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UND redesigns budget allocation system

After years of UND allocating money based on a set model, the school is moving toward a process that will grant funds based on fluctuating factors like enrollment and courses offered with the hopes of creating incentives for faculty and departments.


After years of UND allocating money based on a set model, the school is moving toward a process that will grant funds based on fluctuating factors like enrollment and courses offered with the hopes of creating incentives for faculty and departments.

The budget model redesign is the culmination of years of work that began when UND launched a study in response to a 2013 visit from an accrediting agency, the Higher Learning Commission.

Since then, Huron Consulting Group has assisted UND officials in the education and implementation of a new funding model with the recently retired Associate Vice President for Finance and Operations Peggy Lucke.

"It 180 degrees different from what we do now," she said.

Lucke has been at UND for more than 40 years and ever since she can remember, money has come into the budget office and been distributed to departments based on decisions made at the executive level. This base budget would rarely change over the years except for incremental increases for pay increases.


"What that kind of model doesn't do is really effectively address the realities, so you have increasing enrollment in one college and decreasing in another ... but the resources didn't fluctuate based on the day-to-day realities and there were not much in the way of incentives," Lucke said.

After consulting with the campus community, UND plans a gradual transition to a model funding colleges within the university based on student credit hours, facilities used, enrollment, student and staff headcount and research expenditures.

UND spokesman Peter Johnson said it's a shame this new way of funding hadn't been in place for prior years.

"It was hard to do anything creative in terms of growth because it's basically stagnant," he said.

Dollars to departments

Officials aren't sure how much of a difference there will be between existing base funding for colleges and schools within UND when the new model goes into effect. To counteract any large differences, a participation fee based on a college's revenue will be collected like a tax and used to cover any gaps and bring all colleges out of the red and into the black.

"Nobody is going to lose an arm," Lucke said.

There are eight academic units on campus and the auxiliary and support units will be funded based on how much the academic units use them. For instance, the Law School will fund the non-revenue making Facilities Management Department based on how much space it uses on campus.


"On the support side it's not to incentivise growth, it's to incentivise cost control and increased levels of service," Lucke said.

Moving forward, that participation fee will continue to be distributed by the executive level of administration to cover holes in the budget, but Lucke said the incentives built into the system should also play a part.

In effect, colleges will receive more funding if has more students and courses taught.

But Lucke said committees are in place to squelch competition between departments and instead encourage collaboration. For example, the College of Engineering and Mines would be prohibited from creating an English course solely to get that funding but would be allowed to partner with the English Department to create a class with an engineering emphasis so both could split the profits.

"It's about what's best for the whole," Lucke said.

Slow and steady

As the fiscal year begins July 1, university officials will implement the existing budget model as usual, with one exception. After the numbers are developed, they will also be plugged into the new incentive-based model for the purpose of discussion and study.

"It gives everyone a chance to adjust," Lucke said.


Lucke said one of the most important aspects of the plan was receiving buy in from UND employees. They're also creating technological tools that colleges can use to examine the budget model and "what ifs."

University Senate Chairwoman Melissa Gjellstad said faculty are excited about the new model, which is happening alongside another initiative aimed at long-range planning called Strategic Optimization and Alignment Review. SOAR and the new budget model both rely heavily on faculty and staff involvement.

"(SOAR) is a key opportunity to gain access to data that will be a part of the new budget model," Gjellstad said.

The new budget model would be fully implemented for fiscal year 2017. The participation fee will be used to cover any large gaps, though Lucke stressed it "isn't a blank check."

"The plan will be to make everyone whole to provide another year of experience to be able to make adjustments for going forward," Lucke said. "You don't turn these kinds of ships very quickly."

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