Good afternoon everybody I'm Dan Susanna's privileged to be serving as your president at the University of Delaware. Today we have this open hearing to give everybody an opportunity to hear the latest in the evolving development of our new budget system at the University of Delaware. And so we'll we'll show you the status of the current affairs where we are but also what still needs to be done and more importantly give you an opportunity to ask questions. So I want to thank all of you for your participation and active engagement as we can see from the audience in the room. I should also mention and give credit to our former faculty senator Joan Morgan who when I gave the presentation this year at the faculty meeting or the overall state of affairs of the university and mention about the budget model he suggested the would you entertain the idea of a town hall meeting. And I said Absolutely I'd be delighted because again we we strive to be transparent and engage you and continue to develop a budget system that works for us. So the way we're going to structure the presentation today is I'll start with some general comments. And then I'm going to give a chance to Monday meaner who who is our chief budget officer and she has been working on this very hard with her team and maybe Rambler who is our strategic initiatives vice president. To develop this in partnership with our Provost Robert Morgan who is here and the deans of the academic units. And we want again to thank all of them for their collaboration money. We'll give the presentation. Mary Robin myself will answer questions that you have. So let me just first say that academic budgeting it's probably one of the most hard exercise that anybody will encounter if you're around a university. It's it's an exercise that has to balance the number of things. First of all your strategic priorities your your mission your vision for the future the evolving realities of the academic marketplace the enrollment trends demand shifts and so on. There are really no right or wrong budget models or systems. The molds themselves need to be evolved with time. What used to be great yesterday and served us well may not be great tomorrow. We for for sure have experience some different eras here at the University of Delaware in terms of academic budgeting we start out with what people referred to as block budgeting or incremental budgeting. Sometimes I've also heard the term. Father only knows you know the President basically make sure location the very Units. No questions are asked. You know we we certainly have lived through that model just like Every university in the United States some cases used to be mother all the nos because some have female presidents. And from that reality and there was a wave of development where a number of institutions move to what is referred to as responsibility based budgeting or BB. We certainly had our own evolutions of this under the previous administration of President Harker. And then I came into the picture in 2016 June of 2016. And we've really start recognizing some of the challenges and opportunities ahead I think when it comes to budgeting we have seen in fact some of those challenges and you have a very well articulated that certainly through the work of a number of other committees of what our Beebe can and what cannot do. It certainly incentivize entrepreneurial growth of units. Certainly helps deans be entrepreneurial in terms of decision-making creating new programs and all that stuff. But at the same time there is a sense that the institutions oftentime when they are based on our BB They don't always support the way we should the mission of all the units. Certainly some of our units because of what they do. They really can't float on their own bottom. It's clear that the cost of education is different across different areas of the university. It is for example known through our course study that takes about 50% more resources to educate a mechanical engineer that educated philosopher. And it probably takes a 50% more to educate the medical doctor than a mechanical engineer. So you know a given that if you have a flat tuition all across the board the University any kind of model that is simply recognizing that the presence of students in seats would not would not excel. Also when you not only focus on success being measured by numbers of students taking classes in a particular unit you don't always incentivized. In fact you don't interdisciplinary collaboration. There's challenges who who gets the credit and many of the things that we stand for today in our strategic priorities interdisciplinary global inclusive excellence and above all students success are just simply not promoted by a mole that's saying tell me how many people you have and then there's an algorithmic formula that distributes the resources. Again think about entrepreneurial activity. There's nothing in our BY that specific around the fact that the entire philosophies bring more. And then you have more you know there is nothing that looks at the kinds of things that you do when you do them with others where you Doom successfully. If your students graduate graduate on time right now with 73% four-year graduation rate among the top ten in the country in four year graduation rates I mean that's a phenomenal rate for a for a public university. Rounded and RB be scenario doesn't really matter if your students graduate or not. If they don't just bring me more as long as you replenish the flow rate you just replenish resources. So there's things that are left to be desired. Most important as when units have to float on their own bottom. Oftentimes people feel the pressures to set aside the resources for a rainy day. And so we start having all these umbrellas. And many many more umbrellas are held that all levels of the organization departments centers colleges Vice presidential areas central areas just again because people know that their budget is going to depend on the dynamics of the present time and they don't know what the future will bring right now we know that many universities and colleges across the United States are actually facing enrollment challenges. About 50% of the universe for the first time last year did not make the enrollment targets. So an RB be mall would not work very well under that environment. And yet we know that a model that simply based on block budgeting would perhaps never incentivize excellence. Never incentivized people to go beyond that historical location reality. So we really feel that the reason opportunity it was an unprecedented opportunity came and you're trying to put a new strategic plan new priorities. You took Watson success. You talk about inclusive excellence. You talk about interdisciplinary talk about innovation and entrepreneurship and above all you talk about investing. This was the moment. You know we looked at the historic faculty trends between 20062016 and pretty much our faculty body was at 1200 faculty members plus or minus ten in any given year you know people who are waiting for somebody to separate from the university retire die move to another greener pastures you know so that they can hire the replacement a year or two later because there wasn't any budget any other way. And yet we knew that in our demographics there was going to be a massive wave of faculty retirements and replayed replenishments are we need to do. So once again there was this once in a lifetime truly transformational opportunity to align budget and strategy to align what we're going to make our capital investments in faculty in buildings new areas and actually tried to do it ahead of time. So we we want to devise a mall who we thought in a more coordinated way more strategic way all of us working together where we recognize our academic mission and priorities for all units. And at the same time given opportunity to those who can create new resources to partake in the sharing of those new resources. And in fact that sharing should happen at crucial levels from Central