The New RASCAL Model

Resource Allocation System and Cost Apportionment at Loughborough (RASCAL)

25 April 2012

Why RASCAL• The majority of the University’s income comes from the core activities of teaching and research,

including short courses and consultancy. These are carried out in the 10 Schools of the University at departmental level. At a University level there is also income from the Residential and Catering operations. The surpluses from these operations add to the funding available to the University.

• Support Services such as Facilities Management, IT Services, Student Services, Human Resources, etc are all essential costs of the University which enable it to function but are not self-financing. These departments are given an allocated budget from the University with which to deliver the required level of service to the University.

• The difference between the total income for the University and the total expenditure of the University is the surplus (or deficit). As the required surplus is set at 3% of turnover it can be regarded as another “cost” to the University.

• RASCAL attempts to allocate income to the departments generating the income and charges them with the directly attributable costs of the department plus a fair share of the total costs of the University, including the required 3% surplus.

• The net result of income minus directly attributable costs minus apportioned costs is the surplus or deficit of the department/School. The way RASCAL is constructed means that as long as each department/School meets its budget, whether surplus or deficit, the University will balance its budget and deliver the required surplus

Allocation of IncomeIncome AllocationTeaching This comprises HEFCE teaching grant and fee income. It is amalgamated into

a single “pot” and distributed to departments on the basis of student load. Account is taken of the band the department’s student is in, and weighted as per Hefce formulae. Before distribution deductions are made to provide for special purposes such as providing for DVC’s and, research schools.

 Research, grants & contracts

Relates to qualitative research (QR) and funds for the supervision of home students. It is passed on in the same way that it is received and driven by the unit of assessments members of staff were returned to; i.e. can be traced directly to departments and allocated as such.

It provides departments with some degree of flexibility in controlling the department’s finances.

Other services rendered Allocated as earned

 Short & self-financing courses

Allocated as earned

 Other income Allocated as earned

 

The need for change

A New Funding Regime

• Under the current funding regime HEFCE categorise subjects into 4 bands and funds students according to the band they are in.

• The intention was to try to allocate funding according to the cost of delivering the subject.

• The bands, going from A to D, were weighted 4.0/1.7/1.3/1.0.

• Under the new fee regime only bands A and B are going to be funded. Band B will be getting £1,483 from HEFCE.

• As the University is going to charge £9,000 fees, the income for the bands will be £10,483, £9,000 and £9,000 for bands B, C and D respectively.

• There is no longer any connection to the cost of delivering a subject.

An Opportunity

This was a chance for the University to look again at the RASCAL Model, assess its suitability for purpose and consider ways to Improve it.

Some of the problems identified with RASCAL were:

• Departments understanding of the meaning of surplus/deficit.

• What are the consequences if any of coming in over or under budget and if so do the departments understand these?

•  Motivational factors– Does the model encourage space savings?– Does the model encourage cost savings or budget padding?

• It does not relate teaching experience to the financial position of a department

• How can the widening participation agenda be built in fairly?

• Competition between departments for “strategic funding” rather than taking into account the all expenditure in the department.

• Non-equitability of weighting factors for COMA such as:Drivers for space - studio space 50% discountTeaching cost weightings - for overseas students 1.2 and PGCE 0.5 Load weightings - some students receive an extra 10% load

• Staff driver only includes academic and academic related staff not administrative or technical staff.

Principles adopted for new model

The University decided to adopt the following principles

• An income streamed model should be maintained• Where possible income should be distributed gross• A cross subsidy should be imposed to reflect the cost of teaching in

different subject areas but this should be transparent

Three models considered for cross subsidy were:

1. TRAC T national (average teaching costs across the sector)2. HEFCE income stream (1.7,1.3.1.0)3. TRAC T group A (Russell Group)

The model for cross subsidy chosen was model 1 as this model will keep pace with the competitive environment and it is also data that HEFCE uses.

