Budget allocation meeting- August 2019

Chancellor Ronnie Green speaks during the budget allocation model meeting in Hawks Hall on Thursday, Aug. 8, 2019, in Lincoln, Nebraska.

The University of Nebraska-Lincoln is switching its budget model to provide transparency and indirectly encourage colleges to create innovative programs for students.

Following the lead of other Big Ten schools, UNL is transferring from a Central Administration Management model to a Responsibility Centered Management model. The CAM model does not respond to changes in demand or the market, according to Kathy Farrell, the College of Business dean and steering committee co-chair. The executive vice chancellor is in charge of redistributing resources.

Through the RCM model, deans will have more control over their budget, according to UNL’s budget website. UNL aims to fully implement this system by the summer 2021.  

“The goal, or the ultimate hope, of course, is that if colleges and units have more control over our budgets, we’ll be able to be more responsive to current needs and be able to initiate more entrepreneurial, collaborative and flexible programs and services,” Farrell said. “We’ll be able to adapt more easily to the changing marketplace.”

Farrell said deans will see the colleges’ expenses and revenue in the new model, so they can make more strategic decisions. She said this will hopefully encourage colleges to invest in innovative programs and compete with other universities within the Big Ten, and thus, raise UNL’s reputation and attract more students. 

“Now what’s going to happen is, you’re going to see from a more transparent way what revenues my college is going to see, what revenues we’re generating,” she said. “And so the hope is that I’m going to make better decisions about how I manage my budget, because I’m going to have more information about my budget.”

The new budget does not directly affect students. Revenue comes from students’ tuition and state appropriations. At the undergraduate level, colleges will receive their students’ tuition and 75% of the cost of a course in their college. The student’s college will get 25% of the revenue of a course taken by a student from a different college. 

“The model itself doesn’t change the size of the pie, and it doesn’t drive the size of the pie,” Farrell said. “The model is simply how the funds are going to be allocated and distributed across the colleges and various units.”

The RCM budget model will still rely on central administration even though colleges have more control over their budget. Farrell said each college will pay a subvention tax, also fondly referred to as a participation fee, which will go back to UNL. The fee will be used to pay for strategic initiatives, such as projects that involve multiple colleges. Additionally, colleges will help pay for facilities’ costs, academic affairs and student affairs.

UNL invited representatives from the University of Minnesota, Auburn University, the University of Florida and Indiana University Bloomington to answer faculty’s questions about the RCM model on Thursday, Aug. 23. The questions ranged from whether the model motivates research, to if it has checks and balances. 

The representatives said many of the decisions are up to the deans’ discretion. Additionally, they said their models are slightly different from each other because models can change depending on what’s best for their environment, and all of them recommend the new budget. 

“Once you immerse yourself in this, you look at how the historic-based model ties your hands,” said Tim Boosinger, Auburn University Provost Emeritus. “When you get into this, you think, ‘Why didn’t I do this five years ago?’”

Although they’ve been discussing this change since 2017, Farrell said some decisions they are making now may change later depending on the budget system’s effectiveness. For instance, Farrell said UNL is considering allocating facilities’ money based on square footage. But over time, this may change to allocation based on usage.

“Some of the decisions we’re making right now to build our current model, to roll out, are somewhat restrained just by our data,” she said. “We’ve never had to have certain types of data to allocate stuff because we didn’t need it.”

Over the next couple of months, UNL will assess and develop the model. During the summer of 2020, UNL will receive feedback and then develop the infrastructure before it fully implements the model in 2021. 

“We have the benefit of learning from all the schools ahead of us that have already done this,” Farrell said. “We’re trying to build our model to be better right out of the box. We’re still going to have to tweak it over time, but those tweaks are going to be a function of what type of data we have versus what we think we would like to have.”