By Shannon Vicic
At last week's meeting of the Urbana-Champaign Senate, faculty members voiced their anxiety about a proposal which, if implemented, would fundamentally alter the way administrators formulate the campus's yearly budget.
The Senate met as a committee of the whole to discuss a proposal to reform the campus budgeting system, "Framework for Budget Reform," which was issued by the Budget Strategies Committee (BSC) eight months ago.
Former BSC chair John Braden, who helped develop the proposal, kicked off the Senate's discussion by presenting some of the major provisions of the proposed reform. Braden was filling in for current BSC chair David Swanson, who could not attend the meeting.
According to Braden, "budget reform is first a new strategy for allocating resources to units."
The proposed budgeting system would link funding for colleges and academic units to how well they perform their duties -- teaching, research and public service.
Unit performance would be measured using quantitative criteria, such as the generation of instructional units (IUs), the enrollment of majors, and the development of external fund-raising activities, as well as qualitative criteria such as scholarly rankings and peer university comparisons.
Under the current system of incremental budgeting, a unit's budgetary allocation is largely determined by the share of funding it has received in the previous year. Allocations are made with little regard for changes in research productivity, instructional activities, quality or service outside the institution.
Under the proposed budgeting system, "history would no longer be the overwhelming force determining unit budgets," Braden said.
The proposed system would give the campus more flexibility to meet new financial challenges and pursue changing campus priorities, he added.
The system also would "heighten the culture of planning and assessment" on campus, Braden said. Provost Larry Faulkner would hold annual meetings with deans of colleges and directors of units to review goals and accomplishments and set budget guidelines for the future. Decisions about funding would be based on annual assessments of each unit's progress toward achieving its stated goals.
In addition, colleges and units would be given incentives to develop revenue-generating programs, such as training workshops or non-credit instructional courses.
Such programs would allow the campus to increase its revenue base without relying on additional funds from tuition, state general revenue funds or overhead funds from federally funded research -- areas where revenue growth is limited.
The budget reform proposal has its roots in the principles of responsibility-centered management (RCM), a budgeting approach that has been used for several years at leading private institutions, but has only recently caught on at public universities such as Indiana University and the University of Michigan.
RCM is designed to decentralize decision-making, foster entrepreneurship among colleges and units, and give colleges and units more control over their revenues and spending.
But entomology professor May Berenbaum pointed out that the proposed budgeting system could hinder some university goals, such as centralizing general education requirements and downsizing graduate programs.
The use of instructional units, or IUs, as a basis for resource allocation would provide departments with incentives to generate their own general education courses rather than relying on other colleges to provide such courses for them, she said. It would also create a disincentive for colleges to downsize their graduate programs.
In addition, the system's reward for the quantity of enrollees in a college would provide some colleges with an incentive for "dumbing down" their admissions requirements in order to admit more students, Berenbaum said.
Richard Wheeler, head of the English department, evaluated the proposed budgeting system by looking at its potential impact on his department.
"The results are anxiety producing," Wheeler said. "English has too many students to teach, too few faculty to teach them, almost no flexible funding, and belongs to a discipline in which external research funding hardly exists. Under RCM budgeting principles how could we generate revenues to further our quest for excellence in teaching and research?"
Although the principles of the proposed system would be applied to colleges rather than individual departments, Wheeler pointed out that deans held accountable for RCM formulas would be likely to hold individual departments accountable to similar formulas.
Wheeler raised several other questions about the proposal, including:
-- Will the core values of the university be corroded by market pressures created by the budgeting system?
-- Will the recently established centralized general education requirements fragment under RCM?
-- Will the new system be able to sustain and encourage interdisciplinary work?
-- Will units that can establish profitable external programs benefit at the expense of units that are largely taken up with the university's primary educational mission, the education of undergraduates?
Wheeler pointed out that many of these questions, as well as others raised by the campus community, already have been taken up by those revising the proposal, which is an encouraging sign.
If the budget reform proposal is implemented, a Campus Budget Oversight Committee (CBOC) would be formed to replace the Budget Strategies Committee. The CBOC would advise the provost on the distribution of the planned allocation. This committee would be made up of faculty members and would have a membership proportional to the size of academic units represented.
The second characteristic of the committee is particularly important, Wheeler said. In order for colleges to have confidence in the new budgeting system, the BSC must stand firm on the issue of proportional representation for the CBOC.
Other senators echoed that sentiment and added that faculty members should be elected to serve on this committee rather than appointed to it by the provost.
Wesley Seitz, a professor of agricultural economics, expressed his concern that the campus community would not have enough time to adequately evaluate the complex issues raised by the revised proposal before its implementation.
"Before we start to use a new system, we need to have significant discussions" about the second draft of the proposal, he said.
Faulkner responded that the committee hopes to distribute the revised proposal to the campus community by Jan. 1. The campus will have three months to comment on that proposal before the reform is implemented on a trial basis for the '97-98 fiscal year. If all goes smoothly, the budget reform will be fully implemented by the '98-99 fiscal year.
Time is of the essence in implementing budget reform, Braden said. The five-year DeVor reallocation plan, a temporary measure to shift $15 million in recurring funds to areas identified as campus priorities, will expire at the end of the 1997-98 fiscal year.
If the DeVor plan expires without a successor plan in place, the campus will be left with no central funding capacity, and therefore no central mechanism for addressing new financial challenges or changing priorities, Braden said.