These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
238A Morrill Hall
Present:
Charles Campbell (chair), Rose Blixt, David Chapman, Daniel
Feeney, Steve Fitzgerald, Thomas Klein, Joseph Konstan, Cleon Melsa, Diane Parker,
Charles Speaks, Kate VandenBosch, Susan Van Voorhis, Warren Warwick, Susan
Carlson Weinberg
Absent:
none counted for a summer meeting
Guests:
none
[In these minutes: (1) athletic finances and planning; (2) new
University budget model]
1. Athletic Finances and Planning
Professor
Campbell convened the meeting at
Professor
Speaks recalled that the Committee had asked him to serve as its representative
on the Advisory Committee on Athletics subcommittee on finance and
planning. He is making a report today on
the work of the subcommittee.
The
subcommittee met with Associate Director Liz Eull (the CFO) twice this spring
and focused on the change in athletic department finances between the current
year and next year.
-- Revenues for next year are expected to
be up about $12,000 (on a $47 million budget) but expenses are expected to be
up by about $904,000, producing a budget "challenge" of about
$892,000.
-- Institutional allocation to athletics
was $7.7 million 2003-04 (down from previous years) and it will drop another
$500,000 next year. The target for
recurring institutional support is $5.7 million in 2007-08, predicated on the
original legislative funds that were provided to support women's athletics in
earlier years; this was the agreement negotiated between the athletic director
and the President. At the same time,
athletics provides at least $7.5 million or more to the colleges in the form of
tuition and fees paid for athletes.
-- For next year, the department has
developed a balanced budget. The
department has dealt with the projected deficit through a combination of
increased revenues (projected) and decreased expenditures.
-- The larger challenge is for 2005-06;
expenditures could exceed revenues by as much as $1.5 - 2.0 million. The issues:
there are few marginal options remaining for dealing with deficits;
football revenues are probably close to maximum unless the team goes to a major
bowl game (which would increase attendance and donor interest); men's hockey
and women's basketball are likely generating the maximum amount of revenue that
can be expected; men's basketball is a source of concern (projected revenue
next year is expected to be down about $700,000 from this year); and there are
currently 322.4 full scholarships awarded to athletes ($15,490 for
resident/reciprocity students, $27,120 for non-residents). The athletic department, the Advisory
Committee on Athletics, and the subcommittee will have to engage difficult discussions
about how to deal with the projected shortfall in 2005-06. Will
the department cut teams? Reduce
scholarships? Will there be pressure to rescind the reduction in institutional
support? (In the case of the latter, the
subcommittee was assured there would be no pressure from the athletic
department to do so.)
-- The dilemma for the department is that
as long as it abides by the Regents' policy that calls for competing at the
highest level, keeping the number of teams that it has, and emphasizing the
importance of academics, it cannot make significant budget cuts. But the department does not believe it is any
longer possible to remain competitive in all 20+ sports and continue to shrink
the budget. They are contemplating more
bus travel in the future (less flying) and are hoping the football team will
increase revenues. In all likelihood,
the subcommittee, the department, and the Advisory Committee will return to
discussions that were held when President Yudof was here. Professor Speaks said he was sure those
discussions would recur; he said he could not predict the outcome. But Ms. Eull told the subcommittee that Mr.
Maturi, the athletic director, would not ask the President to stop the
reduction in the institutional subsidy (or increase the subsidy) for the coming
year.
Professor
Campbell said he thought that non-resident tuition rates had been waived for
the athletic department. Professor
Speaks said he did not believe they had.
[They have not.]
Professor Konstan said that one hears
about the money flowing back to the colleges in tuition and fees, but if the
322 athletic scholarships were not being paid, could the colleges attract other
students and obtain new non-University funds?
Could they replace the athletes?
Professor Speaks said it was a good question; in CLA, he said, the
number of qualified applicants far exceeds the number of students who can be
admitted and that if there were capacity in the college for another 322,
presumably the student numbers could be increased accordingly. He said he would guess that was true for the
other freshman-admitting colleges as well.
