Board of Trustees Meeting Agenda | July 2021

common phrases that demonstrate a personalization of what are supposed to be institutional resources provided to accomplish our plan. We need to reshape our thinking towards an institutional mindset – imagine that a university division has a project that is deemed important in the planning stage and therefore receives funding but midway through the year the project becomes logistically impossible. In an institutionally focused mindset, those funds would be released back to the institution and be re-deployed to fund some other important thing. That may seem like an abstract example, but budget managers experience this phenomenon every time there is employee turnover. That position was funded for a specific purpose, and so if it takes 4 months to re-fill the position the wage and benefit savings should be re-deployed back to the institution to be put back to use for another institutional priority. The model is changing Since FY18 we have been allocating resources using Activity Based Budgeting (ABB), using student credit hours as the single activity. This means we allocate State/Tuition Fund revenues to the four academic colleges based on their proportionate share of credit hours generated. Based on campus feedback, some material changes are being contemplated to the resource allocation model. These changes will continue to emphasize the spirit of entrepreneurism, elevate the role of college dean, and certainly maintain the nexus between revenue generation and the survival of the university. But how we allocate resources should also mirror our commitment to our mission and our values, and as stated earlier our planning process should make resource allocation decisions fairly easy. Stay tuned for more information as FY22 progresses. 2. Budget Drivers – Revenue The most significant revenue driver for the university is clearly enrollment, both individual students (“headcount”) and full-time equivalent (FTE) students, which for this purpose is total credits divided by 15 (for a quarter). Headcount is most relevant for services that are not dependent upon credits taken. These services include housing, dining, parking, and bookstore revenues. Other revenue elements, such as tuition and most mandatory fees, are charged per-credit taken and therefore FTE is the main driver. Budget development begins with fall headcount estimates, as it is quite easy to derive quarterly headcount, as well as FTE using established historical patterns from the fall headcount baseline. On the chart below, note the repeating pattern of higher enrollment in the fall, with a consistent drop each quarter of the academic year. This drop is typically 4 or 5 percent each quarter and comes from a combination of student persistence issues, graduation, and/or transfer to another institution.

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