The revenue and cost allocation model must meet the following criteria:
- Transparency. The model should be developed and maintained in a manner that can be clearly understood by those who are accountable for and impacted by its outcomes.
- Matching. The model should reliably match revenue streams with the associated costs.
- Simplicity. The model should be kept simple, with a limited number of exceptions, even though the many details of University costs and revenues can be complex, so that it can be widely understood.
- Predictability. The model should have rules that are clear and consistently applied, resulting in reasonably predictable outcomes that enable effective planning throughout the University.
- Accountability. The model should strive to hold units accountable for what they are able to significantly influence or control, and for approved costs distributed across all units. Standard metrics should be developed for evaluating performance.
- Mission-Driven. The model should support the overall University mission including units that are not self-supporting and need transparent, accountable, and strategic subsidization.
- Data-Driven. The model should be based on data that is easily accessible and visible, derived from a “single source of truth” to ensure that data can be verified and standardized across the University to serve as a tool to monitor progress and the best indicator of performance.
- Adaptability. The model should adapt to changing circumstances, be regularly reviewed using a robust monitoring process and a reasonable cadence, and revised as the University community learns more about the process and outcomes.
- Stewardship. The model should be developed with an eye toward exercising prudence in managing resources, diversifying revenues to promote resilience, maintaining appropriate reserves, and rewarding efficiency and effectiveness.
- Sustainability. The model should enable multi-year financial planning at both the unit and University levels and establish reliable, short- and long-term fiscal expectations that allow units to actively plan for and manage multiple budgetary years.
- Performance. The model should develop incentives and create funding pools linked to performance for all units.
Model Support Requirements:
- Governance. The University’s management and administrative structure will provide appropriate oversight and accountability for the model.
- Systems. The use of a decentralized model depends on the creation and maintenance of a timely and user-friendly information system.
- Change Management. A carefully thought-out transition is required to improve the success rate of any changes in the budget model and related system.