If athletics disappeared, is there a fear that colleges would lose
tuition revenue? He said he did not
believe they would.
Professor Chapman asked if the athletic
department strategic plan extended beyond next year. From everything they have heard, next year
could be very tough for the University in general; there could be another
budget cut. Is there any indication that
this is not a trend line? Professor Speaks
said he did not know. The athletic
department did hire a (very low-cost) consultant to assist in developing the
strategic plan, of which he did not know the details. He said, however, that it is difficult for
him to comprehend talk about serious budget problems in the department at the
same time they have a six-page document of capital improvements they want to
make. It may be that the capital
projects will be funded through private donations, he added.
If these shortfalls will be a recurring
theme, the Committee should take a hard stand with the administration to FIX
IT, Professor Chapman said. If it is
only a one-time event, however, then the department and administration should
work out a solution. Professor Speaks
said he did not believe it is a one-time phenomenon and said the subcommittee
will want to discuss more draconian approaches.
The situation is back to where it was when President Yudof and Vice
President Tonya Brown were here. There
were only three revenue sports; now women's basketball has emerged. But ticket prices are as high as they can be,
and the only room for growth in attendance is in football. There are essentially no revenue streams left
except for fund-raising.
The model is the revenue sport, where
people pay cash for tickets, Professor Konstan said. Is it possible to get people to come to other
sports (give the tickets for free) and make money on concessions or other
sources? Is the University program
different from other urban universities with similar sports? It would be helpful to see if the University
is overspending by comparison, or is short on contributions, etc. Professor Speaks recalled the substantial
report that Vice President Tonya Brown had provided to the Committee; the data
demonstrated that the
Professor Speaks said he was certain
the subcommittee would have conversations about more draconian decisions, but
he was not sure there would be a satisfactory outcome. If the budget is short, how is it covered,
Professor Speaks asked? Probably a loan
from central administration, Professor Speaks said. And while the 04-05 budget
is "balanced," no one knows what ticket-buyers will do. The revenue projections are very conservative
and there is no margin for error in the projections.
Are there lines of revenue not being
exploited, Professor Konstan asked? Apparel? Shoe
contracts? Professor Speaks said he was
certain that Mr. Maturi and Ms. Eull are exploring every available option.
From what he has seen, Professor
Konstan asked Professor Speaks, if everything were OK with the budget tomorrow,
and 2006-07 is an anomaly, would there be clear sailing after that? Or are the plans just a patch? Professor Speaks said he believed they were
the latter. He said he has not seen or
read anything that convinces him an on-campus stadium will turn the situation
around. Mr. Klein said that athletic
projections call for a continued reduction in the institutional subsidy; have
they identified any vulnerabilities in their projected
revenues? The situation does seem an
improvement from the past, where the subcommittee will now see the budget
spreadsheets and the risks; is it getting information early? Professor Speaks said he believes Mr. Maturi
and Ms. Eull are very forthcoming, listen to the discussions, and want help
identifying solutions.
With respect to the stadium, Professor
Campbell said, the attendance figures used to calculate revenue projections
were high, in order to pay for the stadium, so increased football attendance
might not make a lot of difference.
Professor Speaks agreed, noted that there are different ways of counting
attendance, and said that what one needs to know is the expected increase in
revenue, not attendance. Ms. VanVoorhis
recalled that some of the increased revenue was to come from boxes; and from
club seats that carried a very high price, Professor Konstan added. Professor Campbell observed that the contract
with Coca-Cola provided some income to athletics; Professor Speaks said he did
not have those numbers.
What is the role of this Committee on
the issue, Professor Chapman inquired.
