Inside Iowa State

August 26, 2005

Search for alternative budget model continues

by Anne Krapfl

How money gets allocated at Iowa State may change in the next year or two. A campus study group is considering alternative budget models that would stimulate progress on the university's new strategic plan, encourage multi-year planning, respond to student enrollment patterns and offer more flexibility. The idea for a new model was recommended by the consultant who led a budget symposium on campus in May and supported by many of the symposium's 70 participants.

Mark Chidister, assistant to the president for budget planning and analysis and a member of the budget model study group, said the team is working toward a mid-October goal, when it will host a campus meeting. At that time, the group will provide an update on its work, share the ideas it is considering and invite feedback.

"The May symposium showed us there's receptiveness to a change," Chidister said. "The question we'll need to answer is, can we craft a model for Iowa State that will generate the changes needed and suit the complexities of the university."

He said the study group's task involves dissecting the FY05 budget to understand where every dollar came from and how it was spent, developing criteria for evaluating other budget models, studying other universities that have changed their budget methods, and identifying variables that could help shape a new model for Iowa State.

It won't be a speedy process, but it will be a public one, Chidister said. Larry Goldstein, president of Campus Strategies and the facilitator for the May symposium, estimated it takes 12-18 months of study and analysis just to arrive at implementation.

The current model

Iowa State's current budget is a combination of incremental/decremental and initiative-based budgeting. For example, new money for salary increases is added to budgets as a percentage of units' salary allocations from the previous year. In recent years of low or no additional state funding, Iowa State has used internal reallocations to fund strategic initiatives and high priorities. Major new initiatives have been funded centrally with new or reallocated funds.

Summarizing small group discussions during the May symposium, Goldstein noted that the university's current budget model falls short in numerous ways, including:

• It lacks incentives for units to begin new activities or increase levels of activity.
• Its framework makes changes, such as responding to new service demands, a slow process.
• Repeated incremental or decremental adjustments have resulted in a "systemic misdirection of resources."
• Multi-year planning is difficult, if not impossible.

"Competition for scarce resources is increasing and the university must employ systems, processes and tools that will ensure maximum effectiveness of resource allocation decisions," Goldstein wrote in his report.

"As evidenced by the results of the recent Budget Symposium, the community is ready to undertake this initiative," he wrote. "It is therefore suggested that the effort to develop a new budget model be commenced immediately."

Goldstein's report is available online from the president's Web site.

Budget Model Study Group

• Mark Chidister, assistant to the president for budget planning and analysis
• Michael Crum, associate dean, Business college
• Todd Holcomb, associate VP for student affairs
• Mark Kushner, dean of the Engineering college
• Johnny Pickett, associate VP for business and finance
• Ellen Rasmussen, assistant provost for budget, facilities and finance
• Darin Wohlgemuth, director for research enrollment, enrollment services

The idea for a new model was recommended by the consultant who led a budget symposium on campus in May and supported by many of the symposium's 70 participants.