New Budget Model revisited

1/25/2012: Back in Feb 2010 – almost 2 years ago – I wrote the overly optimistic post below, about Brad Shelton’s “New Budget Model”. The idea was that money should follow students – except for a tax for central admin expenditures. At the time the tax rate for Johnson Hall was 28%. How’s this working out?

Not so good. Read Shelton’s web site here. The September 2011 tax rate had been raised to 35%. And it turns out even this is not enough to pay the $2 million in raises for administrators like Frances Dyke and de Kluyver, Jim Bean’s beamer and 5 big pet ideas, Police, the $1.83 million Bean and Frances Dyke have had us paying for Jock Box tutoring, subsidized overheads rates for athletics, etc. Forget about legitimate basic central administration functions like IT support, research startup, accounting, classrooms, etc.

So, word down at the faculty club is that the central administration is now organizing another raid on the money that is supposed to support our academic mission. Either another tax increase, or possibly new CFO Jamie Moffitt will abandon the whole thing, and go back to budgeting a la Moseley. Comments welcome.

2/11/2010: Brad Shelton, UO’s new VP for Budgeting, has been working on a new budget model for UO. This model will specify how UO’s money is allocated to the schools and the administration. I think this budget model will do three important things.

First, it will provide some basic transparency about where our money comes from and where it goes. Many of the newly available public resources on UO expenditures derive from Shelton’s need for the information to complete this process. Until he got involved, this information was deliberately hidden away from the faculty and even the colleges, and there was no prospect for open debate on UO spending priorities.

Second, the model will, for the first time, impose a hard budget constraint on the administration. In the past, when Frances Dyke and Linda Brady wanted to spend a few million remodeling Johnson Hall, or Frohnmayer wanted to give Moseley a fat retirement deal, or Moseley needed to spend a million on a new Diversity office quick to cover up a lawsuit, or Jim Bean wanted to give his friends a raise on the sly, they simply did it. Then they figured out later who to take the money from. Under the new model, the administration will get a cut of the gross, and they will have to live within it. How radical – education comes before administration.

Third, the model will make clear the extent to which student tuition money from CAS, Business and Journalism goes to support the other colleges and the such administrative adventures as Bend, Portland, Sustainability, OIED, and Bean’s “big ideas”. No comment on whether or not these are good ideas, but if they are good, why hide the numbers?

The basic plan is simple: Colleges will keep the tuition they collect, but pay a 28% tax to the administration for central services. The administration will also get the state allocations. (This seems odd – it would be more politic to allocate them to instruction.)  The details are already getting ugly however. The biggest issue – after the tax rate – is what gets grandfathered in. The administration has been on a splurge for the past 5 years – does this go into their base? Similarly, some colleges are subsidized by others. In particular, CAS and to a lesser extent Business subsidize Law, Music, Bend and now Portland. According to some calculations CAS gives up $23 million to the other schools, Business give up $9 million, and Journalism also is in a hole. Are these arrangements going to continue, or will more money go to CAS? From what I hear the new model will lock in the current subsidies. But since new tuition money will be allocated to where the students are, over 5 or 10 years the percent going to administrative bloat, and the extent of the cross-subsidies, will gradually decrease.

Importantly, this model will be applied at the college level – not at the department level. But obviously it will make it easier to think about allocation issues between departments as well, and it’s hard to imagine that won’t have some impact before long

One critical part of this plan is improved financial transparency. As I said, developing this plan has required the preparation of much more information than has previously been available about UO expenditures, and Shelton has been great about making it public, along with Kelly Wolf, and Laura Hubbard. But once the system is in place, the games will begin. Administrators will try to put their pet projects onto the instructional side. So it will be important for the ongoing expenditures to be transparent too.

As it happens, because of a motion Nathan Tublitz got through the Senate last year, the UO Senate Financial Transparency Working Group is developing a solution to this now, in collaboration with UO Controller Kelly Wolf. Soon any UO employee will be able to access transaction level details from UO’s accounting system, via a link on your duckweb page. So next time the administration decides to give one (or three) of their own $750,000 golden parachute buyouts, everyone will be able to see that the money comes from a fund that was established for retiring tenured teaching faculty. We still might not be able to do anything about it, but at least it will be common knowledge.

Bottom line, the administrators will keep their current loot. Music, Law and AAA will still be subsidized by CAS. But the sort of thing that Moseley is (still) doing with Bend will not happen again. And if UO continues to grow, over time more of the new tuition money will go to CAS for instructional purposes than has been true in the past.

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4 Responses to New Budget Model revisited

  1. Anonymous says:

    While admittedly there is little transparency on what the “tax” is for, I think you are off base on immediately assuming it is to fund big admin raises. Actually this fee pays for for many of the activities and units on campus that don’t have access to student tuition. And also to help ensure there is some kind of equity in salaries between the “rich” departments and the smaller ones with fewer high paying out of state students. Unfortunately I don’t have any hard facts for you either, just in talking with various units on campus on how the dispersed budget model is trickling down to various departments.

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  2. Anonymous says:

    Dog says

    The level of ClusterFuck involved in this would make any Marine
    proud.

    But I do want to comment on A La Moseley

    To make a very long story short (and this story is quite the subject of revisionist history but I stick to my version)

    Around 1997 JTM completely decoupled the individual schools and colleges from any centralized budget model. This was done with the idea of making these entities more “entrepreneurial” .
    In my view “entrepreneurial” can’t work well in academia since we are all sharing students.
    The outcome of this was to make the UO a completely decentralized institution which created
    huge dysfunction (which we still have) and huge duplication of effort/services/infrastructure (which is now better than it was earlier on). This created a large culture of competitiveness
    among the deans in which academic considerations never mattered. The current budget model
    reinforces this in spades.

    So we needed a better budget model than the JTM one (which allowed for interesting movements
    of money on paper and gave birth to the DYKE) – but we don’t need the current one. We need a model that brings the various units of the university better into accord with educating better citizens for our current world. I will not go into detail here in this forum, other than saying, much of this change needs to center on a significant restructuring of student
    credit portfolios that substitute non-class learning for the traditional butts in seats model.

    The only positive thing about the current budget model is that CAS is less screwed by JH than
    they used to be. Instead, JH has better distributed the screwing.

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  3. Anonymous says:

    Totally agree that a budget model that only rewards butts in the seats is a dead model for a dying approach to education. We better figure out what is important to our core teaching and research mission, how to deliver that value creatively and organize our finances and resources around delivering that.

    Just dividing up and moving around the same old boxes (depts, colleges, courses) and pitting them against each other is a zero sum game.

    While the “Big Ideas” initiative was maybe poorly executed, it at least attempted to shake us out of a conventional way of thinking about how to deliver quality education and research across old boundaries.

    As tuition rises, we will continue to get pressure from all sides (students/families, government, private education sector) to demonstrate what that high tuition is buying. Piling more students into classrooms alone won’t cut it.

    If all these high paid administrators can’t figure that equation out, then their value is seriously in question.

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  4. Anonymous says:

    The new budget model is already dead. They have already skimmed tuition money off the top, and this is just our third year. Once this happens it is only a short time before all the money becomes allocated according to discretion.

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