SIUE Budget Models: Comparison and Selection, Study notes of Decision Making

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Alternative Budget Models

Question #4: Should SIUE move to a different budget model and, if so, what principles should guide this model?

Our Budget

Tuition, $89.30, 33% Student Fees, $28.80, 11% Housing, $19.90, 7% State Appropriations, $59.90, 22% State Grants/Contracts, $1.90, 1% Federal Grants/Contracts & ICR, $35.40, 13% Purchases/Services, $33.80, 12% Private Grants/Contracts, $2.20, 1% SIUE Sources of Revenue FY 2015 $ Millions Total Budget $271.2 million

Breakdown of Tuition vs

Appropriations

Tuition, $89.30, 60% State Appropriations, $59.90, 40%

Characteristics of Budget Models:

1. Level of Decision Making
2. Transparency
3. Degree to Which Budget is Incentive-Driven
4. Cost vs Revenue Driven
5. Flexibility

Short Description of Each Model

• Zero-Based Budgeting: Each year a unit’s budget begins at a zero baseline.
• Formula-Based Budgeting: Each year a unit’s budget is determined by a specific formula. May be based on enrollment, revenue, costs, etc.
• Incremental Budgeting: Each year a unit’s budget starts with the previous year’s budget as a baseline.

Short Description of Each Model

Performance-Based Budgeting: Each year a unit’s budget is determined based on certain performance measures. Responsibility Centered Budgeting: Each unit is treated as a separate entity. The unit’s budget is based on revenue generated by the unit.

How do Alternative Models Compare?

Level of Decision Making:

• Zero-Based: Central
• Formula-Based: Central
• Incremental: Central
• Performance-Based: Unit level
• Responsibility Centered: Unit level

How do Alternative Models Compare?

Level of Transparency (to all units):

• Zero-Based: High
• Formula-Based: High
• Incremental: Medium
• Performance-Based: High
• Responsibility Centered: Low

How do Alternative Models Compare?

Cost or Revenue Based:

• Zero-Based: Cost
• Formula-Based: Either
• Incremental: Cost
• Performance-Based: Revenue
• Responsibility Centered: Revenue

How do Alternative Models Compare?

Flexibility:

• Zero-Based: Medium
• Formula-Based: Low
• Incremental: Medium
• Performance-Based: Low
• Responsibility Centered: High

Discussion Questions

• What are the biggest problems associated with SIUE’s current approach to budgeting?
• What attributes of the budget alternatives that were described do you particularly like or don’t like?
• If we are to change our approach to budgeting, what principles need to be considered as the new budget model is designed?
• We’ll begin the reporting-back process in about 20 minutes