New University budget model approved

After nearly a year of input from numerous stakeholders, Chancellor Patrick Gallagher has approved moving forward with a new budget model for the University. This means Responsibility Centers (RCs) — the official designation for individual schools and administrative areas — can begin a parallel budget process during the current fiscal year, with the goal of implementing the model for the fiscal year 2023 budget.

Called Budget ReSTART — which stands for Revenue Sharing to Accelerate Responsive Transformation — this model transitions the University from its current, mostly incremental budget process to one that provides RCs with more authority and transparency. The new model, designed with significant input from faculty and staff, aims to empower academic and administrative leaders with greater oversight and decision-making authority through an incentive-based budget.

What’s a budget model and why the change?

At the simplest level, a budget model is the framework used by an organization to plan and manage its revenues and expenses. The University’s current model involves taking the prior year’s budget and adjusting for certain changes, such as an increase in the salary pool, to determine the current year’s budget. Additionally, nearly all the University’s resources are held centrally.

University stakeholders identified concerns with the current model: It lacks transparency, it provides RCs with only limited accountability, it doesn’t provide incentives to raise revenue or reduce costs, and it limits an RC’s ability to support the significant strategic initiatives outlined in the Plan for Pitt.

To address these challenges, Provost and Senior Vice Chancellor Ann E. Cudd and Senior Vice Chancellor and Chief Financial Officer Hari Sastry led a steering committee composed of deans and representatives from the faculty and staff. These members provided expertise, support and recommendations throughout the development of the model.

As the model structure was developed, staff members from the provost’s and CFO’s offices obtained input from across the university, including:

• Focus group meetings with 40 RCs
• 13 steering committee meetings to develop the model structure
• 50+ meetings with deans, regional campus presidents and RC directors of administration
• A retreat with all deans
• 15+ briefings with key stakeholder groups: Council of Deans, Staff Council, Budget & Planning Community of Practice, Senate Budget Policy Committee, University Planning and Budget Committee, Directors of Administration, Senior Leadership and the Board of Trustees

Highlights of the new model

Under the new Budget ReSTART model, a greater share of budgetary responsibility shifts to the RCs, enabling schools to control revenue generation and fund their own strategic priorities. They also will have visibility and oversight regarding central support services and costs.

According to Cudd and Sastry, this will create incentives for RCs to generate revenue, achieve cost efficiencies, support strategic initiatives within the schools and collaborate on research initiatives. Ultimately, they see the new budget model as a key driver in helping RCs to deliver on the University’s mission and strategic plan.

“Given the chancellor’s approval, we will now begin a parallel budget process that will enable RCs to anticipate the impacts of the ReSTART model while still operating using the current model,” said Sastry.

Cudd explained that this approach offers significant benefits. “This will enable us to obtain additional feedback which can be used to further refine the model as we prepare to fully implement it in fiscal year 2023.”

Looking ahead, Cudd and Sastry said a change management plan is being developed that will support the University community as it transitions to this new process. Additionally, a governance structure will be developed that will reflect continued partnership with faculty and staff.