A chance for simplification

RASCAL POT

In order to move to a more transparent income streaming model it was felt that certain deductions from the RASCAL Pot should no longer be made and should instead form part of the Indirect (COMA) charge or be charged /credited straight to the departments. These are listed below:

• Special Initiatives, CETL continuation and special factors – to become part of the new “Indirect charge”.

• Development funding for studentships, strategic funding for pay and strategic funding for non pay – cost/credit to fall to departments.

Items of expenditure that are decided at University level and so cannot be determined by Schools, such as bursaries, will still be deducted from the Pot.

A consequence of this decision is that the gross income allocated to Schools will be higher than in the past.

RASCAL POT Appendix 1

Budget   Suggested Amendment

2012/13 2012/13 2012/13 2012/13

£ £ £ £

Basic Teaching Grant        

Total HEFCE Funding 31,778,000   31,778,000  

HEFCE Funding for Band B only 0   0  

Vulnerable subjects - allocate below -647,008   -647,008  

  31,130,992   31,130,992

       

Add Widening Participation 1,529,000   1,529,000  

Less Special Initiatives -657,119 871,881 0 1,529,000

       

       

Add Fees 35,808,000   35,808,000  

Additional Fees 16,538,000   16,538,000  

less BURSARIES -4,398,000   -4,398,000  

less Development Funding Studentships -1,599,419   0  

less Strategic Funding -769,237   0  

less CETL Continuation -270,000   0  

less LUSAD FE Home fees -12,748   -12,748  

less TTA fees -240,768   -240,768  

less Premium Fees -85,000   0  

less PG(Supervision) fees -2,186,065   -2,186,065  

  42,784,763   45,508,419

       

Less Special Factors Academic Depts -819,765   0  

Central Depts ( exc Grad Sch ) -106,437   0  

add TTA factors 0   0  

  -926,202   0

       

       

Total Home Teaching Pot     73,861,434     78,168,411

INDIRECT CHARGES

Cost of support service sections have in the past been apportioned on five principal drivers but in future it will be based only on two drivers, space and people (people being student load including PGR’s and all staff FTE’s).

The term COMA charge is to be replaced by “Indirect Charges” in future and will include the Community Charge.

This decision was arrived at after a great deal of thought about various options and modelling of numbers from those scenarios as shown in the following table.

It is still a basic premise that the charge is based on perceived usage of University resources NOT a reflection of income in the School.

Scenario

Description Affect

0

Current model -Business plan 11/12

1 New RASCAL pot with income distributed 10.5/9.0/9.0 and with old COMA drivers

Schools with band D students gain per student on 15/16 approx

£4.5k, band C £2.8k and band b £.3.2k.

2 New rascal pot with new COMA drivers (i), old community charge allocation

As above. High no’s of clerical and admin staff cause movement

Variations on scenario 2 – income to reflect costs

3 Income allocated according to TRAC T for Loughborough, new COMA drivers, old community charge allocation

Using TRAC data favours expensive subjects as it looks at cost of teaching not fee charged.

4 Income allocated according to TRAC T for all HEI’s new rascal pot, new COMA drivers, old community charge allocation

Where LU TRAC cost is lower than National rates the school/dept is allocated a lower surplus

Variations on scenario 2 – community charge allocation

5 New rascal pot with new COMA drivers, community charge- allocated in proportion to COMA charge

Over half of all COMA costs are driven by student no’s; therefore this model increases community charges for depts. with high student no’s

6 New rascal pot with new COMA drivers, community charge- allocated in proportion to rascal income

Whilst some schools with a large income are hit by this model others with greater research staff are benefitting

Variations on scenario 2 – COMA drivers

7 New rascal pot. Community charge as in scenario 5 COMA charge drivers space and student load only

See below Eng depts. heavy on space, arts subjects heavy on student no’s

8 New rascal pot community charge as in scenario 5 student load only

Depts with the highest % of students attract a higher COMA charge. Eng depts. have the largest propn of space and so do better when space is removed

9 New rascal pot community charge as in scenario 5 COMA driver staff headcount only

Schools/depts with high SSR have higher COMA charge

Consequences

• Income allocated to the Schools will be a larger absolute amount.• Indirect charges will be a larger absolute amount.• Ignoring the cross subsidy, Schools with greater numbers of band D

students will be better off.• The cross subsidy is designed to rebalance this.• The effect will be gradual as new regime students replace old regime

ones over the next three years. 2015/16 will be steady state.