In the past, it has not supported overruns in the budget. It is possible the President might support
overruns; what is the realistic role for the Committee? Professor Speaks said he believed the
Committee had an influence in getting information about the institutional
subsidy for athletics to the University community and in examining the
opportunity costs of that subsidy. The
Committee worked with President Yudof and Vice President Tonya Brown on taking
serious steps to remedy the problem. He
said also believed the Committee played a role in getting the President and the
athletic director to negotiate a new schedule to reduce the subsidy. What should be the Committee's interest in
the future? It should continue to
monitor the situation.
Professor
Warwick said he was puzzled by the fact that people were arguing about the
facts, not the assumptions. There is an
underlying assumption that intercollegiate athletics is a critical part of an
educational institution--that one cannot have an educational institution
without athletics. THAT question needs
to be answered first; if the answer is yes, it is critical, then
one looks at how to operate the athletic program. If the answer is no, then one asks if the
institution should have an athletic program.
That question has not been argued.
Professor Speaks agreed that this is an important point. The mere fact that a unit has expenditures
greater than revenues is not the only question.
Many academic units in the University do not generate revenues but carry
costs. It is reasonable to ask Professor
Warwick's question. If one decides
athletics is essential and a high priority, and that it must have high quality,
competitive teams, one reaches a different answer to the question of a
subsidy. The Board of Regents has
settled that question, he concluded.
Professor Campbell noted that the question had also been raised during
the first round of stadium discussions and the President had made it clear that
it was not on the table.
Professor Konstan made two points. First, the Committee does not understand the
externalities--would donors not give money to the University if the football
team is not on television? [A recent
study by the Brookings Institution, commissioned by the NCAA, concluded that
there was no relationship between winning and donations to the institution.] Second, in terms of the projected budget problem,
it almost equals the tuition increase on the scholarships that the athletic
department must pay. There would be less
of a problem if tuition did not increase as much. Professor Speaks said that the athletic
department was taking tuition increases into account in its projections.
Universities have eliminated
intercollegiate athletics and survived, Professor Chapman pointed out. This Committee is not in a position to
micro-manage the athletic budget. If the
question about athletics at the University is not on the table, and if the
University should keep athletics, this Committee "should dump the
issue." There is a billboard
effect, Mr. Klein cautioned; there is a place where things need to be in view, and
this Committee helps to serve that function.
If the University cannot get the athletic budget under control, and is
crying "poor" to the state about faculty and programs, but is
hemorrhaging money to athletics, THAT is the discussion the Committee should
have, Professor Chapman responded.
Professor Konstan said he
disagreed. The issue of whether there
will be athletics at the University should not be re-opened every time
something happens. The Committee was
happy with the agreement to reduce the institutional subsidy to the Title IX
level. It is not healthy to go back to
the beginning every time. The Committee
can discuss the impact of athletics, and reduction of the subsidy, but it
should not say the University should not have athletics each time the subject
comes up. Professor Chapman countered
that there was an agreement, worked out a few years ago, and the University
should work with it. Why is athletics
revisiting that agreement now? Professor
Konstan pointed out that the athletic department is not asking for more
money. It is saying it will have to make
cuts if it does not receive additional external funds. Professor Speaks affirmed that the department
is not asking for forgiveness or slowing down the decrease in the subsidy.
Then what is the problem, Professor
Chapman asked? If the Committee is
happy, and athletics is not asking for a change, if we ignore it will the
problem go away? Professor Speaks said
that he had two roles. He was appointed
by this Committee to serve on the subcommittee to provide oversight from this
Committee. He cannot solve the problems
but will help if he can. His primary
role, however, is to keep an eye on the subsidy.
Based on what he heard three years ago,
Professor Feeney said, if football was a big revenue sport there would not be a
problem. Basketball and hockey are
meeting expectations. The problem is
that football does not generate the revenues that are needed. Professor Speaks agreed and recalled from
Vice President Brown's earlier report that if football were to sell out every
game, the increase in revenue (about $3 million) would not solve the
problem. The University has 25 sports
(among the most in the Big Ten) and is among the lowest in fund-raising.
