Last updated July 1, 2019
General Model Questions
Why are we changing our resource model?
To increase transparency of the funding environment and empower decision makers to align their decisions within university priorities as well as financial restraints.
What is the implementation timeline?
The new model will begin July 1, 2020. Planning for adoption of the model began in May 2019. Because some colleges, divisions or departments require a longer transition, we expect that full adoption of the model will happen by July 1, 2023.
What are the most important concepts to understand?
First, moving to a new resource allocation model is a thoughtful process that takes place over a reasonable timeframe to allow for adjustments to the new model rather than a point-in-time action that is severe and damaging to mission. Second, everyone can contribute to the financial success of the university. Through the transparency of a model it is easier for individuals to understand how their decisions affect the broader university.
What are the expected positive outcomes of the model?
We hope that this model will provide a clearer understanding of the many factors that drive the revenues and expenses of the University. With greater transparency we expect to find many new opportunities, challenges, questions and ideas about how to facilitate the success of the University.
How will unintended consequences be addressed?
We know the model will evolve over time. Specifically, governance advisory committees, with representatives from faculty, staff and students, will receive input regarding issues/consequences as they arise and formulate advisory opinions on how to resolve the problems. In many situations, it is likely that solutions will be found within the existing structure of the model.
What fund sources/kinds of operations are affected?
Tuition, supplemental fees, dedicated fees, state appropriations, gifts, grants, auxiliary, service operations are all involved in the new model The model allocates the general revenue resources of the university including tuition, supplemental fees, state appropriations, and recovered facilities and administrative costs collected from grants and contracts. Other units of the University will be required to operate in a manner such that they provide financial support to pay for their use the University’s infrastructure.
Will balances be taxed?
Yes. Ten percent of unused, unrestricted general operations fund balances will be returned to the University Central Mission Support Funds annually.
Who was on the committee?
Four faculty, three staff, three students, three leaders, as well as co-chairs. See page 3 and 4 of Resource Allocation Model Committee Report or listing on website for details.
When did the committee start work?
How can I learn more about the model/are there planned presentations or a forum?
There are open forums planned for 10 a.m., May 15(22 Tate Hall) and 9 a.m. May 16 (201 Cornell Hall). The first forum will be livestreamed, recorded and posted for later viewing. There will be opportunities to learn more about the model through sessions in the FaCTS financial training series. Unit and small group discussions will take place throughout the next six months to prepare for launch on July 1, 2020.
What kind of ongoing input will representatives of constituent groups have to provide feedback?
There will be a steering committee and three advisory committees that have membership overlap with the steering committee: A Revenue Advisory Committee, a Facilities Advisory Committee, an Administrative and Student Services Advisory Committee. We will have a call for nominations to serve on these committees, and they will begin meeting in the fall of 2019. Feedback also can be sent to a dedicated email MUResourceAllocationModel@Missouri.edu and leadership within your unit can bring questions, comments and concerns to leadership meetings.
How long do units that are facing a potential decline in resources have to deal with the reduction?
Business plans will be put together in collaboration with campus leadership regarding how to phase the allocations in over time. All areas of the University will need to be fully operating within the resources allocated by the model for fiscal year (FY) 2023 – 2024 (begins July 1, 2023).
How does the model incentivize growing future revenues?
The new model is based on specific data of each school/college/division. This data will give decision makers the information they need to determine how they can grow their revenue to achieve the strategic goals. The previous model did not provide this information and decision-makers had very little incentive to work on growing revenue in specific areas.
How are employee raises addressed by the model?
Revenue producing units – largely schools and colleges – will have to plan their budgets to allow for merit raises. However, the new model gives budget planners a much better idea of what to expect in the future than the current model. For those units that are cost centers (e.g., human resources, campus facilities), they will make requests for budget increases and will need to demonstrate the need for additional resources to cover merit raises.
What other Universities use a similar model?
While many universities use some methodology/model to allocate resources. However, there isn’t an exact model that is used by multiple universities because in each case the specific unique factors of the environment are considered. Our proposed model isn’t identical to anyone else’s, but universities with similar considerations in their models include University of California – Davis, University of California – Riverside, University of Florida, Washington University, and University of Pennsylvania
What makes the model different than our old way of doing business?
It is more transparent and provides access to significant amounts of data about how the revenues and expenses are accruing and being incurred. It will allow us to plan better in the future and will spark many discussions on how to better utilize the resources we have at our disposal.
What does central mission support funds mean and who decides on those allocations?
It means having a set of resources available centrally that can be used to invest in the items identified as strategically important that would not be accomplished if individual units of the campus had to find resources on their own. It is also the fund that allows for financial stability from year to year in the face of potential changes in actual revenues compared to those budgeted at the beginning of the year.
What is the overall strategy of the model?
