collaborations both for instruction and research/scholarship, and do not want to compromise the current environment at ISU which supports these collaborations so we are very attentive to these concerns.

Again, we appreciate your taking the time to share your observations - they are most helpful.

Faculty Administrator Comment

How will the new budget model handle double majors for distributing tuition revenue to Colleges? Will students who double-major "double count", that is be attributed to both Colleges involved if they span Colleges? I think that may work as their numbers are not large and it would be difficult to apportion them otherwise.

Thanks for your question.

The model under consideration distributes 25% of a student's tuition to the college in which they are enrolled and directs the remaining 75% to the colleges in which the student is taking courses - split pro rata based on SCH.

Our thinking right now, is that the portion of tuition paid by a student pursuing a double major that is distributed based on enrollment would be directed to the college of their first major and the rest would be directed to the college from which they are taking courses. Thus, the college of the second major would receive tuition revenue for coursework the student takes from that college but not base on enrollment.

We are open to suggestions if you believe there is a better way of handling this.

Thanks again

Faculty Comment

I very much appreciate the decision to review the manner in which the university is funded. For many faculty, especially in the socia sciences and the humanities, however, a new model means little until the university is also willing to address the vast wage disparities and teaching load differences between such departments in business and engineering and the rest. Is it really fair that starting assistant professors in business or engineering earn three times more than a starting faculty member in the humanities while teaching less? The fairness of the new budget model should address those concerns as well.

Thanks for your note and concern. President Geoffroy is also concerned about the competitiveness of faculty salaries and this remains a very high budget priority.

One of the performance measures for the new strategic plan is to increase faculty salaries to 102% of the average salaries awarded at our peer institutions. Faculty salary comparisons which have been conducted for many years are done at the disciplinary level, i.e., the salaries of humanities faculty at ISU are compared with humanities faculty at our peer institutions. Thus, the goal is to be competitive within a discipline.

When all of the disciplinary comparisons are aggregated, faculty salaries at ISU are 95% of those awarded at our peer institutions. Faculty salaries in the humanities are 90% of those awarded at peer institutions. So we have a distance to go both for the humanities faculty and for the entire university.

We appreciate your taking the time to write.