The new layout of the Business Plans is shown below:

RASCAL - BUSINESS PLANNING

School of Theoretical Studies

2012/13 Bus plan 2012/13 Bus plan

 New Funding

Model  TRAC Nat T

Student Allocation Student Allocation

Load £ Load £

       

Home Teaching Total 1,591.22 8,986,518 1,591.22 8,449,009

Overseas Teaching Total 663.47 9,336,086 663.47 9,336,086

       

Other Adjustments   36,499   36,499

       

TOTAL TEACHING ALLOCATION     18,359,103  17,821,594

       

TOTAL RESEARCH ALLOCATION     1,850,234  1,850,234

       

Salary Allocation   0   0

Strategic Funding Non-Pay   0   0

Development Funding   0   0

       

TOTAL STRATEGIC ALLOCATION     0  0

       

TOTAL RASCAL ALLOCATION     20,209,337  19,671,828

       

Direct Expenditure   12,509,942  12,509,942

       

Discretionary   0  0

Research Grants & Contracts   98,597  98,597

Enterprise - Other Funded Projects   0  0

Enterprise - Short & Self Financing Courses   1,362,856  1,362,856

       

TOTAL DEPARTMENTAL INCOME     22,894,526  22,357,017

       

TOTAL DEPARTMENTAL EXPENDITURE   13,733,678  13,733,678

       

Income less Direct Expenditure   9,160,848  8,623,339

       

Indirect Charges 7,996,596   7,996,596  

       

Income less Total Expenditure     1,164,252  626,743

       

Cross Subsidy   -537,509   -537,509

       

Forecast Surplus/Deficit     626,743   

  2011/12 2012/13   2012/13 2015/16   2015/16

 Final Ops Approved

Proposed Funding Model Cross subsidy

School surplus/deficit

Proposed Funding Model Cross subsidy

School surplus/deficit

School July 2011            

               

School of Aeronautical, Automotive, Chemical and Materials Engineering 815,297 205,378 543,435 748,813 -752,319 752,698 379

               

               

School of Business and Economics 3,666 352,196 -547,309 -195,113 3,122,980 -1,530,229 1,592,751

               

School of Civil and Building Engineering 160,566 501,527 66,468 567,995 -91,038 -58,760 -149,798

               

Loughborough Design School 685,203 555,454 366,306 921,760 237,895 261,983 499,878

               

School of Electronic, Electrical and Systems Engineering -62,891 -378,557 279,858 -98,699 -832,228 461,569 -370,659

               

Wolfson School of Mechanical and Manufacturing Engineering 192,032 101,969 398,788 500,757 -647,167 542,854 -104,313

               

               

School of Science -582,795 323,028 302,774 625,802 -933,061 900,888 -32,172

               

               

School of Social, Political and Geographical Sciences -699,281 872,177 -1,224,164 -351,987 893,720 -1,020,190 -126,470

               

School of Sport, Exercise and Health Sciences 456,526 229,749 -163,380 66,369 297,998 -664,618 -366,620

               

School of the Arts, English and Drama -1,093,887 -2,762,922 -22,775 -2,785,697 -1,296,780 353,805 -942,975

               

Research Schools 0 0 0 0 0 0 0

               

Other -120,000 -0 0 -0 -0 0 -0

               

TOTAL UNIVERSITY -245,564 -0 0 -0 0 0 0