Empowering more decision makers to assist with delivering the mission through the strategic plan as the new model provides clarity on how specific actions fit within the broader context of the university’s goals and operations.
How does the model impact research funding?
Seventy-five percent of the recurring resources that flow into the central mission support funds will be allocated based on total grant expenditures thereby incentivizing additional growth in research funding. The full value of the Facilities and Administration funds (F&A) collected on grants and contracts will be given back to colleges and schools, thus creating an incentive to grow research and F&A that is collected as it will assist with their meeting their costs. NOTE: F&A are funds provided by granting agencies to cover indirect costs of grants, including utilities, use of space, etc.
How does the model impact old specialized funding allocations – like FIEF, MUSOP, Online revenues, supplemental fees, revenue share agreements for 2 plus 2 programs?
In cases where individual divisions of the university made allocations through programs with specific intended outcomes, it will be up to the leadership of that division to continue to manage the program allocations within their budget. For example the current online revenue model allocates sixty percent of revenue to the departments teaching the courses/programs this revenue will now be part of all tuition revenue and allocated through the model rather than separately.
How will interdisciplinary research and teaching be funded in the model?
First, the model is intended to incentivize both revenue growth and cost containment, so there are many scenarios exist where collaboration allows all parties to balance revenues and costs. For example, while an interdisciplinary course that is open to many disciplines will generate revenue for the unit offering that course through SCH delivery (a benefit), that unit will also bear the cost of offering that course (including faculty salary, space, overhead, etc.). Meanwhile, while another unit that collaborates on an interdisciplinary course by encouraging their students to enroll in a course taught by another unit will “lose” SCH revenue in this case (a cost), they will also not face the instructional costs of that instructional delivery, thus benefitting. Thus, the collaboration of interdisciplinary work can benefit all parties in different ways in the model. Second, University Central Mission Support Funds may be strategically utilized by the Chancellor and Provost to incentivize and reward interdisciplinary efforts at times. Lastly, we believe that although the way that resources flow is an important aspect in incentivizing actions, we also know that the mission is also a strong motivator. In cases where interdisciplinary work has the greatest promise for improved outcomes, people will still employee that approach.
Does the model encourage entrepreneurship?
Yes, it gives decision makers transparency into how their efforts would fit within the operating environment, thereby giving them a better understanding of how their entrepreneurial efforts might be successful.
Why specifically address STEM - What is the rationale for state allocations specifically for STEM (Science, Technology, Engineering and Math) teaching?
For a number of years, federal and state governments have expressed concerns over our ability to keep pace with the employment needs for graduates in these areas. Missouri state leadership has specifically explored ways to encourage this avenue of study and supported higher education institutions that are making these programs accessible to students. Additionally these programs in many cases inherently have higher cost structures, therefore using state funding to support the areas assists with keeping fee increases manageable.
To what campus level (College? Department?) does the model allocate resources and costs?
The model allocates resources and costs to the school/college/division. The school/college/division will then develop their own allocation models for use within their units. We recommend that these models be transparent and include explanations for any deviations from the campus resource allocation model. This transparency will allow faculty and decision-makers within departments to successfully carry out the mission of the university as part of the new allocation model.
How will course “poaching” be prevented?
Course poaching is a situation where one unit begins to offer a course that is already offered on campus and is outside the primary focus of the unit’s expertise in order to capture the SCH revenue generated through that course. This behavior will be addressed in three ways. First, we recommend that the Chancellor identify a committee that can be responsible for considering these issues as part of new proposals for undergraduate courses on campus (see page XX). Second, because the model allocates both revenue and cost, while working in the model units will fully consider both of these when deciding to offer new courses, and thus in many cases these calculations will make poaching less appealing. Finally, we believe the commitment to the campus mission across campus will prevent units from making decisions solely based on the economics of the model.
Space & Facilities Questions
Will academic units be asked to pay for instructional space; i.e. classrooms in buildings other than their own college? Will allowances be made for colleges that do not have adequate instructional space, lecture halls, in their college?
The cost of all general and education space ultimately gets charged back to academic/revenue producing units. If instructional space is classified as being “owned/scheduled” centrally by the campus the cost is spread across all academic units, if it is classified as being “owned/scheduled” by the college or school it will be charged only to them. There isn’t a specific allowance for unit without adequate space, but to the extent that they would use additional space under different circumstances they are avoiding the cost of that additional square footage in the model.
How do cost centers, those of us situated under the Provost, handle facilities? I know we don’t pay into it, how are facilities provided for us and do we have a voice in our facility settings?
The cost of all general and education space ultimately gets charged back to academic/revenue producing units. We will provide the data to everyone regarding the cost of the space that cost centers are occupying. Input about facilities can be shared with the committee that will be established to consider the facilities aspects of the way the model functions.