to deans from deems to departments. And when it came to research programs even all the way down to the principal investigator who has generated the new research activity. So that's what we basically all set out to do. Monday is going to basically report on the progress we've made in some of those categories. You will see pretty much everything I just said that people have predictable based budgets. There is a a component that is based on growth. And there is a sharing you'll see that people have receive the dividends from anticipated sharing of resource ahead of time. We've made huge faculty investments right now. We're close to Harvard faculty members net new. So we obviously have fronted the collective resources in terms of the strategic growth of the institution. And we would love to see that all units are now taking full advantage of it. And see the rewards See the ability to produce excellence and help us move forward as we move on. We all feel poor when we have a new budget model one we're investing that's the name of the game you investing in the future. It's not for today. It is for the future. But believe me there is a very bright future ahead of us and I'm more optimistic than ever about the future that the University of Delaware has. So I'm going to give Monday a chance to to to to to to talk about it. And I'll be happy to take questions. Just like everybody in the team and summarized at the very end Monday >> Good afternoon. Thank you. Dennis. Can everyone hear me. Okay okay. I just wanted to take the opportunity before I get started to really thank the team and the budget office for helping me pull all of this information together. I've had a really exciting opportunity to work with the President as well as Mary and the Provost over the past year and a half and that's something that I've really enjoyed doing. So we'll go ahead and get started. Thank you. Okay better. Alright. So as president Asana mentioned when he had joined the university in 2016 it became apparent that the existing RB be model that was in place did not allow for strategic initiatives to be funded throughout the university. So one of the things that the President did in January of 2017 was he charged a steering committee to come up with a new way to do budgeting at the university. And one of the things that he mentioned was he was keen to the idea of developing a hybrid budget model that attempted to take the best aspects of several different models and create one that created a strategic pool of funds that could be used to reinvest back into the colleges as well as the administration of the university to cover overhead cost. As you can see by this graph that was loaded on the EAB website. You can see that many of the higher ed institutions have started to move towards more of a hybrid type budget budget model from a decentralized model to a hybrid or from a centralized model to a hybrid type but budget model. After president a sourness did charged the steering committee with the to to come forward with a hybrid budget model there were four subcommittees that were actually generated as well or setup as well for undergrad grad f and a as well as special academic revenue so that they could look at those four components of the hybrid budget model and determine what is the best way to generate incremental revenue that can be reinvested back into the university. One of the things that President Asana was keen to do is to make sure that the allocations were directed down to the department level and not just the college level which are BB only went down and mandated the allocations go to the college level. One of the things that he found out when he came here and Had taken a poll from many folks across campus was that the allocations not flowing down to the department level was one of the things that the campus truly wanted to see happen after the four sub-committees were launched they actually pulled together their recommendations and submitted those to us in the spring of 2017 of which time the budget office went through a period of time where we modeled various versions of the budget model that were presented to the President and Provost for review. And we tweaked them over a number of months to come up with where we actually landed today which will review later in the presentation. As Dr. Asana mentioned we have made significant investments in the university in lieu of having an actual budget model that has been distributed or put forth for the campus. Although it may seem that we haven't had a budget model over the past two years. The reality is that we have we've been working very diligently over the past year and a half to set the bass budgets for each of the colleges and the administrative units the centers and institutes across the university. What you'll see later in the presentation as one of the components of the hybrid budget model is that a predictable base will be allocated across the university to the colleges departments centers and institutes. And before we could do that we really needed to take a deep dive into the expenses and the budgets that were previously allocated to the units to ensure that expenses were recorded appropriately. So while we were doing that we also as Dennis mentioned made significant investments as you can see and faculty salary. So one of the things that the president and provost have charged the university with is by increasing the net faculty by 250 net new faculty over the next five to ten years as he mentioned we're about halfway to that target. Another thing that we've invested in as financial aid for both residents and non-residents to increase the quality and the diversity of the student population. You'll also see that deferred maintenance beginning in fiscal year 18 we doubled the investment of deferred maintenance. One of the things that became apparent under the RGB model as the President mentioned is that many folks we're saving a lot of funds for for a rainy day and that was happening all across the university while that was happening deferred maintenance across the university it went to an astounding $500 million of backlog that needed to be addressed. So one of the things that we decided to do was to double the investment that we're making in deferred maintenance. I know that everyone has seen a lot of new construction down on the star campus of deferred maintenance is really meant to address deferred maintenance needs across the green. So it's one of those things that you may not always be able to to see the investments because it could be a roofer an HVAC that is being repaired but the investment as there. As I mentioned we're also investing in other capital projects across the university So before we get into the details of the budget model it's important to really level set everyone to understand how the budget is working not only from a budget model standpoint but also all of the resources that we have available to fund the university. So the budget for the university all fund resources not just the budget model portion is approximately $1.3 billion. And you'll you can see from this graph that roughly half of that is comprised of tuition and fee revenue. There are components of the $1.3 billion that is restricted and we are not able to use those for unrestricted purposes an example that would be research funding. So that is meant to fully support the research operation. Another example would be auxiliary resources from Housing and Dining as well as gifts that would be restricted where we have to set spend those gifts on what they have been obligated for. As you can see at the bottom the state appropriation is roughly 10% of the $1.3 billion and it's important to note that that's remained relatively unchanged over the past five to ten years. Another thing that we've highlighted here is that the university's endowment wallets $1.3 billion. It's really the investment income that is spawn off of that. That really is returned back to offset some of the expenses for the university. We really need