Beginning with the 2021 fiscal year, Ball State operates on an incentive-based budget model. This budget model provides a decentralized approach to budgeting in which University units are given greater control over their own revenue and costs. University resources and administrative costs are allocated based on certain activities and identifiable metrics.

How does it work?

University units are organized by their ability to influence revenue generation and fit into one of two categories:

  • Primary Units — units which are meant to cover direct costs with revenue they generate. This includes academic units and auxiliary units.
  • Support Units — units which do not directly generate revenue. Costs for support unit functions are allocated to primary units through identifiable metrics.

Learn how the budget works for each of the two unit types below.

For Primary Units

Primary Units

There are four main sections to the budget model for primary units:

There are two types of revenue in the incentive-based budget model: tuition/fees and other revenue streams.

Net Tuition and Fees

Net revenue for a primary unit is the total amount of tuition and fees minus the unit's share of institutional financial aid.

Tuition

General tuition is categorized as follows:

  • 75% of gross tuition is allocated to the College of Instruction (the primary unit that is teaching the course).
  • 25% of gross tuition is allocated to the College of Record (the primary unit containing the major for the student enrolled in the class).

       

For example, a student with an Accounting major is taking a Fitness Walking course. In this case, the Miller College of Business would receive 25% of the student's tuition for the course as the College of Record. The College of Health would receive 75% of the student's tuition for the course as the College of Instruction.

Fees

Fees consist of Program/Course fees, which are fees associated with certain majors and/or courses.

Financial Aid

The net revenue calculation in the model uses institutional financial aid. External financial aid (Federal, State, etc.) is excluded. 

Institutional aid can be broken into two categories:

  1. Undergraduate Aid — the amount allocated to each of the academic units based on a college's proportional share of undergraduate tuition received.
  2. Graduate Aid
    • graduate assistant fee remission (based on where the student's stipend is paid from)
    • graduate assistant stipends

Other Revenue

Other revenue consists of allocated state appropriations and other direct revenue not related to tuition or fees.

State Appropriations

The following describes how state appropriations that aren't tied to specific initiatives are allocated:

  • Research — an initial $2.5 million will be 'carved out' as an incentive for research based on total grant revenue. Primary units receive their share of the $2.5 million based on their percentage of the total grant revenue. This amount appears in the budget model as "State Appropriations – Research."
  • Instruction — 80% of the remaining state appropriations are allocated to primary units based on their share of completed credit hours instructed, irrespective of student grades. This amount appears in the budget model as "State Appropriations – Instruction."
  • Student Success — the remaining 20% of the state appropriations are allocated to primary units based on the number of degrees awarded in the following categories: 
    • Resident
    • Nonresident
    • At-risk (students receiving Pell Grants in the year they earned their degree)
    • High-impact (degrees considered high-impact by the Indiana Commissions for Higher Education).
    This amount appears in the budget model as "State Appropriations – Student Success."
Other Direct Revenue

Other direct revenue consists of:

  • grants and contract revenue
  • gifts
  • sales, services, and other

The following section details the expenses attributed to primary units for regular operation and maintenance.

Wages and Benefits

Wages and benefits include:

  • faculty-contract wages
  • faculty-professional wages
  • faculty-semesterly/adjunct wages
  • faculty-summer wages
  • staff and student wages
  • employee benefits (excluding retirement benefits).

Supplies and Expenses

Regular supply and expense charges include:

  • program reserve
  • supplies, equipment, and other materials
  • any travel.

Fund Transfers

There are two lines in the budget model for transfers:

  1. Transfer In — amount transferred into the budget.
  2. Transfer Out — amount transferred out of the budget.

Because majority of University revenue is attributed to primary units, costs for support units are unfunded. The budget model assigns support unit costs to primary units based on certain allocation metrics. These metrics are determined by the Executive Budget Committee.

Support Unit Allocation Metrics

In the budget model, allocation metrics appear as a line item with the amount allocated to the primary unit.

The Executive Budget Committee determines:

  • Which cost pool a given support unit belongs to; typically based on the end-consumer of the support unit.
  • What allocation metric (also called "allocation variable") is used for each cost pool.
Support Unit Cost Pool & Allocation Metrics

Cost Pool

Allocation Metric
Academic Support Student Headcount
Administrative Services Total Direct Expenses
Employee Services Total Employee Headcount
Facilities Net Assignable Square Feet
Information Technology Total Institutional Headcount
Libraries Student Headcount + Faculty Headcount
Student & Enrollment Services Student Headcount

Costs are allocated to the primary unit based on their totals for the respective allocation metric in comparison to the total for all primary units for that metric. This percentage is then multiplied by the support unit cost pool amount to determine the primary unit's support unit cost.

Example Cost Allocation Calculation

Once a support unit cost pool amount is determined, activity-level metrics are used to allocate proportional expenses to primary units. Below is an example of an Information Technology cost pool using "Institutional Headcount" as the activity-level metric.

For this example, the Information Technology cost pool net expenditures is $10 million.

Institutional Headcount Metric

College

Headcount (HC)

HC %
College A 300 15%
College B 700 35%
College C 1,000 50%
College Total 2,000 100%

Pie chart demonstrating cost allocation to supporting units based on activity level

  • In this particular example, the Information Technology cost pool would allocate $5,000 per institutional headcount ($10 million divided by the total headcount of 2,000).
  • Year-to-year, this amount may vary depending on the approved budget of the Information Technology cost pool.

The activity-level metrics are used to allocate the net expenditures of each cost pool. Additionally, fluctuations in the activity-level metrics do not lead to corresponding fluctuations in the size of the cost pools.

Support Units

Support units are expected to stay within their annual budgets and should develop and maximize operational efficiencies through initiatives such as benchmarking. Support units are expected to ensure optimal service levels.

Support unit costs are allocated to primary units in the University's budget model. The Executive Budget Committee, in consultation with College Deans and the President's Cabinet, reviews support unit budget proposals annually. Proposals include strategic objectives and workforce plans, and the Committee can offer suggestions for performance improvement when needed.

Service-Level Agreements

Some support units may execute "Service-Level Agreements" with primary units, which define the 'normal' scope of business between the support unit and the primary unit. Anything identified as being outside of the 'normal' scope of business will be allocated to a primary unit at an additional cost.

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