Implementation Team

Overview

Introduction

New Budget Model Information

The budget model has been developed based on a set of principles developed over the course of several years.

Budget Model Task Force (BMTF) I was formed in 2007 and BMTF I’s report established a set of principles that would serve as the framework for the examination of any new budget model.

Additional principles and guidelines were adopted in BMTF II’s report based upon additional feedback.

The Budget Model Implementation Team responded to questions and comments concerning the BMTF II report. In-depth modelling of the new budget model itself was continued to achieve the model McMaster has today.

How the new budget model achieves these principles:

Tuition allocation

Undergraduate tuition is attributed 100% to the teaching faculty using the teaching faculty rate and student unit taught as a proxy. The residual tuition that may result is credited 50% to the higher tuition faculties and 50% to the remaining faculties. Graduate tuition is allocated 100% to the Faculty where the student is registered.

Grants

The Ministry enrolment related grants, basic income units (BIU), both undergraduate and graduate related, are allocated 100% to the Faculty where the student is registered using the Ministry BIU values.

Interdisciplinary Programs

Interdisciplinary program (ID) tuition and BIUs are allocated in the same manner as other programs and funding is allocated based on where the student is registered.

Research Overhead and Research Institutes

Total amount of research overhead earned is attributed to the Faculties either within the allocation (FICR, ROIE) or via journal entry (Contract OH, ERA, CRC), some components net of 7% for VP Research discretionary budget. Royalties retain the pre-existing allocation method. The VP Research Budget, allocated as a Support Unit, is increased to replace the portion of the research overhead previously received by the VP Research. In addition, the VP Research receives a discretionary budget fund based on 7% of the FICR, ROIE, Contract OH, and ERA. This allows the VP Research office to continue to provide strategic support for research initiatives and to maintain the current level of committed expenditures.

University Fund: Purpose and Governance

The University Fund provides a pool of funds to be allocated for strategic purposes which will include both operating and capital items consistent with the University mission. The University fund at McMaster is 8% of total allocated revenues (excluding Indirect Cost of Research revenue) per year.

Responsibility for the University Fund will rest with the Provost. The Provost will be responsible for proposing on an annual basis how the University Fund is to be allocated. A consultation process will be developed whereby the Provost will solicit submissions for access to the fund on an annual basis. This will replace the current process whereby the budget committee receives requests to support unfunded priorities. The control and governance of this fund will involve consultation with the President, Vice-Presidents and Deans (PVPD) group which will also provide guidance and monitoring regarding the implementation of the new budget model based on reports from the Budget Committee, UPC and ad-hoc task forces. The UF budget will go through the normal budget committee process with final approval by PVP.

Research Infrastructure Fund (RIF)

The Research Infrastructure Fund is intended to provide additional support and incentive for conducting research. The amount of the fund has been set at a level of 1% of total allocated revenues (excluding Indirect Cost of Research revenue). The fund is fully allocated to Faculties using the Indirect Cost of Research (ICR) revenue as a driver, as a simple measure of research intensity within the Faculties.

Highlights of Cost Drivers

Support Units

Support Units receive their funding through the assessment of levies, charged to the activity unit. These levies are controlled by drivers (e.g. enrolment, occupied space) that are most relevant to the operation of the Support Unit. Support Units will be held at current base budgets, they will submit budgets to the Budget Committee as they have done in the past. Requests for funding adjustments will go through the University Fund Governance process outlined above.

Occupancy Cost

Occupancy cost is based on the costs of space at McMaster including facilities management costs and security costs. All included costs are divided by University NASM (excluding common space) to get an average NASM Rate (excluding areas where different occupancy cost arrangements are in place).

There is no differentiation in the cost model in terms of how space is used. Registrar-controlled classrooms are considered a common good and are charged out as part of the Registrar Office expenses. Increases to deferred maintenance and to utilities are not included in the modelling and will impact the drivers and would have to be approved by the governance process. The space allocations will be reviewed during the shadow year and a process developed regarding how space ownership changes will take place.

Transition Period and Hold Harmless

The new budget model will be in place in 2014/15 with 2013/14 as the shadow budget year and there will be no further transition period.

“Hold harmless” means that no Faculty’s budget under the new budget model would be less than their Year 0 base budget allocation. There are however, some conditions to this guarantee. A Faculty’s budget could drop below its hold harmless level if Its activity level decreases (e.g. decreased enrolment), its Government funding is reduced (e.g. MTCU policy levers & international student recovery) or increases are approved through the University governance process such as increased deferred maintenance.

Faculty Budget Development Process

Each Faculty will develop its budget on an annual basis as it does now. A significant change in the budget process however is the elimination of slip year. Faculty budgets will be based on anticipated levels of enrolment as well as known changes to tuition and grant income. Enrolment projections are based on IRA’s models for retention and recruitment. This will include expectations for enrolment increases consistent with program approvals and enrolment management processes.

As part of the budget development process, Faculties and Support Units will be able to make submissions for funding to be drawn from the UF, as noted above.

Next Steps

The budget model will continue to be refined over the 2014/15 year through continued dialogue and communication with the McMaster community.

Contacts and Links for More Information

If you have questions, visit our FAQ section or send us an email at bsinfo@mcmaster.ca

 

Membership

  • David Wilkinson - Provost and Vice President Academic
  • Roger Couldrey - Vice President, Administration
  • Linda Coslovi - Executive Director, Finance and Planning
  • Lou Mitton - Director, Budgeting Services
  • Dee Henne - Assistant Vice President, Administration
  • Iain Clarkson - Budget Project Manager
  • Jacy Lee - Assistant Vice President, Institutional Research and Analysis
  • John Dube - Senior Project Analyst