The UBR Task Force completed its two-year research and model recommendation process in late 2016, and produced over two dozen recommendations. The Steering Committee reviewed and acted on those in early 2017. These decisions cover the allocation of tuition and fee revenue, FACR, undergraduate financial aid and central costs of the university. The University Budget Office analyzed the implications of these initial decisions and reported its findings to the Steering Committee and senior leadership. This resulted in an approved preliminary model, which is being implemented for informational purposes only in FY18. Here are a few highlights of the preliminary model.
This page will be updated quarterly to reflect the latest decisions.
The current budget development cycle begins in November, eight months before the start of a fiscal year (July 1 to June 30). This provides time for robust planning. The same cycle will occur under the redesigned budget model and process. Initial planning and budget development will begin in the fall when enrollment data become available, and will continue through the winter and spring as units refine budget needs and state funding decisions are finalized.
Approximately two-thirds of university operating revenue comes from tuition and fees. Most of this revenue (80 percent) will be allocated directly to the school responsible for teaching the student, with a smaller portion (20 percent) going to the student’s major school. This split reflects that schools incur costs for teaching students and for providing them with supports. Schools receive 100 percent of tuition revenue when teaching their own major student. Course fees will be allocated to the teaching school. Program fees are allocated to the student’s major school.
VCU has a complex tuition structure. The new budget model will not change tuition rates or fees, or the process for setting those rates. To keep the model simple and functional, tuition rates approved by the Board of Visitors for undergraduate/graduate resident students will be used as "base rates." The base rate will be split among the teaching and major schools as described above. Tuition levels above or below the base rates (e.g., tuition "differentials" or unique tuition rates) will be attributed fully to the student’s major school. This allocation rule acknowledges that differential rates support specific instructional and student support costs associated with a particular academic program.
Units that do not generate significant tuition revenues are treated as central support units. For example, the Honors College is included as a central support unit. (See "Central cost allocation" on this page.)
Under the current budget model, most tuition and fee revenue is allocated directly to the university, then schools/colleges are provided with an expense budget that draws upon a portion of these funds. EPT agreements provide some units with a direct share of tuition revenue. Beginning in FY 2019, the redesigned budget model will replace these EPT agreements with a common, university-wide tuition allocation model that directs all tuition and fee revenue to the units.
Seventy percent of indirect cost revenue from sponsored projects will be returned to the school. By state law, 30 percent will be retained to reimburse the university for the cost of central research supports. Additional central research support costs will be distributed across the schools and units with externally-funded research.
There has been no decision to change the way fundraising dollars are treated.
The unrestricted state general funds will be allocated directly to all schools and colleges based on their relative share of the university's instructional activity, funded research and use of central supports. This recognizes the importance of teaching and research to the university's mission.
Incentivizing entrepreneurial activity is a key feature of the Budget Redesign, which allocates revenue earned to the responsible unit. This ensures that activities that generate additional resources benefit the unit directly.
No. Currently, some central units generate revenue. Sources and amounts vary, and include tuition, internal charges to other units and auxiliary revenue. Central support units will not be required to generate revenue beyond what occurs from their usual operations, but they are encouraged to think in entrepreneurial ways. Revenue units are expected to generate revenue. These include the schools and colleges: Allied Health Professions, Arts, Business, Dentistry, Education, Engineering, Humanities & Sciences, Life Sciences, Medicine, Nursing, Pharmacy, Social Work, L. Douglas Wilder and the University College.
The initial budget for central support units will be based on their current levels of E&G funding. The costs associated with central university operations will be distributed across the schools and colleges (revenue units). A set of metrics related to the functions of each central unit will be used to allocate the cost. These metrics were proposed by the central support units and approved by the Steering Committee. For example, VCU Office of Human Resources costs will be distributed based on the faculty and staff head count of each revenue unit, and University Purchasing costs will be based on all expenditures (excluding grants and FACR) of each revenue unit.
The costs of all central support units will be pooled. Adjustments to central support unit budgets will be handled in two ways. First, annual adjustments to the pool at a predetermined rate will aim to cover required cost increases (i.e., changes in benefits, utilities, insurance). Units will be able to submit requests for additional funding from the central pool through a process similar to the current UBAC process. Additional adjustments may be made based upon the recommendation of the University Budget and Strategic Planning Committee.
Central support units will not be charged directly for baseline central costs, apart from space, which will be allocated by assigned square footage. Units may purchase additional services from other units. These internal charges will be treated as revenue for the central support unit providing the additional services.
The budget model will allocate revenues and costs to the school/college or administrative major business unit (MBU) level. Decisions regarding budget and resource management within units remains with the unit head (dean/director/vice president).
Tuition and fee proposals will be handled under the current policy. The Budget Redesign will not change tuition and fee rates or how those charges are determined.
The Budget Redesign will provide greater transparency regarding the costs and revenues attributed to each unit. Units will have more resources available when their activities increase revenues or reduce expenses.
Data reported by the units themselves through the university’s annual space survey will determine each unit’s assigned space.
The model will not change how classroom or other space is assigned. Space that is directly assigned to a specific unit for any purpose will be counted toward that unit’s space costs. Space that is not directly assigned to a specific unit will be included in the general space pool with the related costs distributed across all revenue units.
The best currently available university data allow for the calculation of a blended, average cost per square foot based on the costs of space across the entire university.
Facilities and Administrative Cost Recovery (FACR) is funding received as part of a externally-supported grant or contract that is intended to offset the expenses incurred by the university to conduct funded projects. FACR central cost allocation is handled similarly to the E&G central cost allocation. FACR-funded expenses that provide a pan-university benefit, for example the Office of Sponsored Programs and the PERQ Awards program, will be shared across units with FACR/grant expenditures based on their proportional share of total university grant and FACR expenses. These include administrative units that generate FACR revenue.
FACR-funded expenses that benefit a specific unit, including debt service, will be fully assigned to that unit. Debt service costs will be allocated proportionally by square footage among the units assigned to the space.