- Why are we changing the budget model?
How will Strategic Resource Management be different from our current budget philosophy?
- How does the current budget process work?
- Have other universities done this?
- How do we know if SRM is successful?
- What is the timeline for developing translating the Strategic Resource Management philosophy into a budget model?
- Are there potential negative outcomes of SRM?
Project committees and work groups
- Who is developing the new budget philosophy?
- How was SRM work group membership determined?
- Is faculty representation in the SRM work groups adequate?
- Does the Board of Trustees support the new budget model project?
- Why was it important to have the guiding principles established by the Strategic Direction and Steering Committee?
- How will the new budget model align with strategic planning and decision making?
- How does SRM relate to Collaborative Risk-Opportunity Management?
- Will the new budget model "fix" WMU operational issues?
- Will new budgeting software be considered as a replacement for GLOW at time of SRM implementation?
- How does Strategic Resource Management specifically impact my department?
- What if my unit does not generate revenue?
- What is a Responsibility Unit?
- What is a Strategic Invest Allocation?
- How can service units propose growth initiatives?
- How are oversight and accountability addressed in SRM?
- How will the integrity of academic programs and course offerings be maintained under SRM?
Why are we changing the budget model?
Resource allocation has become a significant topic across campus. Budgets are not aligned with success in enrollment, research, or giving. We need a more strategic and comprehensive approach to resource allocation, which better aligns all resources to address revenue growth, operating efficiencies and success metrics.
Strategic Resource Management—SRM—will be designed to accomplish three objectives that are consistent with WMU’s mission and vision:
- Increase accountability for decisions at executive and college levels by linking strategic decisions with financial decisions.
- Enhance transparency through use of formulas to determine revenue and cost allocation in a way that is objective and easy to understand.
- Incentivize revenue generation and cost effective practices at all levels of the University.
How will Strategic Resource Management be different from our current budget philosophy?
Through SRM, funding will be based on formulas that take into consideration teaching activities, research, space and other operational changes such as increases or decreases in faculty or staff. The application of such formulas to both revenue allocation and cost assessment will provide transparency in the budget-setting process. Work groups will develop the principles behind revenue and cost allocations, and the Core Team will develop formulas to carry out the intent of these principles.
How does the current budget process work?
WMU currently has an incremental budget model. This is a traditional budget model where budgets are based on the funding levels of the previous year and are not linked to performance metrics such as enrollment, research or cost efficiencies. Only new revenue is allocated and budget cuts are typically made across-the-board.
An accessible version of the flow chart showing the current budget process is available.
Have other universities done this?
Many universities, both private (e.g., Harvard, Duke, Johns Hopkins, Syracuse) and public (e.g., universities of Michigan and Arizona, and Central Michigan and Kent State universities), use some form of a strategic resource management system, though specific names vary by institution. WMU’s SRM model will be designed to fit the University's distinctive qualities, culture, organizational elements and mix of mission-related goals.
How do we know if SRM is successful?
SRM will be considered a success if the following project objectives are met:
- Increased accountability for decisions at executive and college levels by linking strategic decisions with financial decisions. This will eventually be implemented at the department level.
- Enhanced transparency through use of formulas to determine revenue and cost allocation in a way that is objective and easy to understand.
- Incentivized revenue generation and cost effective practices at all levels of the University.
What is the timeline for developing translating the Strategic Resource Management philosophy into a budget model?
- 2018-19 Fiscal Year: The five work groups will develop recommendations on identified factors and budget technology needs. The Strategic Direction and Steering Committee will review and approve final recommendations.
- 2019-20 Fiscal Year: The Core Team will develop the new SRM budget model based on the final recommendations. Work groups will begin the assessment of training needs and business process and policy review.
- 2020-21 Fiscal Year: The Strategic Direction and Steering Committee and Core Team will work with University systems to test the SRM budget model by running it parallel to our current systems, finalizing any necessary policy changes.
- 2021-22 Fiscal Year: Transition to the new SRM model will be complete.