Professor Campbell thanked Professor
Speaks for his report and for agreeing to continue to serve on the
subcommittee.
2. New University Budget Model
Professor
Campbell turned next to the budget model.
He noted that the Academic Health Center Finance and Planning Committee
(AHCFPC) had developed a set of budget principles that this Committee and then
the Faculty Consultative Committee had amended and approved. The AHCFPC has taken the next step and
proposed a budget model to implement the principles. It is up to this Committee, he said, to
examine them carefully and decide what to recommend. The AHCFPC committee expects that review; so does the Faculty Consultative Committee and the
administration.
According to the AHCFPC cover memo, "this model is
based on the 'pay for what you use' and the 'proportional use' principles. Basically, costs are assessed to consumers
(colleges) of central services based on appropriate metrics including direct
user fees for services rendered and proportional participation in the costs of
central services and common goods based on their use profile (i.e., student
service costs should be assessed based on the number of students; human
resources costs should be assessed based on the number of faculty and staff;
library costs should be based on the number of faculty and students). Note that the model shows full attribution of
all revenues generated by academic units [tuition, grants and ICR, other local
revenues]. This is necessary to fully
address what is embodied in the "Principles." The goal is to promote efficient use of
services and space, careful management of revenue streams, and a fair
distribution of central costs based on appropriate metrics." State funds and other income would be
directed to central administration for central services/office (e.g., human resources,
finance, student services, central administrative offices), common goods (e.g.,
libraries), facilities, central reserves, and for support of academic programs
in the colleges. Fringe benefit costs
would be charged to colleges on the basis of actual costs, not a percentage of
salaries.
Professor Konstan made a number of comments. He said he had a very strong reaction to the
model but wanted to be constructive. He
said he was grateful to the AHCFPC for outlining the model but said he believed
it was wrong and has a few key fatal flaws.
-- It does not adequately recognize that different types of
"the same thing" cost different amounts. Most AHC research has a higher compliance
cost than most IT or CLA research (human and animal subjects, select
substances, audits, etc.). The same is
true for health and safety concerns.
-- Teaching-related costs also differ
dramatically for lots of reasons (size of classroom, technology, load on
central advising, etc.) that don't average out across colleges
-- Library acquisition costs are much lower
in certain fields than in others (e.g., literature versus nuclear
medicine)--both overall and per capita.
More students does not equal a larger
collection.
-- Information technology usage is probably
not very closely proportional to number of people, while it is quite
discipline-related.
There
are many other examples, he said.
There
are also substantial externalities that this budget model simply does not
recognize, Professor Konstan maintained:
-- Negative
externalities: the Najarian incident has cost immense amounts of money
both centrally and in other research-heavy colleges because of required
"overkill" steps to get back into good status with the federal
government.
-- Positive
externalities: these range from the availability
of student employees for certain laboratories (subsidy of research colleges by
undergraduate colleges) to the more complex interactions of
These are accounting-based, not mission-based,
standards. :
-- Not
everything that makes money is good.
-- If
research had to pay its true overhead cost (not just sponsored research, but
all research) then little research would get done.
-- Fringe
benefit pooling is designed to achieve important social goals (which may be
debated), but think of the other extreme where "Regents Scholarship"
and even actual health care costs are attributed to the unit--what level of
discrimination occurs there. If a unit
hires someone with a chronic disease, it would have to pay?
-- More
core investments should be centralized. Investment in people (training,
benefits) and in facilities (construction standards) should not be controlled
at the unit level.
This
model also lacks the flexibility to respond to change, Professor Konstan
said. Consider the AHC financial crisis
of a decade and more ago.
At
the same time, the model points out some serious problems with the current
system:
-- The
100% crediting of tuition to units was (and is) a big mistake.
-- The
University does not have a good mechanism to support
"entrepreneurial" activities that have low incremental overhead but
generate only small margins. This is particularly important when
the activity has a large goodwill or mission-related payoff.
