Budget Model Update from President Eibeck
To University of the Pacific Faculty and Staff,
University of the Pacific is exploring concepts for a new budget model for the entire University that would incentivize units on all three campuses, while also holding them accountable for contributing toward Pacific's academic and financial priorities. In 2011, I appointed a Budget Task Force, chaired by Dean Phillip Oppenheimer, to analyze different models and present a recommendation to me. The task force recently submitted an excellent report. Next fall we will begin University-wide conversations about the report's recommendations, with the goal of having a new model in place by fiscal year 2017 or 2018.
The Budget Task Force's report recommends we move toward a customized "responsibility-centered management" (RCM) model. This model, which has been used at private universities since the 1970s and is the current model at the Arthur A. Dugoni School of Dentistry and at the McGeorge School of Law, is more decentralized and transparent than other budget models. It allows units to manage their direct revenue and expenses, and encourages units to be entrepreneurial because they are able to keep part of the net revenue they generate.
The Budget Task Force advocates that Pacific have an "RCM-hybrid." In summary, each unit would be held accountable for its income and expenses once its budget projections have been finalized. If a unit under spends, it can carry a portion of the money over. If it generates more revenue than anticipated, it could keep a percentage. If the unit over spends or is not able to bring in projected revenue, it would need to develop a plan to pay that money back. Collaboration between units could be privileged, with units getting to keep a higher percentage of collaboration-generated revenue. An RCM-hybrid would encourage innovation, but it would also ensure that units would have the funds they need to support their activities: a base year budget would be established to make sure needs are met, and formulas would be developed to support non-revenue-producing units. Note that these are recommendations only at this point. I look forward to discussing them with the University community in the months to come.
We do not anticipate changing Pacific's current budget model for about three more years (fiscal year 2017 or 2018). Next fall, Ken Mullen, the new Vice President for Business and Finance, will organize University-wide information and discussion sessions about the recommendations for and implications of a new budget model. Once these discussions have taken place, feedback will be assessed, and preliminary policies, formulas and processes will be designed and presented to University leadership for its review. After the final model has been developed, we will offer intensive training to the University community to ensure it is widely understood.
I thank Dean Oppenheimer and the Budget Task Force members: Larry Brehm, Caroline Cox, Carrie Darnall, Bob Hanyak, Steve Jacobson, Cindy Lyon, Bob Murta, Giulio Ongaro, Jonallie Parra, Edward Pegueros, Sondra Roeuny, Michael Rogers, Barbara Shaw, John Sprankling, Farley Staniec, Louise Stark and Stephen Wheeler, as well as staff member to the committee Norma Peterson, for their dedicated work. I am confident that a new budget model will maximize Pacific's strength and position us for an even brighter future.
President Pamela A. Eibeck