to protect protect that principle endowment. So that we have that longevity of funding for the university. One of the things that I mentioned is the predictable base for the colleges and how we spent the past year and a half really determining what should that predictable bees. And making sure that everything is aligned appropriately at the college level. Or now going through the exercise to look at bass budgets at the department level we've been partnering with the deans and the CBOs to ensure that the department expenses are booked accurately across the University. The reason why I mention this is because as you can see here this is really and we'll get to it in the next slide but this is a pie graph of the formula for the hybrid budget model. So the the largest portion of that pi as the predictable base. And that is really the first piece of the budget model. That is where the majority of the resources at this time are coming from you'll notice that the estimated incremental revenue for fiscal year 20. As I mentioned they are estimated because we came up with them as we were developing the budget model for FY 20 we will true this up at the end of the fiscal year when we have actual metrics and dollar amounts. But we're projecting that to be $35.5 million differential fee flows directly to the colleges that have implemented that fee. There's no scrape off of that. That is pulled back to central. And you'll notice that the strategic pull back fill is $29.9 million. What I failed to mention is that the Estimated incremental revenue as that is generated and we'll see this on the grid and the matrix. 50% of the total is scraped off and pulled centrally to develop the strategic pool allocation to cover overhead. And then also to redirect those funds back to the university the colleges and the departments. Right now the majority of those funds are all being redirected back to the colleges. What that does is over time. As the incremental revenue grows it will give the president and provost more flexibility to really look at the university and the strategic investments that need to be made and figure out where they need to be redirected. So that will eventually get back to the college and the department. It just changes the decision level of where those funds are allocated. An important thing to note here is that of the total amount of resources that the colleges are actually generating to be allocated back to cover expenses across the university. 64% of that is going back to the colleges and the departments. So this is the formula for the budget model. As you'll see the predictable base as I mentioned is on the far right. That is the biggest portion as I mentioned of the formula and you'll see below that we have it set at FY 17 Actually that was intentional. Dennis joins UD and the fall of 2016. And that was prior to when any of the strategic investments were made. So the intention for that is the incremental revenue of those investments that are made post FY 17 should start to generate a return. Or we should start to reap the rewards of those investments that will in turn increase the incremental revenue to to help fund the recurring expenses that we've made an advance. So you'll see here are the strategic pull and overhead portion. That is in red because it's a combination of a formulaic equation as well as onetime resources. We are investing in advance of having the revenue from those investments so we are drawing down on reserves in the short term to cover those investments. That's an intentional investment that is being made. If we did not do that as faculty started to retire because of the new collective bargaining agreement we would be behind the curve and we wouldn't be able to sustain the 1200 faculty that we've had over the past decade or so. As Dennis mentioned we're about a 150 up from that. And so as folks retire we should be able to continue to hold where we are. If we continue to replace those retirements. Another important thing to note as the incremental revenue portions the undergrad grad F and a and other. Those are the formulaic portions of the budget model as well. And as I mentioned the differential fee revenue is going directly to the college which is also a poor portion of this formula So here's the grid and the how the formulae if portion on I'll just go back. So what I'm referencing here is the this information here. How this is calculated as what we're going to see in the grid on the next portion again to emphasize that colleges and departments are guaranteed to receive this amount every fiscal year. The next portion will be determined by the grid. And so what we're looking at here is the formulaic equation that'll be used to to develop how much departments and colleges as well as institutes and in some cases *** will be guaranteed to receive once. The budget model is in place is fully implemented. So as you'll see Undergraduate revenue we are allocating that based on student headcount and i corr. One of the things that we've recently done is we've heard feedback from the deans and we made an adjustment between the split from student had cannon i corr initially. We were going to weight those 50-50 percent what we heard everyone and we made the adjustment to go to the 75-25 which I feel that folks are more familiar with because that is one of the things that we had when we were under the RGB model. Incremental graduate revenue student headcount i corr and subject. It's being split the three ways their special academic revenue a 100% I core is the driver for that. And then if you look down at the bottom what you'll notice is the distribution of how these resources are going to flow once they're calculated using the metric. So undergraduate incremental revenue will flow 50% to the college. And the college will actually the DMM will have the capability of holding that revenue and then looking at each of the departments across our organization to determine based on the initiatives that that department is doing who would be allocated a portion of that undergraduate revenue One of the things that I want to note is we will be making sure that metrics are available down to the department level. So although that may not be allocated down you can see how your department actually performed for that fiscal year. Incremental graduate revenue 25% will go to the college and or excuse me 12.5% of the department or program. That's really if it's an interdisciplinary. That's why that is split there to ensure that we're encouraging that some funding makes it to the interdisciplinary portion. You'll notice down at the bottom the 50% that is being scraped off to go back to the strategic pool. As I mentioned that is at this point being redirected back to the colleges as we've made those investments in advance of generating the incremental revenue the intention is that those investments will start to make a return over the next three to five years. And at that time the strategic pool investment would begin to shrink at the department and the college level. And from there the president and provost I as I mentioned would have the capability to look at it and redirect those funds depending On the new initiatives that they feel they would like to invest in at this time. Another thing maybe a competition that the President may decide to to run and folks can compete to get those resources. Fna for the colleges and departments you'll notice the college's portion is 35% departments will receive 5%. A portion of that will flow back to the PI 5% of that and then 2% will actually flow to the arts and humanities. And then the incremental revenue for the centers and institutes you'll notice at the centers and institutes are going to get the 45%. It's really the sum of the college and the department there. One of the things that I will note is that we are looking at FNA and how this is being transacted within the model. Again this is an implementation year. Um we're still working out the kinks. One of the things that we've discussed is whether