-- The University does not do a good job
using market forces to encourage
more
efficient resource utilization. Instead, it tends to follow a
"regulatory" model that creates mandates (percentage of classrooms
used inside/outside peak hours, standards for Facilities Management services,
etc.).
The
University does need to do something to address these issues. Professor
Konstan said he would suggest a direction along these lines:
-- Back
down to no more than 65% tuition to the colleges (this is closer to reality)
with a reverse swap of central dollars to start at status quo. But if a unit does more teaching, it would
generate more money for the University and not just the unit.
-- Perhaps
try to have a common rate across all revenue categories, a common percentage
split between "retained" and "given to Central" funds, although
research makes this hard.
--
In the long run, perhaps the
percentage of tuition staying in the college should be 50%.
-- Perhaps
there should be a rate break on internal taxes for entrepreneurial activities.
-- Allow
colleges to swap scarce resources--let them trade class hours during heavy-use
periods, for example.
-- Encourage
service units to have tiered services; the University could provide a basic
level and units could receive a rebate if they used a lower tier, or pay extra
for a higher tier. For example,
Facilities Management could provide higher or lower tiered janitorial services
at the granularity of a building.
-- The
University needs to get to serious central planning in certain areas--tenure
lines and buildings are two examples--which it has not done well. In those areas, commitments can outlast the
revenues by 30-40 years or more.
Professor Speaks recalled that about two years ago, the
Committee approved a statement, also approved by the Faculty Consultative Committee, that he read to the Board of Regents when he
served as chair of this Committee. Two
of the bullets in that report were as follows:
" -- We must adopt institutional
priorities, priorities that clearly articulate what we want this great
University to be; [and]
-- It is insufficient to say that our
academic investments and institutional priorities must be in alignment; institutional priorities must drive our investment
decisions, and we must assiduously avoid the reverse process in which our
priorities are established by the investment decisions that are made[.]"
One reaction he has to this
or any other budget model is to ask what are the values and priorities of the
University? Once those are identified,
then a budget model can be adopted. This
model, however, is a spreadsheet approach and does not start with the questions
of where the institution wants to put its money and where it wants to
improve. It is difficult to comment on
any budget model, he said, until those questions are answered.
Professor Speaks said he was also prompted by this budget
model to re-read the report of the Budget Advisory Task Force report, now four
and one-half years old. The Task Force
had broad representation, worked for the common good of the University, and did
a good job. It called for a report from
the President within six months about what had been implemented. There has never been such a report. The Task Force talked about the same things
as the AHCFPC. The current president
served on the Task Force, when he was provost, and he said he would still like
to see a report. The Task Force report
was a blueprint on how to proceed. One
of its recommendations was implemented: a Provost's Budget Advisory Committee was
established--but in working for two years, it didn't do anything. There needs to be a budget advisory committee
that is active, that re-reads the Task Force report, and decides what could be implemented (e.g.,
should there be a single tax). The Task
Force report did not address tuition attribution, which could be part of a tax
system. The goal is to obtain a system
that is predictable.
Professor Speaks said he was calling for several things.
-- A budget approach that follows an articulated set of goals
of where the University wants to make investments; the budget model will flow
from doing that.
-- An active budget advisory committee.
-- A report from the President. The Task Force report was excellent but relatively
little was implemented.
Mr.
Klein said his concern about a budget oversight committee is that it would lead
to more discussion without the authority to get facts and make tough choices
the institution would support. There is
a recent book, The Price of Government, that started
with a question about what the citizens (of the state of
Professor Feeney, a member of the AHCFPC that produced
the proposed budget model, said the goal was to get items on the table, not to
sell anything. They wanted to identify
ways to pay for things; one can have all the principles one wants but the units
and the central administration must fund themselves. The point here is to learn if there is
agreement on where the money should go and where decisions should be made. Should the central administration make the
decisions and hand out the money, providing no transparency and no
incentives? Incentives for Managed
Growth did add incentives. One can say
one does not like parts of this proposed budget model, but what is wanted? He said he did not care if the Committee
ripped this proposal apart, but he said he wanted something to come out of it
that can be taken to the administration.
