Task force explores improving budget process

A task force charged with improving YSU’s budgeting process is exploring a variety of options, including a more decentralized approach that is gaining popularity in some higher education circles.

Chaired by Budget Director Neal McNally, the task force was formed more than a year ago in response to the YSU 2020 Strategic Plan, which called for identifying new methods to develop the university’s annual budget.

“We want a process that is more transparent and responsive to the institution’s priorities,” McNally said. “In this era of shrinking state funding, it is important that we have a process that will help provide some stability and ensure that we are spending our limited resources as effectively as possible.”

The task force hopes to present its recommendations in June.

YSU currently utilizes an incremental budget model, which allocates funding to each university entity – college, department and office – based on the amount that was allocated the previous year, with incremental amounts added or subtracted depending on total funds available for that particular year, McNally said. He said the incremental model is used by most public universities.

One of the alternative methods being explored is called Responsibility Center Management. Under RCM, each entity on campus, such as a particular college, is funded based on the amount of revenue that it generates through tuition, fees and other funds, McNally said. Entities that do not generate revenue are funded via a surcharge to the revenue-generating entities.

This method, McNally said, is designed to allocate funds in areas that are growing and to encourage “entrepreneurial” activities in each college, such as the development of new programs and services that generate revenue.

Kent State University implemented the RCM model in July 2009. McNally, along with Vice President for Finance and Administration Gene Grilli and Paul Kobulnicky, executive assistant in Grilli’s office, recently met with finance and budget officials at Kent to discuss the approach. The model is also in place at the Universities of Pennsylvania, Michigan, Oregon, New Hampshire, Iowa and Illinois Urbana Champaign, among others.

In addition, the task force is studying performance-based budgeting, under which funds are allocated based on how each entity performs in relation to the university’s priorities. The task force has had discussions with officials from the University of Cincinnati, which implemented performance-based budgeting in July 2009.

McNally said the task force is continuing to review the pros and cons of various  approaches, including ways to make the system currently in place more transparent without changing the entire budget model. For instance, he said YSU could hold budget hearings, develop a university-wide budget committee and develop ways to better communicate budget decisions made on campus.

Other members of the task force are Kobulnicky; Marilyn Ward, assistant to the Provost/Academic Budget; Tod Porter, professor and chair of Economics; Peter Kasvinsky, associate provost for Research and dean of the School of Graduate Studies and Research; Elaine Jacobs, associate director of Intercollegiate Athletics; Elaine Ruse, director of Financial Aid and Scholarships; Lisa Reichert, associate director of General Accounting; Rick Marsico, director of Computer Services; and Becky Geltz, director of Institutional Research.

(This is the first in a series of stories on the implementation of the YSU 2020 Strategic Plan.)

The YSU News Center maintains the official news of Youngstown State University.