or not we take a scrape off of the top for FNA rather than looking at the incremental portion. But we're still having discussions regarding that. We're working with Charlie and the provost office. We're actually looking at in addition to rebasing the departments and making sure that the department bases are accurate. We're also looking at the institutes to make sure that they are accurately based as well. Again the differential fee a 100% will flow back to the colleges. And then course fee is an example of this is I believe that the College of Earth ocean and environment has a scuba fee that scuba fee does go directly to the college or department that has that f0 that is not maintained or pulled back centrally. So the timeline of the budget model as I mentioned Dennis launch this back in 2017. So we've put a significant amount of effort and time into developing this. We're currently partnering very closely with IRE to get all of this information automated. One of the things that we are working through is while our Bibi had all of the metrics pretty accurate at the college level. We're finding that as we get down to the department level because we've never really allocated funding down that went down to that level. Formulaically. We're finding some data anomalies that we've had to work through. So we are partnering with them to make sure that we can get this automated and the data and metric reports would be available for everyone within the department to see. And only after we were we to review those obviously what the President and Provost and the Deans were still a little ways off before we can get to that point. I would say that next steps what we've been asking the colleges is to work on their rebasing of the departments and get that information to us by the end of March so that we can do allocations into the system at the department level for the bases in April May timeframe Once the fiscal year closes and we had actual metrics we will go through and rerun the model to perform true up entries to make sure that again as I mentioned we made the estimates appears but will have the actual numbers and the actual metrics at the end of the fiscal year to true up the allocations going all the way down to the department level to make sure that those are allocated. But the key piece of that first is to make sure that the expenses are appropriately booked at the correct level. We want to make sure that if resources are flowing to the department or to the college that the expenses also flow there as well. Most times when you have an instance where there's a large surplus at the end of the fiscal year. Most times not all times it's because the revenue is flowing to one spot but the expenses are being covered by someone else. So it's really important to make sure that we have that appropriately aligned as we move into the new budget model cycle. We are here. So December fourth we're currently at the town hall the drift white papers to be released to the Deans at the end of December. From there we will release the draft in March to the campus. As I mentioned the department level rebase expenses are to be completed by April and then the predictable basis will be loaded into the general ledger in May timeframe. And then at the end of the fiscal year the incremental revenue will be loaded. Pause for questions >> A great example that 75% and we miss it and we modified that. So you know with all base we're I'm sorry. All this we're happy to take questions. I hope you hadn't before again I want to just express my thanks. Question >> I have three questions. I'll start with the first one. The incremental revenue is incremental on top of what house the baseline determined for that. So we're looking at this school year 17 as the baseline for everything as far as metrics are concerned. So what was the undergraduate revenue in fiscal year 17 and then how much has that growing sense that timeframe and that is the incremental portion. My simple question it's actually good that you have that slide up. What does what does the 5% of FNA that goes back to the PI What does that mean So we're working through that. One of the things that Dennis was adamant is that we make sure that the *** are rewarded for bringing in grants and and research to the university. So we are. We are working through that. As I mentioned we are having a little bit of the data anomalies as we get down to the department level and then down to the PI level but it's really to award that PI who may have that increase that significant increase or even a small increase in FNA as they are working through their grant. I don't know if done or Robin >> *** get some portion of the FNA that they generate and that has happened hither and yon across the university said there have been places. We're department chairs allocated certain proportions of FNA to particular *** but it wasn't across the whole university. It wasn't it was sort of at the chair. It could have been at the dean level some places but it was very individual very ad hoc across the university. So the idea is that with this model there will be some amount that goes to *** based on the amount of FNA they generate. It's really important that you understand in this though that what we're talking about here is incremental revenue. So I don't want people to go home thinking that 5% of the FNA that they generate is going to end up in their account okay that for all the colleges in their FY 17 base there there was a significant amount of FNA that was expected to be generated and that went to the colleges. This is nothing new. If you remember the old blot budgeting from years ago everybody every college had a benchmark. And that was an amount of FNA that was in their base funding. When you went above that base funding you could keep it. So we're talking about incremental F and a. And that means the FNA generated above FY 17. Now we haven't worked out all the details. But as I see it what we'll be doing is saying X is the amount of dollars incremental revenue above the FY 17 base by college it goes there and then that college and department deans and department chairs will distribute it to the *** according to how much they generated. So in a fair way you line them up. Our goal is to distribute for that incremental revenue. 5% would be distributed that way as time goes on and all of you generate more and more FNA. The amount that that 5% is gets bigger and bigger. So it's a real incentive even if it wasn't a huge amount in FY 20 or 21 the idea that it could be in FY 22 or 23 is is an important incentive. And I think for all of us who have rhyme Having some discretionary money as a PI is incredibly important for helping you launch new initiatives. Take a trip fun something that isn't acceptable by your funding agency. But anyway I've talked too long but I just want to make sure you don't go home thinking. 