View a more detailed project timeline here.
Are there potential negative outcomes of SRM?
Responsibility center or decentralized budget models can drive negative outcomes such as too much focus on financial performance only and increases in insular activities that create inappropriate internal competition that could weaken the university as a whole. The Strategic Direction and Steering Committee specifically considered such outcomes when adopting the SRM Guiding Principles of Balance, Collaboration and Negative Outcomes.
Who is developing the new budget philosophy?
A Strategic Direction and Steering Committee, convened by President Montgomery, will guide the development of the new budget philosophy. View the membership of the Strategic Direction and Steering Committee.
A Core Team handles project management and provides technical support to the work groups. View the membership of the Core Team.
Five work groups appointed by the steering committee are composed of faculty, staff, deans, directors and administrators from across campus. This wide representation of the campus community and shared governance of the development of the new budget model ensures a full, open-access process. More than 80 University community members have been selected to participate in five work groups:
- Revenue Allocation.
- Cost Allocation.
- Infrastructure Support for Implementation.
- Training, Process Documentation and Policy.
View the membership of the five work groups.
How was SRM work group membership determined?
The SRM work group membership was vetted and discussed by the Strategic Direction and Steering Committee at length. Each SDSC member selected individuals from their respective areas. A large number of work group members were selected due to their knowledge and expertise with either revenue categories or cost categories. Employee groups, both bargaining and non-bargaining, were invited to select representatives to serve as work group members. Many work group members also simultaneously represent multiple areas within the campus community. For example, one work group member might represent their college, faculty or staff, and a bargaining group.
Is faculty representation in the SRM work groups adequate?
Yes. SRM work group membership was carefully considered by the Strategic Direction and Steering Committee. The revenue and cost allocation work groups each include representatives from the American Association of University Professors and Faculty Senate. The faculty representatives are encouraged to gather input from their colleagues and provide updates throughout the project. In selecting work group membership, the emphasis and priority was placed on individuals with knowledge or expertise in a specific area or those with direct budgetary responsibilities.
Does the Board of Trustees support the new budget model project?
Western Michigan University's Board of Trustees, though not involved in the SRM initiative in any operational capacity, supports the initiative in their fiduciary role. Throughout the course of the project, the trustees will continue to receive updates.
Why was it important to have the guiding principles established by the Strategic Direction and Steering Committee?
The guiding principles established by the Strategic Direction and Steering Committee will help ensure that the new SRM model will reflect and strengthen our shared values and priorities.
How will the new budget model align with strategic planning and decision making?
SRM is expected to provide an incentive-based and transparent budget system that supports the University’s strategic goals. The objective of SRM is to align financial resources with university priorities and increase accountability by linking strategic decisions with financial decisions.
This video compares the Strategic Resource Management philosophy to WMU's current budget model, and explains how SRM relates to the University's Strategic Plan.
How does SRM relate to Collaborative Risk-Opportunity Management?
Collaborative Risk-Opportunity Management, or CROM, works simultaneously with SRM. CROM action teams work in collaboration with the Strategic Management Council—SMEC—on the implementation and reporting of WMU’s Gold Standard 2020 Strategic Plan by identifying, monitoring and coordinating the mitigation of risks or advancement of opportunities identified by SMEC. SRM moves WMU toward a sustainable budget model, which is expected to provide an incentive-based and transparent budget system that is linked to the strategic plan.
Will the new budget model "fix" WMU's operational issues?
SRM is a budget philosophy and model for resource allocation and alone will not "fix" WMU's operational issues. However, increasing accountability by linking strategic decisions with financial decisions, enhancing transparency of revenue and cost allocations through established rules and formulas, and incentivizing innovation, revenue generation and operating efficiencies may lead to operational changes. As indicated in the commitment statement signed by all SRM work group members, "Waiting for the strategic resource management model to be developed to implement the guiding principles of the resource allocation" is discouraged. Operational issues can and should be addressed now rather than waiting for SRM implementation.
How does Strategic Resource Management specifically impact my department?