Professor Konstan supports a model where more money flows to the central
administration to make decisions about.
A model could send more money to the units. This is a big decision point and the
Committee should decide what it wants.
Professor
Feeney said they realized that research could not pay for itself. They did not run any numbers on this model to
see if it was good or bad for the
Controlling
expenses needs its own mechanism, Mr. Klein commented. This Committee cannot identify the right
amount of money for information technology, parking, and so on. But it is possible to use benchmarks to help
make the decisions.
Mr.
Fitzgerald said that the AHCFPC gets tremendous kudos for its work. He also looked at the Budget Advisory Task
Force report as well as the report from Professor French about the first year
of IMG. There is a body of works that
address how to fund common goods but the University continues to circle around
the question. The budget principles
brought to the Committee by the AHCFPC were good, but he said that the new
budget model it has proposed does not accord with the principle calling for
identification of institutional values.
Where are those values and priorities identified? The University Plan and Performance reports
starts with goals--makes qualitative statements and sets goals and priorities.
Professor
Konstan said that the model was not that far apart from the view that goals are
needed; it gets a number of things right.
On space utilization, for instance, it calls for a unit to pay more for
additional space or receive less money.
But that strategy does not make sense in other categories. The University does not want to create
incentives to decrease the number of students (e.g., charging the costs of the
library in part based on the number of students is a mistake) or the amount of
sponsored funds or the number of employees.
The University should not throw all the funds into the units and then
charge them for use. Rather, non-revenue-producing
units should be directly funded at an appropriate level (e.g., the libraries,
classrooms, human resources, other common goods) and then there should be
oversight. He said he would tie budgets
to faculty lines in the sense that if the University is going to fund a faculty
line, it should also have the space and other things needed but the unit should
not have to worry about being taxed for the position. A dean should not worry about ill effects of
an increased number of students such as a concomitant larger bill for the
libraries.
In
order to manage demand, Professor Konstan said, the University can make units
pay for some things that are purchased in a distributed way (e.g., copying),
and perhaps space and a few other large resources where it makes sense. More important, however, is to separate the
core functions of the University from that list; the costs of those activities
should not be itemized for the units.
Where other things can be itemized to encourage efficiency, they should
be.
Professor
VandenBosch noted that the
Mr. Fitzgerald commented that a
prerequisite to discussion of trading space is the question of how well it is
used; there is no measure to define utilization. They do a great deal of measuring with
respect to the use of classrooms, but there are disincentives to managing
space. That can be a huge trap, Mr.
Klein responded, because it will not be possible to define utilization in a way
that all agree is fair. If one uses the
market, however, to let units reach an agreement, one need not worry about
predefining utilization. If the
allocation of space has inefficiencies built into it, Mr. Fitzgerald responded,
then the market will only move inefficiencies
around. There are methods that can be
used to measure utilization. Ms.
Weinberg noted that the University developed a facilities model that is used
across higher education and is moving in the right direction in re-creating the
office of space management. The
University has decided it needs to more investment into how it uses space. She also agreed with Mr. Fitzgerald that
there is a need for standardization, such as comparing offices in Folwell with
offices in IT. Until there is the same
square footage allocation for the same uses, it will be impossible to correct
the system.
This
confuses equity with efficiency, Professor Konstan maintained. It is possible to get to efficiency without
dealing with equity. He said he did not
believe there is a definition of the good use of space. Equity can be dealt with by management;
efficiency is a market process. He said
he feared the University could not implement this model because, with three
levels of administration, units may not be confident they would receive money
in return for putting space on the market.
One could check ebay to find out where an office is available, Mr. Klein
joked.
Geography
is a real constraint, Professor Campbell said.
Space will be traded at the boundaries.