5% of the FNA you generate is going to end up in your pocket this year. Okay that makes sense. Robin answer. There are provost imperfect terms. And I just wanted to simply add >> When you look at this entire system the table the percentage is the distributions. You know all of that has come from recommendations of committees. I said before that worked for a long time there were a few things that the President neither prerogative to try to instill upon the culture in the thinking of us and the return of a small fraction of that incremental growth revenue to the individuals who created the principal investigators. In the case of research to the departments or interdisciplinary programs that create a new program activity I think that's extremely important to reward and recognize as an incentive to grow more. I will tell you a third thing that was sort of like presence prerogative and I asked to be included and I'm glad that it has survived because when you have a lot of thinkers working on these tables over a couple of years. You never know what survives the 2% of that FNA that is directed towards the arts and the humanities. I think that's an incredibly important because we should all recognize that we're in this together. We're one university one mission the arts and humanities contributes so much to our mission and to the community. They don't necessarily have the ability to create those research revenues but I do believe with a small investment from the common good we can all benefit >> When my last question and this seems to be the budget for roughly four hundred seventy. One hundred sixty something million dollars four hundred forty. That is about a third of the total budget of 1.3 billion. Can you summarize >> The other two thirds what costs fall under the. Thank you. Yeah absolutely. So as as I mentioned I really find this slide here. This is about the 64% of what the colleges actually are generating is flowing back to the colleges. The remaining percentage is really meant to cover overhead and administrative costs across the university. An example would be advising. Overhead costs of of administration Budget Office and those types of expenses. Yes >> Yes this is just the college portion. So yes. Correct yes thank you. I guess my question was related to sensitivity of the model to unexpected things. There may be a downturn in the economy. State revenues might be affected. Tuition might be affected. Have you thought about doing a sensitivity analysis and where >> Which part of the university would have the most impact Absolutely. So as we prepare for the Board of Trustees presentations one of the things that they have asked us over the past couple of meetings as well as a sensitivity analysis as we have been investing in advance and what we have developed which did not historically exist with the university in the past as a 10-year long-range plan. And so what we're looking at and the 10-year long range plan is. And I guess once you get out five years really it's all just a gas but we we do know that there are significant investments that the President provost would like to make. One of those is the faculty. For example. As we mentioned we are at a 150 roughly net new. One of the things that we've decided to do as a result of looking at the long-range plan and having discussions about where we are and also knowing that we're drawing down on reserves. As we've decided to pause on really bringing in many more net new faculty at this time because we need to look at a number of things. Where are we with the current investments that we've already made and then also where are we with the retirements that we're expecting as well as space issues. So I think that we need to really take into consideration and the Provost has been really watching this. Where are we going to put the new faculty that are coming so we are looking at sensitivities. There are a number of levers that we have in our back pocket. Whereas if we do have a state cut or there is a recession there are some things that we can do. An example would be to slow down as I mentioned on the faculty hiring. We can also look at the investments that we're making in other areas. An example would be and I'm not sure that we would have to have many conversations before we made these decisions but an example maybe to maybe pull back slightly on the doubling of the deferred maintenance that we are addressing. So those are some of the things that we have as levers that we can pull and absolutely that the long range plan is updated annually and we review it more than one time per year to ensure that we are on track and not at risk. So I just want to make sure I understand your presentation. If you go to the very first slide. So here you have these two trends the historical trend which is centralized emerging trend which has an attempt >> To incentivize the units and so then so I get that. But then when you go to the next slide you can skip that. So skip o actually the one question I had about that one is the 60% for researches that direct and indirect or is that just FNA that's direct and indirect. Yes. Okay thanks than next slide on. So next slide. So is this just the incremental Is that what I heard you say when you explain the predictable base here >> And then this is the incremental portion which is developed using the formulaic allocation that we went through on the grid. And then this portion here as differential fee which goes directly from the student when they pay that fee to the college that has the fee. So the total here as the 439. And so what was the other two-thirds of the budget for so the remaining portion is used to fund the administrative expenses and it's yeah. Yes yes >> Yeah the total put thank you sorry. But why do you have a budget model for only a third of the budget instead of all the budget because we can have a budget model to fun facilities so the non-academic units are not generating revenue. They are actually sustaining the the institution in terms of custodians compliance. You know running the budget. It's these are things that we also zero-based budget alum. They're just not generating the revenue that's in every institution I I've ever seen. So like I said we can get you the details on those big components but yeah I'm not sure of the details. I'm just interested in the general principles >> For those who aren't big principles when we say 1.3 billion that's including everything including many funds that come in for very specific purposes that need to be spent on those very specific purposes. So a budget model wouldn't do any good to try to tell the people who pay housing fee. Okay we collect the housing feed. Now let's spend it on building the history department. So just directly off the bat you can see 10% that we we don't really make money on Housing and Dining. 10% we get in then 10% we pay out. We will have research grants and we say all these are 16% of the budget. 16% comes in. 16% goes out. Actually more than 16% goes out. I can tell you that much. No because research builds reputation you know it doesn't really make money. And so already another 25% just from those two categories has spent the police advising the custodians and many other things that we all need. So I wouldn't want anybody to think that 1 third is the academic budget. And then there's now two thirds that administrative support. It's not just administrative support. I think the overall level of administrative support we can be very transparent. We can show you that I don't have the number but we can certainly show that very good question by the way >> So if you had one last question related to this indirect cost return if you go forward a couple slides here yeah so one thing I didn't get about this is you know on the revenue side is everything pooled revenue Wiseman it's distributed down or is there some incentivization going on where the in other words the head counts or the instructor College of record is that does that come in by a department and go back by department and college and then go back out by department and college or is it all pooled somewhere and then allocated and the other thing I just don't get response to the thing about PIE. Idc returns is why can't you just start a policy where if the *** get 5% when how long is this transition going to take because I really think the incentivization idea is a good one. And it just sounds like you're trying to make a smooth transition to that which makes perfect sense. But how long is it going to take before it goes from one thing to the other. I just can't get a sense of that from what I've seen so far >> So I I just want to clarify your question about the pooling. Are you asking specifically about all of the incremental revenue sources and how that is being calculated. So what we're doing is looking at the baseline for the particular revenue stream and the the baseline would be fiscal year 17. What we're also looking at are the metrics up at the top here by college and bought down to the department level. And so we're saying if those metrics increased what portion of the incremental revenue are you going to get because you grew and you helped to contribute to that incremental resource. I mean see what this PI return. It see it sounded like the departments get a certain amount of IDC to distribute but it was based on a pooled IDC >> The individual PI the increment over that is what determines what the *** get rather than the increment of the PI themselves. You see what I'm saying. In other words why if you want to incentivize the *** just make it the increment that they have over themselves not the increment over some pool of the whole department. I understand this right so let me just address that a little bit. I wish I think we all wish that that incremental FNA between FY 20 and FY 17 was enough to give every PI 5% of their FNA that would just be wonderful. But the reality is it's not that much more >> We generate more in FY 20 than we did in FY 17 but not as much more and not as much more as I would have liked and I'm sure every one of you would have liked to. So we really need to do more of that many many reasons why. But the so you have to think about it there's a lot of different ways to think about it. But if you are a PI who was hired at the University of Delaware in FY 18. 