Budget Matters: a New Website & Service for the TTU Academic Community
“Don't tell me where your priorities are. Show me where you spend your money and I'll tell you what they are.”
—James W. Frick (1924- )
Guy Bailey* and Bob Smith**
Budget matters. Think of it as a double entendre that may be read as “budget elements, policies, and practices” or as the exclamatory “budget matters!” Either way, the matters of budget and the move of the university toward more clarity and transparency in budgeting – especially as it affects our academic community – has prompted the development of this paper and a university website that will be a repository for papers, analyses, reports, and other documents related to academic budgeting at Texas Tech University (TTU). More specifically, this paper contains background on current university-level budget discussions, an overview of a recent university-level budget retreat, and a glimpse of future actions the university will take relative to academic budgeting.
Until the current fiscal year or FY12 (September 1, 2011 through August 31, 2012), TTU used a relatively complex system for academic unit budgeting. At year’s beginning, unit budgets were established for all fourteen colleges, schools, and the TTU Libraries, based primarily on historical data and discussions deans had the previous year with central administrative officers about new initiatives. In addition to the unit-based budgets, central resources (some with historic earmarks to particular units) were reserved in the Office of the Provost. During the year, deans would not only plan expenditures with funds known to be available to them but also would have to come piecemeal to the provost’s office to secure additional resources, typically for salary funds associated with faculty members who had retired or otherwise left the university. Thus, the earlier budget system introduced elements of uncertainty and opacity that were not very conducive to good planning or understanding of the potential connections among unit-level initiatives, actions, and resources.
Enter the Responsibility Center Management (RCM) Council and its precursor Revenue Enhancement and Allocation (REA) Task Force. Recommendations of the task force, following a year of deliberation in FY09, led to a commitment to adopt an RCM form of budgeting with implementation guided by findings of the RCM Council, which has deliberated during the past two fiscal years (FY10 and FY11). Overall, the goals of the RCM budget model are to:
- Establish transparent reporting and equitable allocation policies campus wide.
- Provide performance incentives for academic and other units that are consistent with achieving excellence in Texas Tech University's mission and objectives.
- Assure academic units' budgets are tightly aligned with the strategic goals of the institution.
- Create and implement a system under which revenues generated by each unit, along with costs associated with each unit, will be locally managed. Net revenue above expenses incurred will accumulate to the benefit of the unit generating such revenues.
- Protect the viability and quality of programs aligned with the mission of the university that do not generate sufficient revenues to be self-supporting.
- Implement improved data systems and business processes to facilitate both revenue and budgeted expense management.
- Support the university's efforts at achieving National Research University status, continuing excellence in academic programs, and attracting the best students possible.
The work of the RCM Council was moving smoothly forward until mid-FY10, when projections of deficits in state budget revenues suggested a possible revenue shortfall of $20 billion or more in FY12 and FY13. Accordingly, in July 2010 a Budget Working Group (BWG; Bailey and Smith, 2010) was appointed, composed of the provost (serving as chair); a vice chancellor of the TTU System (TTUS); the university's vice presidents; deans of all colleges, the School of Law, the Graduate School, and the Libraries; representatives from the university's shared-governance bodies (i.e., Faculty and Staff Senates); faculty members affiliated with distinguished academic groups (i.e., Teaching Academy, Horn Professors); and elected representatives (Student Government Association [SGA]) from among TTU students. The BWG was charged with the following:
- Exploring options for budget efficiencies.
- Determining opportunities for revenue enhancements, including possible initiatives that may be vital to the long-term growth and development of the university, in order to offset possible reductions in general revenue funding.
- Preparing a ten- twenty-page white paper summarizing the workings of the BWG and containing a set of recommendations to the president and the President's Advisory Council on strategies, guidelines, priorities, and procedures for possible budget reductions during FY12 and FY13.
- Transmitting the BWG White Paper to the President's Office by December 31, 2010.
- Keeping the TTU community apprised of the BWG's efforts, including the scheduling and support of college- and university- based forums and other presentations, along with written summaries.
The BWG completed its work and submitted its report on December 15, 2010. The report and other information on the BWG's deliberations (including an all-day retreat held on August 23, 2010) and recommendations are documented on the BWG website. Briefly, the BWG suggestions for budget efficiencies, opportunities for revenue enhancements, and communication efforts became helpful to units across the academic community during planning and implementation of the $29 million in state-mandated budget cuts during the FY10-11 biennium. Because of these cuts and the relatively late budget setting by the Texas Legislature during its 2011 session, the university became ill poised to fully implement RCM during FY12. Nevertheless, it has been our intention to move toward full implementation of RCM in FY13. Thus, a modified version of RCM has been instituted for FY12. Specifically, the deans, working with Vice President Kyle Clark and the Office of Finance and Administration, established base budgets for FY12, which were essentially crafted for the historic base budgets minus the apportioned cuts. But here is where the RCM element was invoked.
