Resource Planning, Allocation, and Budgeting
Note that this essay is one of twenty (20) New Directions in Planning essays, which are an online part of and a companion to the SCUP book, A Guide to Planning for Change (Norris and Poulton, 2008). The essays will eventually be available in their own Web home, but we are sharing them here, now, because we want you to have access to them sooner and because this blog environment will let you post comments, if you wish. Please do!
A Guide to Planning for Change can be ordered in SCUP's online bookstore or via the order form you can download here (PDF). Why don't you purchase a copy (for yourself or a colleague) and spend the down time over the holidays refreshing your perspective on higher education planning?
Resource Planning, Allocation, and Budgeting has been written by Carole Wharton, of L. Carole Wharton, LLC, a former SCUP president. Carole, and SCUP Resource and Budget Planning Advisory Group chair Carol Rylee, of the University of Delaware, are editing an entire forthcoming book focused on areas related to resource planning, allocation, and budgeting.
Copyright SCUP, 2008, all rights reserved.
Resource planning, allocation, and budgeting are fundamental ingredients of integrated campus planning. Campus plans are only as good as the financial and human resources that support them. Annual budgetary planning is the instrument through which resources are allocated to enable the execution of strategies and the development of organizational capacity necessary to achieve the vision outlined in the strategic plan. The annual budget plan is also the instrument for annual refinement in strategies over time. The alignment of operational unit plans and budgets with institutional strategies is imperative. Without alignment, institutions seldom realize their strategies.
Resource allocation has been dramatically affected by the emergence of enterprise resource planning systems, data warehouses, and analytics. Greater access to data has facilitated re-engineering and streamlining of business processes, which have improved the speed and efficiency of budget analysis and the development of planning scenarios that support strategic decision-making. Additionally, powerful analytical tools are enabling public institutions to adopt new approaches to resource allocation. Recently, many public institutions have been shifting to responsibility centered budgeting (RCB), which has been practiced for several decades in about half the U.S.’s private institutions. Many public institutions are now embracing RCB as a way to decentralize resource allocations, providing units greater incentive to be creative, entrepreneurial, and more responsive to student demand, while being held accountable for managing well and controlling costs.
I. What Are the Forces Driving Resource Planning, Allocation, and Budgeting in Higher Education?
Institutions are caught in ever tightening, constraining circles:
As the saying goes, nothing beats a firing squad to focus one’s attention. With a sense of urgency,
The slow and deliberative campus decision-making process practiced in organizational silos is outdated and a luxury few campuses can continue to support. Today the academic, student life, and administrative and financial offices must bring new meaning to integrated planning. Institutions, even small ones, are increasing viewed and managed as businesses. As such, campuses must adopt planning methodologies that look across the institution, speed adoption and implementation, and ensure the highest degree of flexibility.
Only a decade ago disparate offices developed critical analyses from disparate sources. Staff brought data to the table through separate reporting lines, likely using mixed assumptions. Decision-makers spent more time hearing elaborate and laborious explanations about sources and timing of data than on substantive discussion of the issues. Today there is no place at the table for dueling data sets. The budget officer as well as the institutional researcher must be in accord, drawing from the same data warehouses and linked systems to give senior management the fast turnaround of scenarios, alternative futures, risk and other analyses they need to make informed decisions.
In such lean and challenging times higher education may well turn to practices from industry. Six Sigma and hoshin planning could well become new planning norms. Hoshin planning, adopted from Japan and to date largely associated in this country with total quality management in manufacturing, drives vision and goals deep into the organization. It maintains a high degree of alignment and fosters breakthrough activity by placing responsibility at the lowest possible level in the organization. The move of large public institutions to responsibility centered budgeting is congruent with this approach and we may expect more institutions to adopt more strategic, focused, and aligned planning approaches supported by budgeting techniques that align responsibilities more closely with program delivery centers. With institutions challenged on multiple fronts, a unified approach is the smart choice for organizations that want not only to survive, but indeed, to thrive.
