Current Budget Model
What is the current budget model?
In 2018, Boise State implemented Bronco Budget 2.0 (BB 2.0), an incentive-based budget model for academic revenue units (i.e., colleges). This model employs a formula-based approach that computes marginal annual changes across several key indicators: student credits hours (both graduate and undergraduate), undergraduate majors, and undergraduate degree graduates (for domestic and international students). The BB 2.0 revenue comprises a portion of a college’s budget, along with decision-based subventions, and other instructional support funds such as those utilized for graduate assistants. The model covers Base Funds only (i.e., appropriated funds) and does not include academic degree programs funded through alternative means, such as self-support or online fees.
For campus units outside of academic colleges – administrative and support units, research, and auxiliary areas – the current practices are largely based on an approach called incremental budgeting. That is, budgets are based on historical practices and budget requests are prioritized (approved or denied) through the University’s annual budgeting process. The same practices are generally in place for additional funding requests from academic areas. The annual process is primarily concerned with approval of Base Fund requests that are managed centrally as part of position control, but may require use of one time funding.
What is it that we are trying to change? What problem are we trying to solve by implementing a new RCM-style budget model?
Boise State is fortunate to have a strong and sure financial footing, and we want to make sure we can sustain it. Doing so requires us to have a model that balances our revenues and expenses. The budget model we use does not make the pie of available funds any larger or smaller but changes how the slices are distributed.
There are many areas of the university that will continue to increase in cost, including utilities, insurance, construction/repair, technology, and other essential components of our infrastructure. Boise State relies heavily on tuition and state funding, which means we must have a budget model that allows for flexibility in order to adapt to changing conditions if and when necessary.
A primary objective of the initiative is to expand and improve the existing budget model to account for costs (expenses) in addition to revenue for the entire university. This approach will incorporate previously excluded academic programs (such as online and self-support), will identify expected levels of service for administrative areas (which primarily operate under a budget approach called incremental budgeting), and will improve on the design of our current model (i.e., carry forward lessons learned from Bronco Budget 2.0).The vision is to align the university under a single budget approach sometimes described within higher education as “all funds, all areas” budgeting.
While there are predictions of an enrollment decline nationally, we are in a thriving city in a thriving region, and we are likely to have relatively mild impacts from this demographic shift. Even so, we need a model that ensures sustainability when facing impacts we can anticipate and those we cannot. Boise State is financially healthy, and we want to keep it that way.
Why are we undertaking this initiative now?
Because the university is in sound financial shape, now is the optimal time to implement a new model; it is much more difficult for institutions to successfully adopt new budget models during financially difficult times.
How will the new budget model support the University Strategic Plan, Blueprint for Success? How will it be aligned with our values and strategic goals?
The budget modernization initiative aligns to Goal 4 of the University’s Strategic Plan, Blueprint for Success, to “create a transparent, centralized business operations model that responsibly uses university resources, supports collaboration, and promotes consistency across individual campus units.”
A new budget model will help support all goals of the Blueprint for Success by increasing transparency in financial decisions and build/enhance trust on campus. Transparency will help us better understand how strategic decisions are made, helping us prioritize initiatives for student success, research, innovation, and community engagement, which are goals of Blueprint for Success.
Executive leadership will continue to balance opportunities to advance all five goals against available funding. Most RCM style budget models have a centrally held reserve from which strategic priorities are funded. We expect to have centrally held reserves and a transparent mechanism that will be used to advance the Blueprint goals and objectives.