100% of your FNA is incremental. Right cuz you weren't here and FY 17 to generate any personally you should not I don't think that's fair to *** who were hired in FY 15 who are also very young and or or do you see what I mean so so in in attempt to be fair and I think this needs a lot of thought. The idea is that we look at what is the incremental FNA for example for a college to that's above what's in their base that they generated between FY 20 and FY 17 however much money. That is that college should distribute 5% of that to the individual *** but they shouldn't divide *** into incremental *** and pre incremental ***. All PEIs are generating FNA and all *** should be rewarded regardless of whether they'd been her 40 years or four or four months. And so yeah that will be that still to be determined exactly how to do it. But I think it you can you can line people up based on what they what is their overall contribution and that makes an assumption that the overall contribution of *** to FNA is related to incremental FNA. But it's really important to be fair and not. I had so many long discussions about defining an incremental PI and I took the stance from the very beginning that there is no such thing we're all *** together and we want to reward everybody for that. I do think when snag on this that you probably are thinking and maybe not saying is I want to be certain that this does not disincentivize cinnabar eyes people working together so that we have people being co-PI zone awards because you can imagine. If Robin Morgan and Dennis's scientists are going to write a grant together. We're going to have to split the increment that are 5% of the FNA. I want to make sure he's doing a good job. I'm not going to just give them. Give them a handout. I'm sure he's not going to give me one. So I don't want to I want to be sure that we're thinking. We're not doing something that causes people not to go out and work with other ***. I think that'll resolve itself. It'll keep us from taking on charity cases. But we all realize that when you put several *** together with different expertise is in most cases your opportunity for actually winning that award is much better. And so half of x is much better than 0 of x. But that's something to think about. And to those excellent points. I also want to add some information on a little bit of a subtlety. I would say that's no clear to everybody >> When we talk about an FNA number that's not just an arbitrary number. It is given to us by federal authorities as reimbursement for expenses we've already incurred. So this number this percent gets audited in the rears every few years and that give us the new one. So when we say our error rate now is 59% that's what it is because we demonstrate with those kinds of expenses averaged over time over our grants and so on. So the bass really needs to go back to those who are going to pay for those expenses >> The hope is that we're going to get more efficient with increment. And this way we're not going to increase expenses but we have an increment and we can share the wealth of that increment. That's the idea. I get incredibly complex things. If you love to be a part of our team to think more about those with will will welcome you. And I'm going to add one more thing. And then we'll take your question time. If you many of you have been in situations where you're see and hear 10% of the FAA to the department increment. Anyway in the past in various colleges has been different but a fairly common scenario is binded the percentage of FNA that went to departments was also what a department would be asked to pay for startup for new faculty in that department. So if your department was getting 28% you were expected to pay 28% of the startup costs for faculty. Some of that may have to be rethought depending on the cost of faculty and how this distribution works. And we're still haven't discussions. We'd appreciate hearing what you have to say. My feeling is that we don't want to create a situation where a department or unit is not obligated to pay any of the store it up. Because what will happen then is that will cause stored up to escalate. And I want to be sure that for every new faculty that we hire we give them what they need. I'm not trying to cheat to hire cheap. I'm not hiring faculty at the five below and try and to give them the least possible start-up package. But on the other hand when they asked for a helicopter I want that department here to have some reason to say I don't think you really need a helicopter because they have to pay for it too said we're still figured all that out. I'm not sure the answer's going to be the same for every unit on that but again your ideas are very much appreciated for that. John you have a question >> Okay well I actually have a couple comments. And I would first like to thank President dishonest for everything that he's done to make this development of the budget as open as it has been. And I hope that continues as one who was here during the Harker administration. I remember there was a discussion about whether RB be stood for responsibility based budgeting or revenue based budgeting. And I would really welcome the key insight that President dishonest uttered at a college of Arts and Sciences meeting when he said that it really stands for really bad budgeting. He made a lot of friends when he said that Most of the comments and questions so far have been about the research aspect of this. And I would just say that I think that if you're a PI you shouldn't need this 5% of your FNA as an incentive. If you're a young faculty member who's expected to bring in a sizable amount of external funding that carries overhead. You're incentive should be trying to get tenure. And if you succeed then you've got a job for life right if you're a more senior faculty member you also have the incentive of being able to pay yourself two or three months of summer salary. Grant that's much larger than a couple percent of your FNA in almost all cases I'd like to focus on what I think is and has been a neglected issue both in order BB. And with this current budget model which is teaching which is after all the number one source of revenue for the university. I've distributed a handout which shows our universities rankings by US News and World Report which began to decline at a pretty disturbing rate. When the hardware administration came in and introduced are BB. Because in that incarnation of RB be the ideal course was one that had an enrollment of a couple 100 students and was being taught as cheaply as possible by a perhaps an overworked continuing track instructor or even buy an adjunct faculty member being paid maybe only six or $7 thousand. And you can see how after the introduction of RB be the percentage of classes at UD with an enrollment. Under 20 has gone down from 40% to 34% while the percentage of classes