[Plsfaculty] Colleges' Share of Tuition to be Tied to Enrollment, Teaching in Budget Redesign

[Donna-Rae Marquez]

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Colleges' Share of Tuition to be Tied to Enrollment, Teaching in Budget
Redesign


Alexis Blue
The University of Arizona is moving forward on a new budgeting system that
will change the way tuition dollars are distributed in an effort to provide
increased incentives for teaching activities. 

Currently, the UA gives all tuition dollars to the state. The state then
returns them to the University as part of the state appropriation, which
consists of about half tuition dollars and half general funds. In the past,
the entire state appropriation was distributed to colleges and service units
based primarily on their prior years' budgets. 

With the new system, undergraduate tuition funds will flow more directly to
colleges, based on the amount of teaching they do, the number of majors they
have and the number of degrees they award. All graduate tuition dollars will
flow directly to the students' colleges of enrollment. 

The new budget system will begin in a "budget neutral" state. That is, each
college's budget allocation for 2010-2011 will include information about the
proportion of the budget that would be supported by undergraduate tuition
dollars if those dollars had been distributed based on the number of student
credit hours taught, number of majors enrolled and number of degrees awarded
by a college, said Leslie Eldenburg, who co-chairs the University's Budget
Redesign Committee with Ed Frisch, associate vice president for academic
resources, planning and management. 

Any incremental changes in student credit hours, majors and degrees awarded
by a college during the academic year will result in incremental budget
changes for 2011-2012, Eldenburg said. An increase in those areas will lead
to an increase in the college's tuition appropriation, while decreases in
those areas will lead to decreases in the tuition appropriation.  

After the tuition distribution system has been phased in, a "cost allocation
system" for support services, such as the library, student services, and
information technology, will be implemented. Colleges will divide the cost
of commonly used services on campus and changes in college activities, such
as increases in the number of majors or faculty members in a college that
use those services, will lead to incremental changes in college budgets,
with larger colleges likely paying a greater share.  

"I think what you'll see is a much tighter link between an activity and how
that activity's funded," said UA President Robert N. Shelton. 

Shelton said the change will send a clear message to campus units: "Here are
the ways in which you can fulfill your mission for the University of Arizona
and will be rewarded for it. If you teach more students, we aren't going to
just take all that tuition money away from you. We're going to make sure you
see the benefit of that." 

The biggest advantage of the new "responsibility-centered management model"
is that it rewards colleges for increasing their teaching efforts in a
formulaic way, something the University had no concrete way of doing before,
said Eldenburg, an accounting professor and vice dean of the Eller College
of Management. 

"Under the (current) system colleges have no incentive to increase teaching
activities whatsoever. The incentive is, if anything, to decrease teaching
activities because budgets are unaffected by such reductions," she said. 

Some have expressed concerns that the new budget model will lead to larger
class sizes and the addition of courses simply as a means of revenue
generation. However, Eldenburg said evidence from a number of other
universities with responsibility-centered management budgets shows such
problems have not occurred. 

Harvard, Duke, Iowa State University and the University of California, Los
Angeles, are just a few of many universities that use similar budget models.


The UA began working on redesigning the budget in summer 2008, when Provost
Meredith Hay requested that a committee begin to study
responsibility-centered management budgeting. A second committee continued
the work in the 2008-2009 academic year. It developed a formula that would
allocate undergraduate tuition funds to colleges based 75 percent on student
credit hours and 25 percent on the number of majors enrolled. 

A third committee, the Budget Redesign Committee, adjusted that flow formula
to give 75 percent weight to student credit hours, 20 percent weight to
majors and 5 percent weight to the number of degrees awarded by a college,
in an effort to emphasize the importance of awarding degrees, Eldenburg
said.  

The Budget Redesign Committee worked throughout the 2009-2010 school year to
develop models, analyze data, create an implementation plan and communicate
information about the redesign to the campus community. Those interested in
scheduling a presentation for their department by the Budget Redesign
Committee can e-mail Sharon Young at skyoung at email.arizona.edu. 

You can also find information, including background, committee reports, case
studies and more on the  <http://www.budgetredesign.arizona.edu> Budget
Redesign website. 

 

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