As indicated in the BWG Report (2010), because of enrollment growth, changes in the mix of students (favoring greater numbers of graduate and postbaccalaureate students), and increases in student tuition and fees (as approved by the TTUS Board of Regents), enhanced revenues are expected to somewhat offset the cuts in the university's FY10-11 budget. Thus, following the setting of base budgets in early June 2011, the deans were informed on June 24, 2011, of additions to their FY12 budgets (Appendix 1) based on anticipated enhanced productivity. These developments served as a platform for further planning and development.
The 2011 Budget Retreat
Imagine an academic budgeting system where:
- Unit heads are aware of their total budgets at the beginning of each fiscal year;
- Incentives for growth and development are clearly indicated;
- Planning at the university and unit levels is well coordinated;
- Revenues for demonstrated growth and development track back to the unit’s budget;
- Communications and information sharing support creative efforts across units;
- And where there is the will and determination within units – among faculty and staff members, and administrators – to work toward the financial health of the unit.
We believe that this vision can become reality through the current biennium. To launch the effort, an all-day budget retreat was organized on July 1, 2011. The attendees at the retreat included all the deans (or their proxies); President Bailey; Provost Smith; Vice Presidents Clark, Taylor Eighmy, and Juan Muñoz (who also serves as vice provost for undergraduate education and student affairs); Senior Vice Provost Rob Stewart; and Vice Provosts Valerie Paton, Tibor Nagy, and Mike Wilson.
The retreat began with presentations by President Bailey (the national, state, and university context for budget planning), Provost Smith (purposes and anticipated outcomes of the budget retreat), and Vice President Eighmy (Office of the Vice President for Research support for the colleges and schools entering FY12). The remaining approximate seven hours provided time for presentations by each of the deans in which they were asked to address:
- What is your unit’s current (FY11) budget (state and local funds)? How much was it reduced during the 2009-2011 biennium, and what key budget decisions had to be made to accommodate the reductions?
- What is your unit's projected base budget (state and local funds) for FY12, and what, if any, reallocations were necessary to meet the unit's teaching, research, and outreach mission in 2011-2013?
- What supplemental allocation, if any, has been provided to your unit's base via the Office of the Vice President for Administration and Finance? How will the additional dollars be used during the 2011-2013 biennium to advance your unit's mission and position your unit for further growth and development in the 2013-2015 biennium?
Guiding the deans' presentations and attendant discussions were a set of retreat goals that were articulated as follows:
- The retreat should emphasize the university's movement toward greater transparency in academic budgeting – transparency that should now also occur at the unit level,
- Establishing the first steps of a phase-in of RCM budgeting,
- Building common understanding across the collegiate and equivalent units,
- And sharing ideas and attendant discussions to help foster creativity and innovativeness in unit planning, including budget planning.
Copies of all the deans’ and others’ retreat presentations are posted on the Budget Matters website, which also contains links to the RCM Council and BWG websites. We also have crafted a Budget Matters Comments Forum, where any member of our academic community – including faculty, staff, and students – can post suggestions and recommendations. We look forward to learning of reactions to our Budget Matters efforts as we move forward.
Academic Budget Planning – FY12 & Beyond
If you take the time to visit the Budget Matters website and open some of the PowerPoint presentations linked therein, you will see representations of the forthright and open discussions that have occurred at TTU during the past year. It is our hope that such openness and transparency will continue. Indeed, we plan to conduct yearly retreats so that unit heads benefit from the reports and wisdom of their colleagues as the university continues on its trajectory toward Tier One status. In turn, we anticipate that the new budget-related efforts will become self-reflexive as we move ahead and academic community members realize the benefits of the new openness and attention we are giving to “budget matters” at Texas Tech.
As in all instances with ATTT offerings from the Provost Office, we welcome your feedback that may be directed to firstname.lastname@example.org.
Bailey, Guy and Bob Smith. “Texas Tech’s Budget Working Group – What’s it all about?” All Things Texas Tech 2 (2) 2010; http://www.depts.ttu.edu/provost/attt/bwg.php. (July 22, 2011).
About the Authors
*Guy Bailey is president and professor of English at Texas Tech University.
**Bob Smith is provost and senior vice president, and professor of chemistry at Texas Tech University.