IV. Resources
To date there are no comprehensive studies of use or impact of RCB in institutional budgeting. On line searches, however, lead to the experiences of several public universities’ adoption of this approach in the past five years. For one institution’s experience, see Paul N. Courant and Marilyn Knepp, Budgeting with the UB Model at the University of Michigan, 2008. http://www.provost.umich.edu/budgeting/ub_model.html (Accessed October 18, 2008).
Books and Articles:
Nathan Dickmeyer, The Strategic Attitude: Integrating Strategic Planning into Daily University Worklife. Washington, DC: NACUBO, 2004.
Faculty and Academic Administrators. Washington, DC: NACUBO, 1984. Still a good handbook for the basics of budgeting.
Larry Goldstein, College and University Budgeting, NACUBO: Washington, D.C., Third
Edition, 2005.
Karla Hignite, Proving that your Outputs Count, NACUBO Business Officer. February 2008. Explores forces that are changing the requirements of regional accreditation with greater focus on accountability, and the greater role business officers must now play in accreditation.
David A. Kenyon, Strategic Planning with the Hoshin Process. Quality Digest, May 1977. http://www.qualitydigest.com/may97/html/hoshin.html (Accessed October 15, 2008).
Richard J. Meisinger, Jr. and Leroy W. Dubeck, College & University Budgeting. An Introduction for Faculty and Academic Administrators. NACUBO: Washington, DC, 1984. Out of print but available from online sources. Still a very good comprehensive overview.
Nancy Sielke, Budgeting for Excellence”: How the University of Missouri-Kansas City Transformed its Budget Process Using NACSLB Standards, Government Finance Review, February 01, 2004. A case study of the University’s opening up and transforming its budget process to a more performance-based approach, tightly linked to strategic goals using National Advisory Council on State and Local Budgeting Standards. http://goliath.cnext.com/coms2/summary_0199-728054_ITM (Accessed October 18, 2008)
On-line Resources
See http://www.acenet.edu/resources/chairs/index.cfm?section=3&subsection=28 (Accessed October 18, 2008) for budget management guidance at the ACE Department Chair Online Resource Center, especially a collection of articles of advice from other chairs.
See http://www.nacubo.org/x2308.xml (Accessed October 18, 2008) for National Association of College and University Business Officers (NACUBO) articles offered online on various topics.
An informal SCUP Budget Group is preparing an online book expected in late winter or early spring of 2009 consisting of chapters by the group’s members that address several aspects of campus budgeting.
A Guide to Planning for Change can be ordered in SCUP's online bookstore or via the order form you can download here (PDF). Why don't you purchase a copy (for yourself or a colleague) and spend the down time over the holidays refreshing your perspective on higher education planning?
Resource Planning, Allocation, and Budgeting has been written by Carole Wharton, of L. Carole Wharton, LLC, a former SCUP president. Carole, and SCUP Resource and Budget Planning Advisory Group chair Carol Rylee, of the University of Delaware, are editing an entire forthcoming book focused on areas related to resource planning, allocation, and budgeting.
Copyright SCUP, 2008, all rights reserved.
Resource Planning, Allocation, and Budgeting
Resource planning, allocation, and budgeting are fundamental ingredients of integrated campus planning. Campus plans are only as good as the financial and human resources that support them. Annual budgetary planning is the instrument through which resources are allocated to enable the execution of strategies and the development of organizational capacity necessary to achieve the vision outlined in the strategic plan. The annual budget plan is also the instrument for annual refinement in strategies over time. The alignment of operational unit plans and budgets with institutional strategies is imperative. Without alignment, institutions seldom realize their strategies.
Resource allocation has been dramatically affected by the emergence of enterprise resource planning systems, data warehouses, and analytics. Greater access to data has facilitated re-engineering and streamlining of business processes, which have improved the speed and efficiency of budget analysis and the development of planning scenarios that support strategic decision-making. Additionally, powerful analytical tools are enabling public institutions to adopt new approaches to resource allocation. Recently, many public institutions have been shifting to responsibility centered budgeting (RCB), which has been practiced for several decades in about half the U.S.’s private institutions. Many public institutions are now embracing RCB as a way to decentralize resource allocations, providing units greater incentive to be creative, entrepreneurial, and more responsive to student demand, while being held accountable for managing well and controlling costs.