It is too early in the process to determine how SRM will impact each department. Work groups began meeting in mid-September and are currently creating rules for the allocation of revenue and expenses. When SRM is initially implemented, the overall funding levels for all units will be maintained at previous levels. Full implementation will occur over a three-year period based on the established allocation rules and annual budget process.
What if my unit does not generate revenue?
Service Units, or SUs, are units that provide Universitywide benefits, programs and services in support of the primary mission of the University. These units include the central academic administration, institutional administration (government and legislative affairs, development, marketing and communications), library services, centralized student services, research services, public service, information technology, business services and facilities. SUs will not be required to generate revenue beyond what occurs from their usual operations, but they will be encouraged to think in entrepreneurial ways to continue to provide quality service while being good stewards of resources. The Strategic Direction and Steering Committee is responsible for identifying units as either a Responsibility Unit or Service Unit.
What is a Responsibility Unit?
Responsibility Units, or RUs, are units that generate significant external revenues that can be linked to a specific activity. The Strategic Direction and Steering Committee has designated colleges and auxiliary units to be the primary RUs. The RUs' revenue will fund college and auxiliary-specific service and support expenses such as administrators (dean’s office), advisors, marketing and others. RUs are held accountable for the effective and efficient management of their resources and are responsible for developing strategic and financial plans that align with overall academic and University plans. The Strategic Direction and Steering Committee is responsible for identifying units as either a Responsibility Unit or Service Unit.
What is a Strategic Investment Allocation?
A Strategic Investment Allocation covers the shortfall between allocated revenues and expenses. Strategic Investment Allocations may also serve to fund institutional priorities and achieve institutional goals. They may assist in compensating for disparities in costs of academic programs, serve as incentives to develop sound program plans, and/or provide startup funds for new ventures. Strategic Investment Allocations can also promote collaboration by encouraging stakeholders to achieve balance between what is best for a unit and what is best for the University as a whole. The recommended rules for WMU’s SRM model call for state appropriations to be the main funding source for the Strategic Investment Allocation pool at WMU.
How can Service Units propose growth initiatives?
Service Units can propose growth initiatives using the budget protocol process that is currently in place. The SUs will continue to submit budget protocols to their appropriate vice president. Each vice president maintains the overall stewardship and budget responsibilities for their area and may fund the initiative at the executive level. If the request is brought forward for central funding, the vice presidents will collaboratively identify priorities, which will be presented to the president during the annual budget retreat.
How are oversight and accountability addressed in SRM?
The president, with input from the Strategic Direction and Steering Committee will have the ultimate authority to determine the University’s strategic and budget priorities and make any necessary adjustments to the SRM model. Each vice president maintains the overall stewardship and budget responsibilities for his or her area.
Once SRM is fully implemented, each responsibility unit will be responsible for developing strategic and financial plans that fit within the overall academic and University strategic plans. All responsibility units will be held accountable for the effective and efficient management of their resources, including the overall fiscal performance of their college/unit inclusive of all funds assigned to the unit.
Service units will also be held accountable. Over the three-year implementation period, the annual SDSC annual budget review process will phase in incentives for service units for providing quality service through efficient use of resources, which must be demonstrated by supporting data.
How will the integrity of academic programs and course offerings be maintained under SRM?
The University has established processes to ensure the integrity of academic programs and course offerings. These processes include, but are not limited to, the curriculum review process governed by the Faculty Senate and Academic Program Review and Planning. These processes will not be affected by SRM. SRM incentivizes outcomes that support the University’s strategic goals of student success, academic excellence, discovery and collaboration, inclusive excellence and equity, and sustainable stewardship.
Will new budgeting software be considered as a replacement for GLOW at time of SRM implementation?
This has yet to be determined as the SRM infrastructure support work group is charged with determining reporting and other infrastructure needs, which may include information systems and technology as well as data requests. This work group began meeting in April and will continue to meet until recommendations are finalized. Recommendations will be considered by the SDSC and final decisions will be communicated to the campus community.