Background
As a result of the campus community's thoughtful input and feedback, our new budget model will build upon the lessons learned from Responsibility-Centered Management to reduce complexity, increase transparency and provide the tools necessary to make the informed financial and strategic decisions that best meet our common goal of upholding the University's long-term educational, research and land-grant missions.
The financial challenges that we collectively face, both from the trends in higher education and from the still-unfolding effects of the pandemic, necessitate that we remain agile, flexible and adaptive – traits that our community demonstrates daily.
Activity Informed Budgeting is a budget method designed to allocate revenues to the units responsible for the activity. It is intended to aid the university in navigating the increasingly complex and demanding issues and opportunities in higher education over the next 10 years. It is also designed to provide greater transparency into the budget process.
Timeline
Upon careful reflection of the steps ahead and in alignment with feedback from across our community, the Activity Informed Budgeting timeline will be adjusted for full implementation to begin on July 1, 2022, the start of fiscal year 2023. In the coming months, we will continue to share information, incorporate feedback and convey decisions on individual components of the model, particularly for those that will be implemented during FY22.
Guiding Principles for Transition from Responsibility Centered Management (RCM) to Activity Informed Budgeting (AIB)
Please expand the panels below to find more information on the AIB Guiding Principles.
a. Ensure institutional strategic investments can be funded to elevate the university overall and leverage new opportunities, including in individual Colleges, Centers or Institutes, and in campus infrastructure.
b. Ensure research is funded appropriately.
c. Budgets to include an Activity Informed Component (AIC) and a Strategic Budget Component (SBC), with the SBC to be reviewed annually for possible changes based on institutional strategic priorities. [NB. The term “Subvention” to be retired.]
d. Limit deficit budgeting via stronger review and controls to increase accountability.
e. Proactively scan for, and monitor, current University activities that likely need to be reduced in scope or eliminated.
f. Sharpen focus on controlling costs of doing business at scale / operational efficiencies (e.g., advance function-based decisions rather than unit-based decisions).
a. Continue to support teaching effort, as the core work that generates tuition revenue.
b. Align activity drivers within budget with strategic objectives for retention and degree completion.
a. Continue to support research effort and outcomes.
b. Align budget with strategic objectives for innovation and research growth, including:
- Costs of compliance.
- Research infrastructure.
- Attracting and retaining research-intensive faculty and staff.
c. Reward key measures of scholarship and research expenditures.
a. Align budget with support for inter / multi-disciplinary innovation, teaching, and research.
b. Develop approaches for UG shared programs that are akin to the GIDP budget approach.
c. Reward / fund new revenue growth or curricular innovation to improve retention and degree completion.
d. Accelerate research growth by focusing on research development efforts and research infrastructure investments.
e. Continue with current-year (forecast) budgeting to ensure responsiveness.
f. Undertake periodic evaluations of centers and institutes.
a. Leadership at all levels of the organization must ensure that their budget processes and resource allocations align with UArizonastrategic goals, and are aligned with our mission, vision, and values.
a. Make transparent the strategic goals for these units and align budgets with activity levels and unit specific goals.
a. Each College should develop a transparent model for providing support to academic unit operations based on activity to ensure institutional alignment at all levels.
b. Allocation models should be aligned with Institutional and College-specific strategic goals.
a. Weight all undergraduate SCH equally.
b. Simplify F&A distribution and ensure transparency.
c. Simplify activity taxes and space charges.
d. Treat all tuition revenue the same, no matter the delivery platform.
e. Exclude state line-item funded entities (e.g., Cooperative Extension Services (CES)), from AIB, but include in budget for transparency.
f. Clarify the GE budget and ensure it supports robust oversight mechanisms for the new GE model.
g. Maintain high transparency on budget decisions and ensure robust communications processes.