I. What Are the Forces Driving Resource Planning, Allocation, and Budgeting in Higher Education?
Institutions are caught in ever tightening, constraining circles:
- Students and their parents are demanding a plethora of amenities to mirror the comforts of home. At the same time, parents and public officials express outrage about the rising costs of a college education. Spare living quarters, common dining halls and cafeterias, spartan gyms and worn playing fields are out. Apartment style living, elaborate food courts, spa-like health clubs, and the like are the new norm. At the same time calls for accountability and transparency grow louder and louder. Accrediting agencies expect full-blown systems of accountability. The IRS has expanded the 990s reporting requirements, reaching deep into institutional governance matters. Many state governments now require institutional budgets to be arrayed against a set of quantifiable outcomes measures.
- As this is being written in October 2008, stock markets around the world have been in free fall. The banking industry has seized up. Readily available funding for student loans has vanished. Institutions can no longer borrow for capital projects or to meet cash flow requirements; endowments are once again “underwater.” The Chronicle of Higher Education is publishing articles on fund raising in hard times! The confluence of these events will have major consequences. Unlike in prior years, all institutional sources of income will shrink: tuition revenue will decline and students will not be able to get, much less pay back, loans. States are slashing campus budgets. With federal bailouts in the offing, budgets of granting agencies will be cut. Private giving and corporate support will slow if not dry up altogether.
- Much has been written about the changing profile of the college student population—its diverse ethnic, age, and gender profile. Institutions have grown accustomed to meeting the students where they are—on line and at on and off campus locations, night and day. Increasingly they are also expected to meet the needs and expectations of these populations with new technologies that address varied learning styles, degree of student readiness, and student requirements at different times in their lives. The environment is changing at an incredible rate of speed. Institutions must be on top of the context in which they operate and be ready to shift focus – and the attendant resources – quickly. Fortunately, new tools to support analytics, described in this book, bring more information and bring it faster to the table to support decision-making.
- The faculty and administrative talent pool is small compared to the burgeoning enrollments. The pool for academic and administration leadership is even smaller.
- The student consumer has a dazzling array of choices: a growing internationalization of higher education by traditional and proprietary institutions, not only in the United States, but from foreign countries; as well as an ever widening range of delivery mechanisms offered by both traditional and new types of institutions. With so many choices, students will need assistance identifying institutions most likely to meet their time, place, quality, and cost requirements. With so much competition, institutions will need to plan carefully and wisely in how they deploy their talent and technologies.
As the saying goes, nothing beats a firing squad to focus one’s attention. With a sense of urgency,
- Campuses are again turning to strategic planning -- drilling down to core purposes and finding unifying visions to guide priority setting and stay on course.
- Campuses are finding ways to cut costs and redirect resources to highest strategic priorities consistent with mission and vision. The amenities arms race has to halt. Faculty and staff cutbacks are likely, along with reduced benefits and the disappearance of discretionary funds. Without borrowing capacity, institutions may shelve construction plans and reconsider planned initiatives.
- Campuses are pursuing new alliances such as joint purchases of system applications, shared spaces, cross registrations, and consortial arrangements to support delivery of services.
- Many new resources are available to support planning and decision-making. Former Executive Vice President of the University of Pittsburgh and Temple University Jack Freeman, in the McNamara Pentagon when PPBS (Program Planning Budget System) was introduced, once observed that had today’s technology been readily available when PPBS was introduced, it might have been successful in colleges and universities. This heavily data driven system failed to catch on in college and universities for lack of technologies to capture, collate, order, and analyze copious amounts of information; track, crunch, and turn around the numbers fast enough to support informed decision-making. Today’s technologies can both support and deliver information quickly and institutions are drawing more heavily on data driven decision-making and reporting.
- Accrediting associations and agencies are joining state governments in placing greater emphasis on accountability, requiring institutions to demonstrate both stewardship of resources and successful student learning outcomes as part of their self studies.
