The budget model redesign initiative began in early 2013 as a result of Drexel’s Strategic Transformation of Administrative Resources (STAR) Review. This project asked an outside consulting firm to assist us in assessing how to make our administration more effective and cost-efficient, in order to better invest resources in the priorities of our Strategic Plan. One focus area of this review was Drexel’s budget model and relevant processes, which were frequently cited by both academic and administrative stakeholders as areas requiring examination. Thus, among other areas of review, Phase I of the initiative focused on assessing the University’s current budget processes, identifying means by which they could be improved, and understanding relevant stakeholders’ appetite for change. Once this initial review was completed and a business case for change was presented to the STAR Steering Committee, implementation activities began. A broad project timeline is illustrated graphically as follows, with further details below – click to expand.
Model & Process Design
- Spring 2013
- Model structure and framework was developed to build out a straw man redesigned model
- Collection and validation of financial and activity-level (“driver”) data used for formulaic incentives and allocations
- Design and testing of incentives and rules for revenue and cost allocations
- Development of preliminary incentive-based model using FY12 actual data to understand what College- and University-level financials would have looked like in that year, had it operated according to the initially developed incentives and allocation rules
- Summer 2013
- Engagement with academic and administrative stakeholders surrounding the proposed model parameters
- Multiple rounds of individual Deans’ meetings to review FY12 modeled financials and model principles
- Tweaks to incentives and allocation rules based on stakeholder feedback
- Fall 2013
- Deans Retreat–full review of model components and FY12 financials
- Communication of model principles and mechanics to the Academic Administrators Group
- Build-out of additional years of modeled data (budget and actuals)
- Winter 2013-2014
- Development of scenario-planning tools to allow Colleges to understand financial implications of future decisions (increasing enrollments, changes in credit hour production, research activity, etc.)
- Continued communication of future state processes to academic and administrative stakeholders
- Initial development of comprehensive budget process document
- Initial design of various future-state governance committees
- Spring 2014
- Completion of first draft of comprehensive future-state budget process document, including proposed charges and membership for governance committees
- Communication of future-state budget processes to administrative unit leaders
- Distribution of first draft of document to Steering Committee, Implementation Committee, and Faculty Senate
- Implementation Committee begins meeting bi-weekly to address most frequently cited concerns and modify the model mechanics, if appropriate
- Build-out of RCM application in Hyperion Planning begins
The Parallel Process is a year (FY15) in which the University operates under its historical budget model and processes, but has reports and information available such that Deans and administrators can understand what University and College budgets and bottom-lines would look like if Drexel were operating under RCM in this year. This approach is further intended to allow for modifications to the model to be made should any unintended implications be identified as stakeholders analyze their parallel data. Implementation of the RCM application in Hyperion Planning is scheduled to be completed in October 2014, and both reports and scenario planning tools will be made available to relevant stakeholders shortly thereafter.
“Hold Harmless” Period
During this year (FY16), Drexel will operate under the rules and parameters of the redesigned budget model, but the financial impact of any decisions—negative or positive—will be managed centrally. This approach allows for further identification/remediation of any unintended consequences of model rules or processes, and presents stakeholders (especially Deans) with a full year to better understand the implications of various decisions from the perspective of both revenues and expenses.
In FY17, Drexel University will go live with its redesigned, incentive-based budget model, and Primary Units will be expected to manage both their revenues and expenses, and will be accountable for achieving centrally negotiated bottom-line results.