To revise space use requires renovation or building, but people still
expect that their space will be near their department, not a quarter-mile away.
Mr.
Klein reported that he had asked a colleague at another institution about this
issue; he thought space was the most contentious issue in budget models. Until space use is quantified, it will be
tough to incorporate it in a budget model.
Professor
Feeney said that they purposefully remained vague about space in the budget
model. They wanted to keep the model at
a high level, to affect where dollars flow and how expenses are charged. They talked about tiered space expense but
decided that was an administrative matter.
They also did not want those who are in new space to be paralyzed by
charges; they also recognized that Physics is in a 1920s building. Should a department in new space, that got
what it wanted, pay more? His concern,
he said, is inertia--the University will not act on the recommendations, will
do nothing, and will continue to make fixes on the margin. He said he believed the administration is
receptive to change; the Committee should not miss the opportunity.
Mr.
Klein asked if it might be more effective for the Committee to talk about one
or two key pieces of the model, such as the IRS. If it could address these few issues would that
resolve the fundamental questions? It
might be possible to get further by focusing on one part of the model and not
take on the whole model. Professor
Feeney said his paradigm is that groups generate revenue differently and
institutional taxes are regressive.
There is a need to identify metrics and the Committee can argue over
what makes sense. If there is to be a
tax, central services and core values must be taken care of. He recalled that Vice President Pfutzenreuter
said he liked the idea of sending all revenues out to units and then taxing
back what is needed. The question then
is what criteria are used to set taxes.
People
hate taxes they see, Professor Konstan commented. It is best if the model has no taxes after
the funds are received by the colleges.
There should be decisions on tuition, ICR, and so on, negotiations up
front, the amounts carved off, and the University will then be happier and more
productive. Services will be there to
use and units need not pay for them--all get the same core, such as the
libraries and classrooms. In some areas
incentives can be used so that units can elect to receive more or less of the
service or good. With the proposed
model, the deans can all run the numbers and see what works best for them and
then argue over the formula to "get a good deal" for their college.
The
University is moving to seeing more things as common goods, Ms. Blixt said
(e.g., Internet connections, payouts for accumulated vacation). There are things that need to stay common
goods, but the budget system would be easier if units knew what was coming off
the top. She said she would like to see
a simpler system.
If
there is a major change in the system, it must be budget neutral to begin with,
Professor Campbell said, in order to avoid gaming the system. The University is dealing with a 15% budget
cut and it must deal with the perceptions that it has changed focus (changed
programmatic priorities). There was a
$100-million budget challenge even without the cuts, and some of that will
continue. The University is retrenching
and reallocating so there is a mechanism for support for new priorities and
programs. THAT is a central function and
it is not clear where it would operate in this model. In order to work, this model allocates
central funds and what units must buy at time X, and the University will have a
distribution at that time that reflects values and current priorities. As priorities change, there must be a
mechanism to get money across boundaries.
The
University needs inflation, Professor Konstan said. That was the solution; the University did not
need to impose cuts because giving a unit no increase or increases less than
inflation was making a decision. That
could be built into the University:
units could be required to take 2% cuts every biennium and then allowed
to propose 4% increases. He said he did
not believe there would ever be a fair solution to the budget model; those
units that start rich and powerful will stay that way. The best that can be done is try to get all units to be efficient, and as the University
receives funds it makes investments where it decides best.
Professor
Campbell said this had been an excellent discussion, although the Committee was
not at the point of taking action.
Professor Feeney urged that those who had strong reactions to the
document to work it over. The Committee
must get to something it can agree on and move forward. This is the "staunch allocation
model," but there is a central-allocation model. He asked Committee members to work on the
model. Professor Campbell said the
Committee owed a great deal of appreciation to Professor Feeney and his AHCFPC
colleagues for getting the topic on the table in a clear way so that the Committee
can chew on it.
Professor
Campbell adjourned the meeting at
--
Gary Engstrand