with an enrollment over 50 has gone from 12% to 16%. And in order to generate more tuition revenue the acceptance rate was increased from around 47% to now 62%. And all of these have had a negative effect on the ranking of the university by US News and World Report it used to be around number 70. Now it's number 91. If it falls below a 100 we are likely to have a significant hit to the reputation of the university and the ability to get good students from other states and other countries to come here. So I think this really needs to be fixed in the new budget model and on the reverse I have shown a modified reward function for teaching which does not simply grow linearly with the number of students but would turn over at around 50 students switch would then incentivize colleges and departments to teach undergraduates in smaller lecture sections that would help education. It should increase retention. It should read increase our our ability to advertise ourselves. And I think it would really be really very helpful in the long run. Thank you. Peace. He went to take the mike. Thank you. I had a similar >> Question I was I think I think we understand that the 5% incentive for PI in terms of increasing our research portfolio but considering that tuition revenue is 51% of the whole budget. I was wondering if there had been discussion about an equivalent way to incentivize teaching while Robbins getting the microphone. I do know that one of the things that we looked at with the budget model is >> A lot of the policies and programs that perhaps need to be looked at and and made sure that they are in alignment to drive some of the behaviors that we would like to say so I'll turn it over to Robin. I hope I'm going to answer this. So this strategic pool that will become Anand centrally. Let's talk about a future day when we're not sending 90% of it already back to the colleges to pay for investments that are already made but but a few years from now when we have more money that that strategic pool is meant to incentivize groups to think about programs that will really hit our strategic initiatives. And the first one is the success of students. It's about thinking about interdisciplinary programs. What do students need what kind of new programs can we generate and our main revenue source is students tuition. It's a balance between maintain the quality and I think John's pointed out we are we're working very hard to try to increase the number of small classes that we have reduce the number of large ones. We will be starting some major initiatives to study online education and make sure it's of high-quality. It's not just taking a video of a lecture and letting someone look at it at their leisure but really an interactive type of thing. Those are those are always. So when we imagine new revenue coming into the university most of that is based on what we deliver to students courses that we offer new academic programs. And so those strategic resources will be deployed in those ways in the hiring that has been done and that is currently being done. One of the questions we always ask is What's would have academic programs these hires promise to add to the university doesn't mean every single hire has to. But we're looking for if you look at those cluster searches that we're doing we're thinking about interdisciplinary programs and data science and offering a master's and a PhD in data science and those things are are coming of age. So I think there it is built in there. It may not be as obvious as the 5%. But I guarantee if you get a big grant for a teaching new teaching program a $20 million grant for the type of education will deliver in 2045% of that or we'll figure out how to get that to you >> You can add something Dennis I want to add that first of all I do agree with many of the comments that have been expressed regarding teaching. And I can tell you that once a strategic pool starts to get replenished because this new faculty will produce new programs and so on there will be additional revenue. So we can try some new things. One of the significant efforts which I would like us to move into as a continue to enhance student success and incentivize again great teaching. So that students do graduate in four years you know I like the 73% to become 80%. So when Mandy mentioned before President Provost who likes have these competitions with strategic pool in the future we'll be posting metrics for the four year and six-year graduation rates for every unit and those that are shining on those metrics and help us achieve the institutional objectives should get a percent allocation directly to that through those competitions and strategic resources. I also want to issue a cautionary note about the US News. Clearly it is a trailing indicator of what is happening today. Realize that the 2011 cohort of students who graduate in 2017 and we report the data and 2018 becomes the the stuff that you get in the news done in 2019. So the things that we're doing now well hopefully we'll show 567 years from now. That's that's the name of the game. There are also some obviously I agree with you John There are some classes that have become very large. And we need to take stock of that. There's better modalities how to teach those classes you know flip the classrooms have the smaller under 20 opportunities for students to be instructed while they learn the standard material may be online. We should make an effort to increase the owners types of offerings and offerings towards students. Many students sizes are under 20 inactive learning setups absolutely we should do that. And again we should incentivize that. It's again just for the US News I know this is not a conversation about US news. There are some new things that they reward now including for example social mobility. That costs us some eight to ten ranks the way it is right now. The fact that we don't have more Pell eligible students and that we don't graduate as fast as we should or Pell students. So again that is going back to those are items that Arabic be lost on us over the previous years the whole inclusive excellence pillars which has not addressed with that type of budget more than the new budget reality we're trying to put forward is attempting to do that. It's going to be work in progress. It's not going to be done overnight >> Like it's crap and then you get 12.5% incremental revenue get it funded MA or 25%. That would be a very good guy >> And RDD we saw among the departments and so that concept it's possible. But I think yeah certainly department bringing in more incremental revenue by increasing the i corr the instructor College of record the on and the types of courses particularly introduce disciplinary courses and academic programs that are offered will be away. And yes one danger of this is that it's up. It has some of the same incentives that are Bibi had with one really huge exception. Most of a college budget It's base. So as a dean under or Beebe because 100% of my budget is based algorithms. When something went wrong with an algorithm you could see your canoe tip almost totally over in one year. This won't happen with this budget because so much of it the FY 17 bases there. You're gonna you're guaranteed that amount of money. So you're working in a margin above that. I go back to the old block budgeting. Some of you will remember that but we had a block and a benchmark and we we went above that benchmark. We got to keep it. This is not terribly different from that except now it's not just research. It's also teaching incremental revenue you get to keep that too. So I think it it isn't perfect but it has some of the hallmarks. It has more less risk for it for a unit. It has more of a solid base that someone can count tone in trying to add new revenue. I guarantee you the read. Well I shouldn't say that that's a strong word. I'm very doubtful that revenue will will drop at the University of Delaware. Steward of some horrible external thing happening out there in the world. How fast it goes