This graph illustrates the total number of students enrolled in each department in the College of Arts & Sciences. Under the Activity Based Budgeting model, the revenue of each department could be based off of the proportion of the number of students enrolled in that department, in addition to other factors.
A new university budgeting model, which would base fund distribution on the classes and majors students choose and revamp the way funds are distributed at the university, was discussed in its first public forum last weekend at the Graduate and Professional Student Senate (GPSS) Higher Education Summit.
The new model, called Activity Based Budgeting (ABB), is a way to preserve, and perhaps improve, the quality of education for students, said Bill Zumeta, professor for the Evans School of Public Affairs.
ABB is a method of budgeting in which the revenues generated from instructional and research activities are allocated directly to the unit responsible for the activity, according to a report issued in early October by Doug Wadden, executive vice provost for Academic Affairs and Planning, and Paul Jenny, vice provost of the Office of Planning and Budgeting.
With the ABB, all tuition revenue returns to departments or colleges based on a formula of factors such as quantity of instruction, majors and degrees produced. Under the current incremental budgeting model, state funds and revenue from students is collected centrally and redistributed by the Provost’s Office based on a long history of past budget negotiations, with little or no alterations per year, Wadden said.
There are advantages for students that could accompany a decentralized budgeting model, said Trond Nilsen, GPSS senator and industrial-engineering graduate student.
“I think it [may] result in the departments being more responsive to student requests because there [will be] a much more close tie between money coming from students going to the department,” Nilsen said.
Nilsen added that there might be a disadvantage to the increased responsiveness to student demands needed to encourage enrollment.
“It might result in departments coming up with more classes that are easy that students will want to take,” he said.
However, two institutions that operate under the ABB model — University of Oregon and Indiana University — had representatives at the panel and said that departments bending to the will of students in an effort to increase funds did not occur at their respective schools.
While departments will operate more closely with the revenues they generate under the proposed budgeting model, Jake Faleschini, president of GPSS, said that those units that do not generate sufficient revenue on their own might still have funds available.
“Almost every school that’s ever implemented a system like [ABB] implemented it in a way that was called ‘no harm,’” Faleschini said, “which means that no department, school or program should see their funding cut because of [the new model].”
The efficacy of the incremental budgeting model was put into question in light of the decline of state funding for Washington’s public baccalaureate sector.
In a 2008 presentation by the Board of Deans and Chancellors entitled “Preliminary Thoughts on Transforming UW Resource Allocation Processes,” one reason listed for the need to change current practices was: “Our budget practices have long been based on a state supported approach; while the state is a critical supporter of the UW, it is not the only driving funding source.”
During the panel, however, Wadden stressed that there would still be discussions for a new budgeting model, regardless of the condition of state funding. “There is enough concern over the management of the institution and the budget model, and the need for transparency and understanding cost representation and predictability, and seeking new ways of doing business that we would be talking about ABB even if we were in good times financially,” he said. “The fact is, the model works in good times and in bad times; it has to.”
While it has not yet been determined when the ABB model will be implemented, Wadden said that there will be an analysis over the next several months of its impact on all aspects of the university.
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