MU unveils new financial model that will begin July 2020

Officials say new model will improve transparency and allow leaders to plan for the future better

May 14th, 2019

COLUMBIA, Mo. – Today, University of Missouri officials unveiled a new resource allocation model that will help leaders across campus plan their budgets better for future innovation and creativity, ensure financial responsibility and accountability, and maintain transparency and trust. The new model will begin July 1, 2020, and all departments will transition fully to the new model by July 1, 2023.

The new model is based on the Responsibility Center Management (RCM) budgeting model. Under this model, financial responsibility is delegated to schools, colleges, divisions and other campus units, which allows those units to prioritize their actions. This model, which has been used by other universities and been around for more than 30 years, is being recommended for MU by a 15-member Resource Allocation Committee (RAC) with representatives from students, faculty, staff and administration.

“The work of this committee will have an impact on MU far into the future, and I am extremely grateful for everyone’s diligence,” MU Chancellor Alexander N. Cartwright said. “We are committed to making sure we continue to use every resource entrusted to us in a fiscally responsible manner. This new model helps us maintain that good work. Provost Latha Ramchand and CFO Rhonda Gibler have worked closely with the entire committee to develop a model that balances RCM with our institutional mission.”

The committee noted that the current process struggles with two issues: lack of transparency and lack of incentives, both of which make it difficult to understand the source of funds and incentivize strategic use of funds.

“Our past financial decisions were always made in the best interests of our students and researchers, but we have struggled in some areas because of the current system,” said Gibler, vice chancellor for finance and co-chair of the Resource Allocation Committee. “We’ve worked for the past 18 months to create a new model that fostered innovation and remained flexible enough that we can handle unexpected expenses yet remain true to our strategic goals.”

The guidelines for the new model focus on keeping financial resources closer to units responsible for producing the revenue while also holding those offices that do not directly generate revenue more accountable during the budget planning process. The guidelines of the new model include:

• 70% of undergraduate tuition and fees and 100% of graduate and professional tuition and fees will be allocated to the school and college generating those tuition dollars determined by credit hours and completions of degrees and graduate certificates.
• 100% of Facilities and Administration fees associated with grants will be allocated to schools and colleges. Facilities and Administration fees are revenue provided by granting agencies to support indirect costs of research. Examples include paying for maintenance of research space and administrative oversight for regulatory compliance with research.
• 10% of all general revenue allocations that remain at the end of the budget year will be reallocated back to the central fund for strategic priorities.

Additionally, units generating revenue will be required to account for space used by faculty and staff for both academic and research missions. Each unit will be allocated space costs based on the square footage of the space they utilize on the campus.

“The model allocates revenues and costs back to the units. One of our biggest costs on campus is our physical infrastructure and the associated maintenance costs,” said Ramchand, provost and executive vice chancellor for academic affairs and co-chair of the RAC. “By holding revenue-generating units accountable for their costs including the cost of space, the model will encourage us to be more efficient with respect to all resources including space.”

Units that do not generate revenue, examples of which include the Office of the Chancellor, the Office of Finance and the Office of the Provost, will account for their budget each year with an oversight committee representing students, faculty and staff. Offices that serve students such as financial aid, student life, enrollment management, cashiers and the MU libraries, will also provide a budget report each year to a committee that will make financial recommendations to the administration in an effort to ensure student success at the university.

“We realize that any budget model we have in place needs to be flexible as our university is constantly transforming to meet the needs of our state, adapt to students’ changing challenges and respond to our scientists’ evolving research fields,” Gibler said. “Because of this, we will evaluate the model on a regular basis to determine if any adjustments need to be made.”

EDITOR’S NOTE: The report can be accessed at: https://committees.missouri.edu/resource-allocation-model/ Additionally, the new model will be discussed at two public forums:

10 a.m., Wednesday, May 15
22 Tate Hall

9 a.m., Thursday, May 16
201 Cornell Hall

The forum on May 15 will be livestreamed and can be viewed here: http://extension.missouri.edu/staff/adminmgmt/livestream.aspx?P=Y&dm_i=48WP,60KH,221MMO,MOAX,1#gsc.tab=0