Strategic Budgeting, Frequently Asked Questions
The Strategic Budget Model does not use credit hour weights. Accounting for differences in the cost of instruction across colleges and schools was an important consideration for the Steering Committee as it reviewed how tuition revenues could be allocated in an incentive-based budget model. However, using weighted credit hours to allocate revenues is just one of several ways to address this concern. While using weights would direct additional funding to colleges and schools with higher instructional costs, it would also inherently distort the University’s understanding of revenue within the model by representing it in a way that is not consistent with how the revenue is actually generated. Further, schemes for establishing and maintaining credit-hour weights are complex and controversial, detracting from the simplicity and utility of any model in which they are used. The proposed alternative to weighted credit hours is the use of the Mission Enhancement Fund, a pool of resources maintained by Senior Leadership, to address issues related to differences in cost of instruction.
Since the purpose of the Strategic Budgeting Initiative is to align the University’s resources with its mission and priorities, an Auburn budget model must not deprive mission-critical, yet costly programs, of adequate support to meet their costs of instruction. Assuring this support is a primary reason for the creation of Mission Enhancement Funds.
The Strategic Budget Model recognizes funds as either restricted or unrestricted. This distinction recognizes the inherent legal conditions associated with the funds and is accessible through the University’s chart of accounts. While individuals may consider they have “committed” certain unrestricted funds for a specific purpose, this intention does not alter the legal status of the funds themselves. Such funds are “committed” after they are received, and their association with a specific purpose is not accessible through Banner.
In the interest of maintaining a concise, understandable presentation, several types of expenses have been combined into the “Other Operating Expenses” line of the income statement. These expenses vary and are generally not material enough to be shown as individual expense lines across all colleges and schools. Representative examples of “Other Operating Expenses” include special lab and classroom supplies, guest and conference meals, special publications, insurance premiums, postage, and other general administrative expenses.
If a detailed list of Banner account codes is desired, please work with your local budget officer for additional details.
Existing reserve balances of colleges and schools will not be affected with implementation of the Strategic Budget model. Additionally, schools and colleges will continue to have opportunities to accrue reserves by realizing more revenue than was budgeted or decreasing expenditures. There is no plan to reduce commitments from the Mission Enhancement Fund if a college or school is able to improve its budgeted position in any one year. Conversely, negative variances from budget in net revenue may require the use of unit reserves during the fiscal year. Uncommitted reserves may be a factor in determining strategic allocations from the Mission Enhancement Fund.
Existing reserve balances of administrative units will not be affected with implementation of the Strategic Budget model. Uncommitted reserve balances may be a factor in the Central Unit Allocations Committee's review of a central unit’s budget request. Once central unit budgets are finalized, any over or underspending will be reflected in the reserve balance in the unit.
Under the Strategic Budget model, budgets are developed for the full fiscal year. A separate “summer budget” will no longer be required. Revenue will be distributed in each academic semester (fall, spring, summer). Funds needed to compensate nine-month faculty who are additionally compensated in the summer semester should be included in the personnel budget.
The proposed budgeting methodology is the result of extensive planning, consultation, and discussion, including examination of similar initiatives at peer universities. It is important that this methodology remain unchanged for a period of time to ensure consistent reporting and planning from year to year. One charge of the University Budget Advisory Committee will be to commission a full assessment of the methodology after five years and make recommendations for any changes. Meanwhile, the methodology allows the University’s senior leadership sufficient flexibility to adapt to emerging trends.
All three governance committees have been structured to ensure the broad representation envisioned for all University committees.
In itself, the new resource allocation methodology neither encourages nor discourages interdisciplinary research and teaching. Sponsored-program activity earns direct revenue, indirect cost recovery, and a share of the Division I state appropriation whether it focuses on a disciplinary research question or an interdisciplinary one. Interdisciplinary teaching would be restrained by the new resource allocation methodology if, and only if, the academic schools and colleges failed to identify opportunities for collaboration and resource sharing. Compelling interdisciplinary initiatives will also be eligible for strategic investment from the Mission Enhancement Fund.