A Merger, and the Case for Decentralized Financial Management

Faced with a challenging situation at the University of Toledo, Scott Scarborough reports, in Business Officer, what he learned as he explored the pros and cons of responsibility-based budgeting- and the still-to-be-answered questions that help that institution's leaders make the decision.

"When I joined the university in early 2008 as its new chief business officer, the deans of business and education asked, "What's the next step toward implementing RBB?" It was obvious that these deans were eager for more control of the financial resources generated by their colleges and schools. At that point, I set out to review responsibility-based budgeting—its strengths and weaknesses—and how it might work at the University of Toledo."

"Over the past few months, the deans and I have studied and discussed RBB; we have weighed its pros and cons. In addition, we invited Jon Strauss to the University of Toledo campus for one day to join and inform our conversations; he was very helpful. I have briefed the president and his cabinet on the strengths and weaknesses of RBB and solicited their input. Our president is very supportive of taking the next steps down the RBB path. The deans and their financial staffs voted unanimously to pursue changes to the university's centralized model of financial management. Roughly half of the deans and their financial staffs, however, thought it best merely to modify the centralized model by adding more funding incentives and increasing transparency. The other half in attendance thought it best to pursue RBB fully and abandon the university's centralized financial model. Everyone, however, agreed to continue the conversation before making a final recommendation to the president."

Read the full article here:
http://www.nacubo.org:80/Business_Officer_Magazine/Current_Issue/April_2009/The_Case_for_Decentralized_Financial__Management.html

New Realities in Higher Education - Reporting on the Current Budget Crisis

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Related, Friday, May 1 - at your desk - enhanced audiocast: Can Faculty Development or Curricular Innovation Help You With Your Budget Crisis?

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Professor Emeritus Ray Schroder, University of Illinois at Springfield, is putting time into a new blog - New Realities in Higher Education - covering an eclectic and interesting useful range of news stories about how institutions, their governing boards, and funders are interacting in the current financial crisis. He's putting new information in at a pretty fast pace. Worth a bookmark.

Graphic Intensive Slide Show to Illustrate Budget

An interesting new University of Michigan Web site uses graphics "to provide a concise online tutorial for people seeking information about the basic workings of the university’s budget, focusing in particular on the General Fund, which is the source of support for U-M’s educational enterprise.

The tutorial, University of Michigan Funding: A Snapshot, was created in response to questions from students and others about how the university is funded. It also has information about state support for higher education, financial aid, donor support and links to more in-depth resources."

Streamlining Financial Services: Doing More with Less

University Business magazine has a series of webinars which, after their live transmission, become available to be watched and listened to for free, in a set of archives. The most recent in that series is titled Streamlining Financial Services: Doing More with Less. (You'll need to create a UB Online identity in order to access the archives.) It was transmitted live on February 12, 2009:

In these days of tight budgets and increased student enrollments, streamlining back office financial operations can save time, money and manpower. Join Casey McGuane, SVP and Chief Services Officer at Higher One, and financial specialists from two universities in a discussion of how institutions are successfully delivering a higher level of service through electronic tuition and fee payment and automated refund disbursement. Presentations by: Tim Goral, Editor, University Business Magazine - Moderator; Casey McGuane, SVP and Chief Services Officer, Higher One; Dr. Carol Probstfeld, VP of Business & Administrative Services, Manatee Community College; Karen Pettit, University One Card Administrator, Eastern Kentucky University

The Politics of Travel: Who Should Stay Home?

As you might expect, we at SCUP are absolutely certain that you and your campus will benefit tremendously from your attendance at higher education's premier planning conference in 2009 - SCUP-44 in Portland, OR, July 18-22. That's why we read with great interest this item from an anonymous vice president for government relations from a university in the midwest. Our favorite line is "My institution has nearly an annual budget of $700-million. Our travel budget is — well, no one knows." More:

There is little in the intricate world of a university that seems simpler than banning travel. The university would simply stop paying for mileage, airline tickets, hotels, tips, taxi rides, meals, and spa visits. (Just kidding about the last one.) However, in truth, the way that travel expenses are paid at a university is incredibly complex.

First, athletic departments get a pass. Teams play away games and coaches go on recruiting trips. Neither of those can change. But after sports, whether a division of the university can cut back on its travel costs comes down to, well, money. Let's examine the connection between travel and money office by office.

The development office (also known as fund raising or "institutional advancement") gets the next free pass.. . . "Wait a minute," a provost might say, "what about my researchers?" . . . The provost might add: "And what about my publishing faculty?" . . . In the scheme of things, travel is a very small portion of a university budget. My institution has nearly an annual budget of $700-million. Our travel budget is — well, no one knows.

Budget Crises, Academic Change: A Fable

This essayist reads like he's been around the block a few times. Reading this article, while at times it may seem unpleasant, provides - if nothing else - some of the jaundiced perspective on planning and planning processes that you might expect to hear from many in any constituency:

Budget reduction processes offer special opportunities for change. In public universities, these moments of fiscal challenge prompt government representatives, coordinating boards, and other responsible observers to tell us to take advantage of the crisis to restructure the university and achieve better efficiency and accountability. The state may give us a mid-year budget cut and ask for a strategic realignment of our work, as if the university operated on a week by week cycle.

