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BUDGET MODEL OVERVIEW

CASE STUDIES

METRICS DISCUSSION

EWU August Steering Committee Meeting

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02
03

Agenda

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Budget Model Overview

EWU August Steering Committee Meeting

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Modeling Option 3 �Performance-Based/Activity-Based/Incentive-Based Hybrid

EWU August Steering Committee Meeting

Funding Source

Allocation Mechanism

Recipient

Capital

Auxiliaries

IDC contribution

Student credit hours rolling three-year avg

Designated unit

Auxiliaries

Capital

Support services

Internal services

IDC contribution

Grants and contracts

Designated fees

State operating

Tuition revenue

Undesignated fees

Academic college

Indirect cost allocation

Strategic initiatives

Performance measures

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Direct Funding Mechanisms

EWU August Steering Committee Meeting

Designated Fees

In development
Typically, fees that are required by a third party to be designated for a purpose

Capital

State capital funding
Certificate of participation
Debt service

Grants & Contracts

Restricted grants and contracts with federal, state, and local agencies or private organizations

Auxiliaries

Designed to generate sufficient revenue to cover the cost of operating and capital needs
Revenue bond commitments

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Combined Revenue Pool

EWU August Steering Committee Meeting

Combined Revenue Pool

State Operating

Undesignated Fees

Tuition

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Combined Revenue Pool Allocation Overview

EWU August Steering Committee Meeting

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Key Decision Points

Set Aside Funding levels for strategic initiatives, subvention, incentives, and performance
Determination of strategic initiatives, incentives, and performance measures
Percentage split between administration and colleges
Allocation factor(s) among colleges
Funding mechanisms and allocation factor(s) for administration and support services

EWU August Steering Committee Meeting

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Case Study: PennState

“The model dynamically connects the activity of a specific unit—such as student headcount, student credit hours, and research expenditures—to their base budget allocation. The budget model has intentionally incorporated strategic funds to provide additional support for some units with activities and contributions that cannot be fully captured in those metrics. This funding aligns with feedback from deans, chancellors, administrative leaders, and financial officers during the development phase.”

EWU August Steering Committee Meeting

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PennState Revenue Sources

EWU August Steering Committee Meeting

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PennState Budget Process

Establish E&G Total Revenue
Set aside funds for strategic and mission-critical needs
Calculate units’ initial budget allocations
Fund student-support and administrative units
Calculate college and campus formula-based budget allocation
Allocate strategic funds to units and priority initiatives

EWU August Steering Committee Meeting

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PennState Allocation Mechanisms

Colleges: Formula-based approach using 3 year average of student credit hours (65%), student headcount (35%)

Incentives: Non-resident tuition, research F&A dollars

Administration & Student Support Services: Past cost data and benchmarking with other institutions

EWU August Steering Committee Meeting

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PennState Results

EWU August Steering Committee Meeting

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Case Study: University of North Dakota

“Much effort was made to acknowledge the complexity and diversity of UND, yet keep the model simple to allow for everyone to understand the flow of resources.

Revenue is tied to activity levels, such as student credit hours, grants awarded, ticket sales, etc. As these activity levels increase so does the revenue to the unit that is helping to generate the activity levels.”

EWU August Steering Committee Meeting

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Funds Flow Overview

Strategic Investment Pool: All units are charged a participation fee of 15.8%
Tuition revenue: Allocated based on student credit hour production (60% to the college of instruction, 40% to the college of record)
Program and course fees: Flow directly to the colleges and schools, exempt from participation fee
State appropriations: Allocated based on instruction (70%) and research (30%)
Research: Flow to the unit awarded the grant/contract, charged an indirect cost rate
Auxiliaries: Flow directly to the unit provided the service or product

EWU August Steering Committee Meeting

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Funds Flow Overview

Service Unit Cost Pools:

Administrative Cost Pools

EWU August Steering Committee Meeting

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Case Study: University of Kansas

“Moving from a historical allocation model to a Priority Centered Management (PCM) model will allow the university to ensure sufficient reserves, invest in priorities, and better support decentralized program innovation geared toward advances in strategic priorities for the university.

