Inside Iowa State

Jan. 26, 2007

New budget model gets a green light

by Anne Krapfl

The process of developing the university's FY08 budget will be twofold, following President Gregory Geoffroy's decision Tuesday to implement a new budget model at Iowa State.

The new model, called the Resource Management Model, is the recommendation of the Budget Model Review and Implementation Committee (BMRIC), and follows 20 months of study, campus forums and meetings, and visits with budget planners at universities that have adopted new models. Earlier this month, the new model received endorsements from the Faculty Senate and Professional and Scientific Council, although both groups expressed reservations about aspects of the model and how it will be implemented.

On Monday, BMRIC members sent Geoffroy a progress report on three months of additional study, budget simulations and campus discussions since the group recommended the model in an October 2006 report. The reports are online.

"I deeply appreciate all of the thoughtful discussion that has occurred, and I want to thank the university community for its very careful consideration of this important change," Geoffroy said.

He extended special thanks to members of BMRIC and its predecessors, the Budget Model Study Group and Budget Model Development Committee.

Geoffroy said executive vice president and provost Betsy Hoffman will oversee the process of implementing the new budget model. He has asked the BMRIC members to continue their work on defining and honing the new model through the end of spring semester. By then, Geoffroy said, many of the budget advisory committees outlined by BMRIC should have their members.

"I have asked Provost Hoffman to be especially diligent in ensuring that the new model will enhance, not harm, our great culture at Iowa State of supporting interdisciplinary activities," Geoffroy said.

Two models for one year

The goal is to fully implement the new budget model for the fiscal year that begins July 1, 2008. To move toward that goal, parallel budgets -- one using the current model, one using the new model -- will be developed for the fiscal year that begins this July. BMRIC members recommended this to give university leaders and budget officers time to identify and refine the new processes, data sets, college-level revenue and expense projections, and other decisions the new model will require.

BMRIC also recommended that work groups address specific tasks prior to full implementation:

• Developing policies and procedures
• Developing data management systems
• Training
• Converting the budget from one model to the other
• Fully implementing the new budget process
• Evaluating the new budget process every three to five years

A culture for change

The newest BMRIC report acknowledges the anxiety a significant change like this creates and concerns about whether a university culture can support the new budget model. Changes in the campus culture, it states, that will help the implementation process run more smoothly include:

• Generally, an ability to change and adapt
• Tolerance for and encouragement of risk taking and innovation
• Flexibility, timeliness in responding to changing demands for academic programs, majors and courses
• Willingness to reduce or discontinue programs and services of lower priority
• Communicating budget decisions and how they relate to long-term goals

BMRIC members predict that there won't be a lot of additional funds to add staff as the new model is implemented. The focus needs to be on standardizing processes and training current staff in new skills and new roles for the new budget model.

President Gregory Geoffroy has approved the new budget model, full implementation is set for FY09.

In a nutshell

The change ahead will replace the current model -- in which units receive incremental annual increases (or decreases, in years of budget cuts) that are a percentage of the previous year's allocations -- with a model that links revenues to the responsibilities and performance of major units.

Those major units also pay for campus space and services they use, such as payroll and utilities, and some services they may or may not use directly, such as grounds care or the Memorial Union, but from which they derive some benefit.

Notably different features of the new model are: transparency (revenues, expenses and policy are publicly known), the full costs of administration and other central services are allocated to campus units, and a broader use of advisory committees throughout the budget development process.