Most of us respond politely, even though we know nothing of the kind is possible. By December, every university has already spent about half of its budget and it has made commitments for much of the rest. If it is to give money back to the state, it must find it by scrounging around in supplies and expenses, canceling travel, postponing purchases of new computers, and perhaps not hiring some adjuncts and increasing class sizes. But strategic realignments? Not a chance.

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Finally, the president creates a strategic and accountable realignment for the institution by cutting a little here and a little there, abolishing a program that has no supporters in the legislature and ready-to-retire tenured faculty, and eliminating building maintenance funds to avoid laying off any faculty.
The public relations office describes these moves as creative and visionary change, and the press hails the president as a wise and profound academic leader who has accomplished these fine things in an effective and accountable way without damaging important academic functions of the institution. Although the president knows that the campus’ deteriorating physical plant will become a major issue for the future, she also knows that she will be somewhere else when that happens.

And so ends the fable with a budget crisis averted, and a change process achieved.

Using Quaker Principles to Budget in Tough Times

Most of us are involved in budget cutting exercises. We're looking for new revenues and we're looking for ways to cut expenses. Kent John Chabotar, president of Guilford College, writes about using heritage Quaker principles in budget planning and decision making processes:

In good times and bad over three decades, I have been involved in college financial decision-making as a faculty member and administrator. Whether it was at wealthy institutions like Harvard University or Bowdoin College, places of moderate means like Guilford College or public institutions like Michigan State or the University of Massachusetts, budgeting always involved not enough revenue and too many expenses. Frequently, trying to achieve a balanced budget was equivalent to trying to get 10 pounds of sugar in a 5-pound bag.

Those decisions have become far more difficult in the present economic maelstrom as revenues have deteriorated along with the stock market and tax base and expenses, especially for financial aid, threaten to skyrocket. The difficulty multiplies if the institution uses participatory budgeting processes in which the community from faculty to students gets involved.

Now I lead a college that uses principles from our Quaker heritage to make many decisions including the strategic plan, long range financial plan, and annual budget.

Don't Let the Downturn Get You Down

We were noticing this week, on the RPG discussion list, that the California community colleges are reporting very large increases in matriculation in the current semester. It made us wince, because we know that tuition does not cover expenses at community colleges, not even close. This article helps you to make a good case for more public support for community colleges, even in times of financial crisis:

As community colleges across the country defend themselves against across-the-board budget cuts, they need to go on the offense by mobilizing key constituency groups to make the case that community colleges offer the best hope of turning the U.S. economy around.

Our extensive work with community college systems in seven states and two in-depth opinion research projects reveals that few people understand the value of public two-year colleges and the huge impact they have on economic success. Similarly, too few community colleges have organized effective advocacy efforts, and when they do speak out, they often use messages that don’t resonate with their target audiences.

While those at community colleges feel beaten down by unfavorable comparisons with four-year institutions, they need to realize that a huge reservoir of good will exists and should be tapped. Our poll findings show that the public holds community colleges in high esteem, but they don’t understand two critical issues that undermine the support of these institutions on the state policy front:

Federal Stimulus Funding for School Modernization, Renovation, and Repair

We bet you and others on your campus have been thinking a lot about "shovel ready" projects? (We're talking $6B here!) So have the great folks at the National Clearinghouse for Educational Facilities (thanks to SCUPer Judy Marks for the info) who have created this new Web page category for related information:

The first webpage section, "Status of the School Funding Stimulus," describes the school-related elements of the January 15th draft House bill. This section will be continually updated as the house and senate bills proceed through Congress.

The second section, "What You Can Do Now," provides advice on the most effective way of spending the stimulus funds. We will be adding much more to this section over the next week.

There are four additional sections, "Funding Stimulus News," "Related Events," "Recent Journal Articles," and "Related NCEF Resource Lists." We will continually add information to these.

The I.R.S. Considers Pressing Schools to Further Reveal Their Business Activities

So, is your school one of the 400 that are being looked into by the IRS right now?

The Internal Revenue Service is considering expanding its scrutiny of colleges and universities to focus on billions of dollars associated with academic research, federal financing and intellectual property, a senior agency official said on Tuesday.

The expansion of an investigation would put pressure on the schools to further disclose their inner financial workings as the I.R.S. undertakes a major effort to learn more about whether academic institutions are improperly using their nonprofit status to avoid paying certain taxes.

The expansion, while not yet certain, “is on the table,” Lois G. Lerner, the I.R.S.’s director of exempt organizations, said in a brief interview.

The Place of Information Technology in Planning for Innovation

"This anecdote highlights one of the principal paradoxes faced by college and university leaders. On the one hand, we place great value on the academic freedom that allows our faculty to follow their passion, curiosity, and interest as they pursue their research. We look forward to unpredictable innovations that will lead to unprecedented improvements in human health and welfare or a deeper understanding of the moral and physical universe. On the other hand, as administrators, we must strategically plan and invest to support the research programs of the future, which means that somehow we must plan for what cannot be planned for: the unpredictable."

The Difference Between "Budget Total" and "Total Budget" Apparently Matters for Community Colleges

This article, "Who Controls Community College Budgets," is from Inside Higher Education by Doug Lederman.

The state’s highest court ruled last week that the SUNY system’s Board of Regents was within its rights in 2003 when it issued regulations that limited county governments to approving the “budget total” rather than the “total budget” of their local community colleges. In New York’s higher education governance structure, county and local governments “sponsor” two-year colleges and have final say over their budgets, which are set and administered by the state university system.