The model also uses different mechanisms to determine allocations, one for academic units and one for the support units. Academic units are most directly affected by the different formulas as a portion of their formula is tied to Student Credit Hours (SCH)…These units will also receive a portion of their revenue based on performance related to institutional strategic priorities.”

EWU August Steering Committee Meeting

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Budget Model Overview

EWU August Steering Committee Meeting

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Allocation Basis

College allocation:

65% student credit hours
20% research
10% student success
5% other priorities

Subsidies for high instructional cost or other strategic benefit

“Initially, 51% of remaining funds will be allocated to academic units and 49% will be allocated to support units.”

EWU August Steering Committee Meeting

Support Unit allocation:

Assigned to receive 100% of prior year budget until benchmarking can be calculated
Eligible for increases/decreases based on performance related to mission

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What are your key takeaways from the prior case studies?

EWU August Steering Committee Meeting

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Allocation Factors Among Colleges

Typical allocation factors:

Student credit hour production
Declared majors by college

Potential additional factors for consideration:

First time freshman graduation rates
Underserved student graduation rate
Transfer student graduation rate
Research

EWU August Steering Committee Meeting

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Allocation Factors Among Admin/Support Services

EWU August Steering Committee Meeting

Square footage occupied

Facilities

Employee headcount
FTE
Total headcount (staff & students)

HR/IT

Average direct expenditures over last 3 FYs

Finance

Average student headcount over last 3 FYs

Student Services

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What allocation metrics should EWU consider in its budget model?

EWU August Steering Committee Meeting

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Incentives

Factors to encourage specific activities through financial incentives
Examples of incentives:

International students
Online enrollment
Certificate programs
Increase class fill rates
Student retention
Research

EWU August Steering Committee Meeting

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What incentives should EWU consider in its budget model?

EWU August Steering Committee Meeting

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Project Status Check-In

EWU August Steering Committee Meeting

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Budget Revision Process

EWU August Steering Committee Meeting

DISCOVER

Conduct an environmental scan of EWU’s current budget processes through document review, financial analysis, interviews and focus groups with employees and leadership.

DEVELOP

In collaboration with EWU, develop a revised budget model that includes an expenditure allocation model based on service unit production, performance, and institutional strategy.

COORDINATE

Develop a comprehensive project plan to address the scope of work, provide progress reports, and perform quality assurance.

REVIEW

Workshop the revised budget model with key EWU staff and stakeholders to promote transparency and change management.

ADOPT

Produce policies, procedures, trainings, and guides to support EWU in adopting the revised budget model.

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Project Milestones

EWU August Steering Committee Meeting

Project �Kickoff

Discovery Facilitation

Data, documents, interview set-up

Stakeholder Input

Interviews and Focus Groups

Current State Assessment�Summarize strengths, weaknesses, and opportunities

Review Session�Review results of Discovery, and develop principles to guide budget model development

Draft �Budget model

Review Session �Review and iterate on draft budget model with Moss Adams team, gathering additional information as needed

Stakeholder Input�Review draft model with Moss Adams to provide input and additional considerations for implementation

Finalize � Budget model

Implementation Support�Develop policies, procedures, guides, trainings

Execute

Carry out implementation of revised budget model�

FEB-APR

MAY-OCT

NOV - JUNE

Moss Adams Deliverables

EWU Steering Committee

EWU Staff & Stakeholders

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Next Steps

Moss Adams to continue workshopping budget model using EWU data
Upcoming Steering Committee work to focus on review of the draft budget model and identified decisions
Academic Affairs to provide input on performance measures for college allocations
Collaboratively continue to iterate upon the budget model

EWU August Steering Committee Meeting

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EWU August Steering Committee Meeting

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