The University currently uses a process whereby the base operating budget allocation is adjusted incrementally each year. The base budget is historically determined and recent incremental increases have been made linked to enrolment growth and a limited number of strategic priorities. Also base budget allocations have been decreased annually for many years through across-the-board reductions.
2. How did the decision to develop a New Budget Model (NBM) develop at Queen’s?
The changing funding environment in Ontario, with emphasis on tuition, restricted funds, overall government constraint and revenue diversification, has prompted many institutions to revisit their resource allocation policies and practices over the past decade. For several years there has been discussion at Queen’s about revising the model for allocating resources within the operating budget. There is an underlying concern that the most recent practice of incremental budgeting over a historical base is not well understood, transparent, or accountable, nor does it necessarily reflect academic goals and priorities.
3. What is the new budget model?
The new model for Queen’s will be based on activity-based budgeting. The goal of the new model is to decentralize authority and accountability for resource planning in the university environment, empowering and increasing the self-reliance of Faculties and Schools and ensure a greater link between resource allocation and academic goals. In its simplest form, all revenue flows directly to Faculties and Schools, and similarly, all costs are attributed to Faculties and Schools.
4. What is Activity-Based budgeting?
Activity-based budgeting (commonly referred to as responsibility-centred budgeting) is a method of budgeting in which the costs of activities in every functional area, or shared service, (e.g., Library, IT Services, Student Affairs, etc.) are attributed to, or charged against, the revenue that results from Faculty and School activity. For example, revenue from student enrolment will be attributed to the Faculty or School who generated the enrolment (registered and/or teaching Faculty) and the costs associated with supporting student enrolment (e.g., School of Graduate Studies, Student Affairs) will be charged out on the basis of enrolment.
5. What are the objectives of the New Budget Model (NBM)?
6. What is the function of the Provost Advisory Committee on Budget (PACB)?
The PACB is a committee comprising Vice-Principals, Deans, Shared Service Directors and a faculty member at large. The PACB provides advice to the Provost on the budget model and specific resource allocation options, making specific recommendations to ensure that the budget model reflects the goals and objectives of the University as well as the individual Faculties and Schools. The Committee will also review the Shared Services budgets as part of the annual budget process.
7. Who else uses this type of budget model?
There are a number of other higher education institutions which have adopted an Activity-based budgeting model within recent years, with more Universities moving in this direction. The process and model at two institutions in particular (University of Toronto and University of Michigan) have been reviewed and identified as successfully using planning frameworks that would align well with Queen’s commitment to integrated planning and resource allocation. Other universities adopting this model include the University of Saskatchewan, McMaster University and the University of Windsor. York University and UOIT have also embarked on a process to develop a similar budget model.
8. When is the New Budget Model (NBM) intended to go live?
The first year of the NBM will be 2013-14, the planning for which begins in the fall of 2012. The intention is to hold budgets “harmless” in the first year. That is, the NBM will be in place but Faculties and Schools will have time to transition to the new model and take advantage of the incentives to increase revenue and decrease costs to improve the resource allocation within their academic units. The NBM will be used to shadow the existing allocation of resources, but will also provide time to understand the impact of attribution decisions.
9. How will my budget change in 2013?
As noted, the University intends to have a transition period whereby Faculty, School and Shared Services budgets will have the same level of resources in 2013-14 as in 2012-13. What will change in the first year is the level of transparency and understanding of how resources are allocated to various units and activities.
10. I’m worried that under the New Budget Model, decisions will be made on the basis of finances instead of academics. Will that happen?
The purpose of the NBM is to better support the University in making strategic academic and resource allocation decisions, with accurate financial information to support such decisions. The current system of allocating resources is only loosely based on academic priorities and the associated costs. The over-arching goal of the NBM is improved information to support decision-making and greater assurance that resource allocation is closely linked to academic priorities.
11. Is space a shared service cost?
Yes, all Faculties, Schools and Shared Services will be charged occupancy costs for the space assigned to them. The costs will be attributed as a blended rate across all campus buildings to ensure units are not economically disadvantaged if their assigned space is more expensive than the average. Occupancy cost data, including the costs of energy, water, maintenance, waste removal, insurance and security, will be reported more transparently in an effort to raise awareness of the environmental impact of each occupied building footprint. Space is a valuable and scarce resource and the budget model is intended to provide an incentive to use space more efficiently.
12. How will the new budget model promote collaboration among Faculties and Schools?
An important cornerstone of the new model is the concept of collaborative problem-solving. As shared costs are attributed in an explicit manner, the level of engagement and discussion is expected to increase among Faculties and Schools during the annual budgeting process. The University of Toronto has reported that divisions are collaborating on launching new joint programs, they are working to better share resources, and service units are further collaborating with academic divisions to eliminate duplication of services. Furthermore, the expectation is that the budgeting process under the new model will lead to a higher degree of interaction among unit heads and the central administration. There will be a greater level of discussion around decisions regarding university-wide costs and central shared services.
13. What type of trickle-down effect to individual departments do you anticipate?
These discussions will be taking place in every Faculty and School. In departmentalized Faculties, it is expected the budget will be allocated in such a way as to provide incentives for departments to increase and/or diversify enrolment in order to increase departmental resources.
14. Will individuals, other than the Dean’s and Business Officers, be involved in the development of the new model?
The Planning and Budget Team is meeting regularly with business officers from the academic Faculties and Schools as well as the Shared Services. The Provost is using the Provost’s Advisory Committee on Budget (PACB) to seek advice on the development of the model (see Membership ). Members of the Queen’s community are encouraged to ask questions and provide comments through this web site, which will be shared with the PACB.
15. Will the new model disadvantage departments that do not have Graduate Programs?
No. The goal of the new budget model will be to better account for the associated costs of all programs, graduate and undergraduate, so there is more awareness of and access to cost information for all activities at the University.
16. Will there be an opportunity for the Faculties and Schools to receive service-level definitions with the Shared Service providers?
Yes. Every shared service must provide a service-level definition for the delivery of university-wide services. This document will stipulate the standard level of service to be delivered for the level of funding that is available.
17. How will the NBM impact individual researchers and research projects?
Research revenue from grants and contracts will flow directly to the researchers. Funding for indirect costs of research or overhead will be attributed to the Faculties and Schools. Within the framework of University policy and the external requirements for indirect costs allocation, Faculties and Schools will allocate the revenue to support priorities.
18. What is a “shared service”?
Shared Services collectively refer to services and functions the University decides or is compelled to deliver on an enterprise-wide basis. Shared Services should be viewed as enablers or facilitators whose purpose is to support and enhance the academic enterprise, through direct support to Faculties and Schools or indirect support to other shared services. Any service that would not be categorized within a Faculty or School is a shared service.
The following areas are considered shared services:
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