Deferred Maintenance makes the actual cost of older spaces more expensive. Is there a plan to “catch-up” on the maintenance without passing that cost onto the units?
There is not one plan for “catching up” at this time. This is a matter that the Facilities Committee will be well informed about and they will have the opportunity to suggest solutions. The Maintenance Department has and will strive to be good stewards and to expend available funds to the greatest benefit of the campus. Because we have not had the financial wherewithal to keep up with the real cost of maintaining our buildings, we have deferred maintenance costs. In the future, these expenses will need to be addressed by the university and may include a number of solutions such as reducing our campus footprint, charging variable rates depending on actual space costs, seeking assistance from the state or others to make improvements or other solutions.
Why are facilities costs charged to units in the model?
All operational costs are charged to units in the model, including space. Previously, space costs were “free” to units, resulting in little incentive to manage the facilities that are a significant costs on campus. Currently, we have too little overall resources to continue to support the number of buildings that we currently occupy – through making it clear that these spaces drive real costs, we believe that individuals will be more responsive to changing the footprint they currently occupy.
How are facilities costs determined?
The full cost of supporting our general operation funded facilities will be determined based on occupancy of the space. We have too little overall resources to continue to support the number of buildings that we currently occupy. We believe this approach will make it clear that these spaces drive real costs, and individuals will be more responsive to changing the footprint they currently occupy.
Do units who are in less desirable space or more efficient space get a discount?
At the initial roll out of the model all space will be treated the same and charged the Campus education and general (E&G) average cost for services provided (this recovers all Operations costs except MU PD, central mail and other smaller Campus administrative costs which are recovered through the administrative cost allocation. The facilities recovery area will also recover the annual costs for prior E&G debt service. Facilities costs for the support area cost centers are also recovered through the facilities allocation process.) It is a significant step to start charging back the cost of occupancy. Moving forward, the facilities committee will consider at what points in the future we may refine the methodology for the charging of space. Historically, units have had very little authority or incentive in driving the quality of the space they occupy, so it was determined that starting the new model at an average cost for space was more equitable.
How will space be improved by the model?
Through greater understanding of the cost of occupying space, we anticipate that there will be more interest in collaborating in space rather than maintaining separate spaces that are not fully utilized. It also brings people to the table to talk about strategies for improving the space we have, eliminating space we don’t need, and finding the most economical ways to bring on new space.
Does it help my unit to identify unneeded space as soon as possible?
Yes, it can reduce your FY21 (and all future years) space costs significantly to release unneeded space back to campus. During the start-up of the model, units can release almost any space back to campus. At some point in the future, the need and usability of the space by others will be a consideration for campus to receive unused space.
Cost Center Questions
How are student services costs determined?
The total cost of centrally provided support functions for students are allocated out to units based on the student credit hour production with sensitivity to some costs being more clearly for undergraduate support and other costs more clearly for graduate student support. Costs include the following offices: Dean of Students, Undergraduate Studies and eLearning, Graduate Studies, Libraries, Counseling and Wellness, Disability Center, Enrollment Management, (e.g. Admissions, Financial Aid, Student Information Systems, Registrar, Veteran Services), Cashiers and Student Loan Repayment.
How are administrative costs determined?
The total cost of centrally provided administrative support functions are allocated out to units based on the proportion of the total expenses the university incurs they represent. Costs include the following units: the Chancellor’s office, Provost’s office, Operations Division, Division of Finance, Office of Research and Economic Development, Advancement Division, Human Resource Services, Division of Inclusion, Diversity and Equity, and Marketing and Communications.
Student Funding Questions
What tuition and fee revenues are in the model/are all tuition and fees in the model?
Undergraduate, graduate, professional and online tuition and supplemental fees are allocated through the model. In the current environment there are other specific fees managed through recommendations of student oversight committees or are charged based on a factor other than credit hours. These fees currently include: IT (Information technology), Student Activities fees, Student Health Fee, Business Excellence and Accountancy semester based fees, Med School Resource Fee, Law Testing Fee, Applied Music Fee, Self-Paced Administrative Fee, Ag Econ Investment Fee. These other specific fees are not allocated by the model, but are allocated directly based on the fee design and restrictions.
How is graduate education funded in the model?
Graduate education can be funded through tuition or external funding as is the case now. 100% of graduate tuition is returned to the unit. Graduate tuition can also be waived by units. When graduate education waivers are provided by units, those waivers are charged back to the unit. Graduate stipends are charged to the unit, as is the case now. If graduate tuition is waived and if stipends are provided (and if these costs are not charged to some other source such as external funding) these costs can be covered by other unit revenue, such as the revenue generated through undergraduate SCH delivery by the unit. Overall, the model aligns graduate tuition with the school or college teaching the graduate courses and assigns cost of granting tuition waivers to the same entity that provides the stipend. This is intended to align the decision making around graduate education.