Budget Glossary and FAQs

The University's previous budget model was maintained centrally, and new-year budgets for all areas were only marginally updated from the prior year’s budget and were not tied to any type of performance metrics. All revenues were held centrally and allocated equally, regardless of which area(s) generated the revenue, and central University funds covered any deficits for underperforming units.

The new incentive-based budget model is a decentralized approach to budgeting in which areas within the University are given greater control over their own revenues and costs and thus are rewarded for good stewardship of funds. University resources and administrative costs are allocated based on certain activities and identifiable metrics.

Learn more about the budget model.

These are agreements between support units (typically HR, IT, or Facilities) and primary units. These are agreements which define what the normal scope of business is between the support unit and the primary unit, and anything identified as being outside the ‘normal’ scope of business would be at additional cost.

The University's previous 'incremental' budget model created several issues for units and for the institution.

Individual Area Issues

• Individual units had little accountability — any operational losses were covered with central University funds at year-end.
• Lack of transparency in the budget process.
• No fiscal incentive for areas to attempt to generate new revenue streams, create internal efficiencies or process improvements, or attempt to contain costs — budgets were based on prior-year numbers and not performance.
• No incentives existed to promote student success, research, or instruction.

Institutional Issues

Funds were not allocated in a manner which aligned with the University’s strategic priorities outlined in the University's strategic plan, and cross-unit collaboration was not rewarded.

As the name suggests, areas under the incentive-based model are rewarded for good stewardship of funds. Revenue is allocated to the areas which generate them, so creative thinking, innovation, operational efficiencies, and high performance are incentivized.

Other improvements include:

• Central funds are allocated to higher-priority, strategic initiatives for the University.
• Incentivizes good stewardship of funds, innovation, creative thinking, operational efficiencies, cross-unit collaboration, and cost containment.
• Student success, research, and instruction are incentivized as units receive State appropriation revenue based on identifiable metrics like hours instructed and degrees awarded (at various levels) and retain all Indirect Cost Revenue (IDC) from research initiatives.
• Units retain revenue and savings they create and receive other allocations based on strategic initiatives.
• Units retain surpluses and losses, increasing visibility and accountability.
  
• Units are more involved in the budget process and are more aware of the success metrics used for budget calculation, increasing transparency.

Currently, the new budget model is only applicable to the University’s General Fund (Fund 100100; also known as the University’s general operating fund).

An area which does not generate revenue would be classified as a support unit. Support units are accountable for fiscal performance (should stay within annual budgets) and should develop and maximize operational efficiencies.

Support units should ensure optimal service levels and may engage in Service-Level Agreements with primary units.

Since support unit costs are allocated to and funded by primary units (revenue-generating units like academic colleges), primary units are represented by the College Deans, through the Executive Budget Committee. The College Deans can offer suggestions for support unit performance improvements, as well, so support unit activities are more transparent in the budget model.

Availability of carry forward will be determined by the Executive Budget Committee at the end of a given fiscal year.

Subvention amounts are reviewed annually as part of the budget-setting process.

Retiree benefits are funded with central University funds. They are not funded by the department the employee retired from.