up. What we we we are concerned about we want that to go up as fast as we can make it go up while still offering incredibly high-quality programs. So I don't want to go back to the days where we were stealing students from each other offering redundant courses and not using faculty time and giving our students a really really rich experience. I think with this whole model one of the one of the points I'd like to make is that what we're trying to incentivize or things that enrich the university. Okay incentivize things that enrich the university and I use that word enrich meaning. It could be things that bring in more money. But it could be things that enrich the University in other ways that give it reputational value that make it a better place for students a better climate for everybody. And that's what we'll use for strategic funds for. So they will be deployed to things that make money but that won't be the So criteria and it might not even be the most important criteria. It will be things that promise to make the university better. But as we get into this when you see things that you think are not right or that are not as good as they could be like the 50-50 75-25 you need to let us know. Because the name of this game is it's not done and it probably never will be >> For those of us who've seen budget models come and go I don't know how many of you Cgd and it's I've seen three or four myself. We know they're never finished but we're trying to get something that is sort of the best of both worlds. I'd like to add to that a little bit. One of the things that we have done here is really give the deans the flexibility where they may have some departments that are heavy revenue generators and some that are not the 50% going directly to that college level really allows the dean in conjunction with their CBO to take a look at their entire organization and see where where is that need really generate or push those resources down to the departments that may not be those big revenue generators. That's also the case as far as the strategic pool allocation goes where that will sit with the dean and then that gives them the flexibility to look at the organization across a whole and see. Where do we need to redirect those resources because although it may not be a huge revenue generator the importance of really putting resources in a certain department still may outweigh whether or not that is a revenue-generating department. Hi I just wanted to know whether the strategic a pool percentage will stay at 50%. Going forward or do you expect to go introduce adopter sometime so I would say that for the next couple of years we're going to stick with what this allocation is. Really we need to see the return on the investments that have already been made and we can't really go in and change too many things because it will just upset what we've already built into the model. The fact that most of those resources if not all are going back to the college and the department level at this time on that really doesn't make sense to to really tweak that number because it will just all move the money around in the buckets. It will automatically all go back to the college and the department level. So I wouldn't say that it's written in stone but I would say for the next three to five years maybe we're probably looking at this being the formulaic for the strategic pool. And I would I would add that I think me and he's got that hit that nail on the head but this year for example with 50% strategic pool >> 29 million of that is going right back to the colleges. And so Dennis don't choke over this but that leaves between his office in mind five to $6 million is that right that's all we have of this strategic foe. It's not like we're sitting own $50 million it's five to $6 million. And that will continue until that pole is bigger. Now the one thing I do want to say is that you hear me talking all the time about what a tight year. This is this is a tight year. We have a lot of capital going up. We are not. We know we're anticipating retirements but they haven't happened yet. We've hard faculty 150 net new it's a tough year tighten your belt go on a diet And I call myself the queen of NO in the provost office. I try to say it with a smile and usually I try to say not nail but I am the queen and now my experiences Dan in 2008 in all the years when its top is when people come to you with the very finest ideas. So just because I say I'm the queen to know and we only have $5 million and holy and how please don't let that dampen the ideas bring on the really good ideas because that's often when they come out right now and we will figure out some way the sky will figure out some way to do it. If it's a really good idea would you like to add to that thank you >> Will not change anything. Just want to say that out of those five or 6 million most of it is in the Provost office is a whole lot. I went to buy some stamps the other day and people said well I'm not so sure but what I will say is the following. That I said that at the general faculty meeting budget system's budget models are not money trees. There are allocation methodologies of what we already have. We can keep bidding our heads for a very long time thinking. There's going to be one perfect model. I'll make everybody. 1353 faculty members very happy in every department every calls at all times. That's not going to happen. I guarantee you that I want to be honest with people all the times. However there is one good way that all of us will feel better is grow that pie. We have now an approach to increase the budget the overall size of our budget. And so we'll have more resources to give. And and we have a starting point and we're willing to listen. So as newer assumptions new data come up. And if we think that some of the very things we're trying to do doesn't really get accomplished. We will revise. I mean that's what we're trying to say. And believe me many other institutions who ultimately equilibrated at decent working budget moles. It took them over a decade to get there. I'm not trying to prolong things. I know we've waited long enough. I hope that we should be able to continue moving strong with this. In fiscal 21 and beyond. We're almost there but we need to continue to engage you. The deans the department chairs and the chairs caucus the senate budget committee and so on. That's all I have you know maybe we can end on this note but if anybody else has more questions you still have a few more minutes. John >> Q John Morgan again and I'd like to really endorse what presided or Jati said about the importance of doing a sensitivity analysis. And I don't want to be a profit of bad times and all that but I'm old enough to remember the spring of 1990 after the fall of the Berlin Wall. After all the countries of Eastern Europe shuck off the Soviet yoke. And there were there was a lot of talk in the United States then about the peace dividend. Because the United States would no longer need to spend hundreds of billions of dollars on defense. And then in August Saddam Hussein invaded Kuwait. And well prices went way up and the United States suffered a very severe recession. And this university had a hiring freeze for several years. And about farce I I'd I frankly think it's really hard to predict the future just a year in advance right less than a year from now there will be a presidential election who was elected president of the US will have a big effect on the American economy for the next four years. I don't think anyone in this room can make a confident prediction about who the next president of the US will be >> On January 202021 Any other questions. With that Mandy I think we're turning it back over to you. Great. Thank you. This has been recorded and we will make sure that the presentation is loaded up on the budget website for everyone to see it should be up there tomorrow morning. Thank you
2019 Budget Town Hall
From Robert Diiorio December 05, 2019
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