Why does Mason need a new budget model?
Mason, like all institutions of higher education, faces a dynamic and challenging future as a result of reduced state and federal resources. In 1985, the Commonwealth of Virginia contributed 67 percent of the university’s Educational and General Budget. For 2016, the contribution is 27 percent. Diversification of Mason’s revenues is essential for long-term financial health, and the new model is a proactive way to prioritize resources within a strategic plan. Another driver is the changing and more competitive landscape in the higher education marketplace. In addition, the new model will enhance transparency and accountability.
Can you clarify how this model is different from others?
We have heard this model described as “eat what you kill.” That characterization is inaccurate and we want to make sure everyone understands how this budget is designed.
Budget models come in several forms, from the top-down model in which the budget is controlled by a central administration, to Responsibility-Center Management (RCM) models in which you spend what you raise. Mason’s new incentive-based model combines the best of both models. The central administration and colleges work together to maximize revenue and control costs while promoting transparency around revenues and expenditures. In this model, each college will have a revenue goal. If that goal is exceeded, the college will share in the gain with the university. If the goal is missed, the shortfall can be covered by other unit carry forward funds.
There are clearly initiatives we want to support that do not generate significant revenue, but we cannot support all those programs, hence this new model allows the central administration and colleges to work together to maximize and diversify revenues.
What is the next step in the model’s development and overall timeline?
Mason’s new incentive-based budget model is scheduled to “go live” in FY 2017. That said, developing this model must include a careful and thoughtful collaboration between academic and administrative leaders and the Mason community as a whole. The current timeline includes discussions in the fall of 2015 with each college to educate key stakeholders on the intricacies of the model; schools will gain a better understanding of the revenues they generate. Then, in the spring of 2016, we will work collaboratively with academic units to establish enrollment goals and requests for FY 2017. During the summer of 2016, we will decide whether to go live with the new budget model in FY 2017 or run parallel for another year.
What does this mean for FY 2016?
Budgets have been set for 2016 and funds have been allocated.
What about non-college budget requests for FY 2017?
Budget request proposals will be sent out on or around Oct. 19, 2015. Given limited resources, budget requests will be constrained to key critical areas with opportunities to look for additional efficiencies within the base budget.
Are all funds included in the new model?
The first phase of implementation will include only Educational & General funds. As we progress, other funds will be incorporated.