The slow and deliberative campus decision-making process practiced in organizational silos is outdated and a luxury few campuses can continue to support. Today the academic, student life, and administrative and financial offices must bring new meaning to integrated planning. Institutions, even small ones, are increasing viewed and managed as businesses. As such, campuses must adopt planning methodologies that look across the institution, speed adoption and implementation, and ensure the highest degree of flexibility.
Only a decade ago disparate offices developed critical analyses from disparate sources. Staff brought data to the table through separate reporting lines, likely using mixed assumptions. Decision-makers spent more time hearing elaborate and laborious explanations about sources and timing of data than on substantive discussion of the issues. Today there is no place at the table for dueling data sets. The budget officer as well as the institutional researcher must be in accord, drawing from the same data warehouses and linked systems to give senior management the fast turnaround of scenarios, alternative futures, risk and other analyses they need to make informed decisions.
In such lean and challenging times higher education may well turn to practices from industry. Six Sigma and hoshin planning could well become new planning norms. Hoshin planning, adopted from Japan and to date largely associated in this country with total quality management in manufacturing, drives vision and goals deep into the organization. It maintains a high degree of alignment and fosters breakthrough activity by placing responsibility at the lowest possible level in the organization. The move of large public institutions to responsibility centered budgeting is congruent with this approach and we may expect more institutions to adopt more strategic, focused, and aligned planning approaches supported by budgeting techniques that align responsibilities more closely with program delivery centers. With institutions challenged on multiple fronts, a unified approach is the smart choice for organizations that want not only to survive, but indeed, to thrive.
IV. Resources
To date there are no comprehensive studies of use or impact of RCB in institutional budgeting. On line searches, however, lead to the experiences of several public universities’ adoption of this approach in the past five years. For one institution’s experience, see Paul N. Courant and Marilyn Knepp, Budgeting with the UB Model at the University of Michigan, 2008. http://www.provost.umich.edu/budgeting/ub_model.html (Accessed October 18, 2008).
Books and Articles:
Nathan Dickmeyer, The Strategic Attitude: Integrating Strategic Planning into Daily University Worklife. Washington, DC: NACUBO, 2004.
Faculty and Academic Administrators. Washington, DC: NACUBO, 1984. Still a good handbook for the basics of budgeting.
Larry Goldstein, College and University Budgeting, NACUBO: Washington, D.C., Third
Edition, 2005.
Karla Hignite, Proving that your Outputs Count, NACUBO Business Officer. February 2008. Explores forces that are changing the requirements of regional accreditation with greater focus on accountability, and the greater role business officers must now play in accreditation.
David A. Kenyon, Strategic Planning with the Hoshin Process. Quality Digest, May 1977. http://www.qualitydigest.com/may97/html/hoshin.html (Accessed October 15, 2008).
Richard J. Meisinger, Jr. and Leroy W. Dubeck, College & University Budgeting. An Introduction for Faculty and Academic Administrators. NACUBO: Washington, DC, 1984. Out of print but available from online sources. Still a very good comprehensive overview.
Nancy Sielke, Budgeting for Excellence”: How the University of Missouri-Kansas City Transformed its Budget Process Using NACSLB Standards, Government Finance Review, February 01, 2004. A case study of the University’s opening up and transforming its budget process to a more performance-based approach, tightly linked to strategic goals using National Advisory Council on State and Local Budgeting Standards. http://goliath.cnext.com/coms2/summary_0199-728054_ITM (Accessed October 18, 2008)
On-line Resources
See http://www.acenet.edu/resources/chairs/index.cfm?section=3&subsection=28 (Accessed October 18, 2008) for budget management guidance at the ACE Department Chair Online Resource Center, especially a collection of articles of advice from other chairs.
See http://www.nacubo.org/x2308.xml (Accessed October 18, 2008) for National Association of College and University Business Officers (NACUBO) articles offered online on various topics.
An informal SCUP Budget Group is preparing an online book expected in late winter or early spring of 2009 consisting of chapters by the group’s members that address several aspects of campus budgeting.
Labels: A Guide to Planning for Change, New Directions in Planning, Resource Planning Allocation and Budgeting
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