montana university system allocation model redevelopment retreat report of progress for board of...
TRANSCRIPT
Montana University System
Allocation Model Redevelopment Retreat
Report of Progressfor
Board of RegentsNovember 16, 2005
Review of Process
Direction provided by BOR – Sept. 2005 meeting
Schedule retreat to discuss and develop a new allocation model
Finalize retreat objectives – Campus Advisory meeting – October 20, 2005
Retreat – November 10 & 11 - 20 participants- all campus units CFO’s participated- Dennis Jones provided his national expertise- Bob Kelly (Great Falls businessman) served as
an independent observer of the process
Retreat Objectives
MUS finance officers draft a conceptual proposal
MUS finance officers agree to the conceptual proposal
Develop future action plan of tasks, assignments and necessary reviews
Report on progress and outcomes at the November BOR meeting
Dennis Jones’ “First Principles” forthe MUS Allocation Model
1. The model should focus on financing the state system of higher education – not the more narrow issues of allocating state funds to campuses.
2. Any model should be transparent as to the policy choices to be made by
a. The Board of Regents, andb. The Legislature & Executive Branch.
3. The model should provide a framework for simultaneously dealing with
a. Allocation of state revenues to institutions,b. Tuition revenues and rates, andc. Student financial aid (in Montana, including
mandatory fee waivers).
First Principles (cont’d)
4. The model should have a specific component a. Dedicated to furthering the Regents’
strategic priorities b. Allocated by the Regents to campuses for
these purposes.
5. The model should reward – not punish – institutions for aggressively seeking revenues from sources other than
a. Students, or b. State.
First Principles (cont’d)
6. The model should protect institutional viability a. By not creating conditions under which
institutions have to adjust quickly to substantial changes in funding,
b. Buffering the effects of enrollment changes (especially decreases), but not avoiding those effects.
7. Ideally, the model should provide incentives for institutions to collaborate as units within a system, rather than compete as free-standing entities.
Desired Features / Functions of Model
Development process should involve all CFOs, at all stages, as well as the OCHE, OBPP and LFD.
Concepts and calculations should be simple and understandable.
Model assumptions, decisions and calculations should be based upon a rich array of generally available, regularly updated, data.
Montana students should be provided a fair share of State support for their cost of education.
Features / Functions (cont’d)
Each campus should be provided a reasonable opportunity to sustain its vitality, at a Mission and organizational scale appropriate to its level of enrollment, but not at the expense of another.
Each campus should be provided a level of funding sufficient to support its minimum necessary Base of fixed costs.
Model should establish an appropriate Total revenue level (target) for each campus, as well as an appropriate State Support level (target), based upon peer data.
Features / Functions (cont’d)
Model should provide some way for Regents to reward performance and/or support their priorities.
Application of Model, by OCHE and Regents, should be “Persistently Consistent.”
Model will be developed by the entire Model Team, or by smaller Work Groups (reporting back to the Team).
The Team will review and agree on each element of the Model before submittal for Regent approval.
The “Conceptual” Model
The foundation of the new Model Concept developed by the Model Team is:
the establishment of Targets for Total Net Revenue, State Support, and Student Contribution for each campus; and,
the creation of an Enrollment Corridor, which protects each campus from an abrupt loss of State funding due to enrollment decline – and deemphasizes the importance (and reward for) each new student FTE added to an institution’s enrollment.
Concept Illustration
Total Net Revenues(peer average)
Peer percentage Campus Actuals Maximum FTE forof State support current State $
Current Campus
Enrollment Fixed level of
Peer percentage State supportof Student Minimum FTE for
contribution current State $
Establishment of Individualized Campus Targets Individual Campus Corridors
Model Concepts
The “beginning point” of State support for each campus will be set in FY08, by adjusting each FY06/07 level for enrollment changes and new biennium current level adjustments.
A Work Group must codify the Current Level Adjustment definitions within the Regents budget process.
An independent consultant will perform a peer analysis (for each individual campus) to establish the suggested Campus Targets for Total Net Revenues, State Support and Student Contribution.
Model Concepts (cont’d)
Peer data must be selected to reflect such individualized characteristics as institutional classification, program mix & levels, enrollment and geography.
The Regents adoption of campus targets for Total Revenues, State Support and Student Contribution will, in effect, establish long term differential tuition plans.
A Phase-In plan for pursuing the targets will establish Priorities among the campuses.
Model Concepts (cont’d)
A Work Group must also develop suggested Enrollment Corridors for each campus, possibly through statistical analysis of when an enrollment decline would put State $/FTE above peer averages.
Enrollment Corridors will also reflect Regent priorities for protecting campuses in the event of an abrupt enrollment decline - as well as the incentive for expanding current enrollment levels.
A Work Team must also develop a set of suggestions for establishing specific goals, measurable objectives, and a funding source / level for a Regents’ Incentive Program.
Board of Regents Policy Issues
Approval of Peer comparators.
Adopt revenue “targets” from the peer comparators as a guide to reallocate funds within the Montana University System as the method for establishing revised “base” funding for all institutions.
Adopt a timeline to reach the new base funding targets.
Policy Issues (cont’d)
Determine the appropriate state/tuition funding ratios, by institution type, as a means to implement differential tuition.
Adopt a timeline to reach the differential tuition targets.
Determine how much funding should be in the Regent’s Initiative/Incentive Pool.
Establish the width of the “enrollment corridors” by institution.
Policy Issues (cont’d)
Develop a policy to address the situation when one or more institutions are unable to maintain their enrollments within their approved corridor.
Develop a policy on how to fund mandatory waivers.
Adopt common definitions of what constitutes “Current Level” adjustments.
Develop a one time appropriation request to provide additional base funding to the two year campuses as a means of right sizing their base funding.
Development Process Timeline
November 2005:Approval to proceed, approval to hire NCHEMS (Dennis Jones) to develop peer comparator data and provide ongoing assistance as the model is revised
January 2006:Adoption of peer comparators, initial revenue targets, establish enrollment corridors
February 2006:Conduct simulations to fine tune/adjust the model