Skip to main content
You are the owner of this article.
You have permission to edit this article.
UNL preparing 'innovative, entrepreneurial' budget model switch

UNL preparing 'innovative, entrepreneurial' budget model switch

City Campus Gateway / Entrance

The new budget management model the University of Nebraska-Lincoln has been tinkering with for three years isn't operational just yet.

But a group of UNL administrators and faculty are running a "responsibility center management" model, or RCM, parallel to the university's existing budget to watch it in action before it's deployed next year.

When it becomes active for the 2020-21 school year, the decentralized responsibility center management model will push academic units to be more proactive in how they are serving students, said College of Business Dean Kathy Farrell.

The incremental-based budget model UNL now uses, where funding flows from a centralized pool to various academic units, limits what administrators can see, Farrell said. Deans can only control their expenses, but not the revenue side of the balance sheet.

That will change with the new system, which will give mid-level administrators better insight into how enrollment in their colleges generates tuition revenue, as well as more discretion in how those funds are used to move the college forward.

"It's designed to create incentives for colleges to be innovative, entrepreneurial and to respond to the market more quickly and to pull those levers," Farrell said.

It works like this:

A portion of every dollar paid in tuition will be scraped off the top to fund centralized operations at UNL such as admissions, information technology and libraries — what Farrell described as the "overhead costs."

The majority of every tuition dollar paid will follow students to the college in which they are enrolled, such as chemistry students in the College of Arts and Sciences or architecture students in the College of Architecture.

Students taking a class offered jointly between the College of Architecture and the College of Business would see their tuition dollar split, with a greater percentage going to the college where the instruction is taking place, and a percentage remaining in their "home" college to help fund advising and other student support services.

Meanwhile, state appropriations will be allocated to Nebraska Extension, as well as by credit hour generation, degrees awarded, and funded research activity per college, according to an algorithm developed by UNL.

The hybrid responsibility center management model UNL has been developing is nothing new.

Indiana University was among the first public universities to switch to the system in 1990, while the University of Minnesota, the University of Iowa and Rutgers University have all converted to similar systems.

Even with several working examples in place, transitioning from one system to another, particularly when the operating budget exceeds $1.3 billion, doesn't take place overnight.

Shortly after becoming UNL's top administrator in 2016, Chancellor Ronnie Green formed a task force to explore various budget models and how each would allow the university to better align funding with its strategic priorities while also managing through fiscal challenges.

In the following spring, the task force recommended the hybrid system that it said would promote greater transparency, giving decision-makers more information to hold programs accountable or create new revenue drivers for their units.

Earlier this year, Huron Consulting won a competitive bid for $951,000 to assist UNL in implementing the new responsibility center management model. Based in Chicago, Huron has worked with more than 40 universities to develop and implement new budgeting processes.

Greg Bedell, Huron's managing director, said there has been an uptick in universities and other institutions redesigning their budget models in the decade since the Great Recession, likely because of the ongoing fiscal uncertainty in many states.

"Universities, generally speaking, are looking at this process to think about 'How do we align strategically where we want to go and make sure the allocation of resources go to the things we're trying to achieve?'" Bedell said.

While Huron has a standard blueprint to approaching a budget redesign, Bedell said every situation is unique to the university, from the structure of the model down to the weighting of various metrics an institution will use to measure its effectiveness.

It will take several years of tweaks and adjustments before UNL feels entirely comfortable with the new model, he added, but will create "a greater dialogue across the campus about what the finances are and how they support the mission."

Most of the adjustments UNL will make will center on how state appropriations are allocated. Farrell said the metrics for those processes have not been set in stone quite yet, and could be recalibrated several times after the new model goes into effect.

She also said UNL will erect guardrails to prevent academic units from abusing the model — a common downside cited by critics such as Boston University President Robert Brown.

To counteract declining tuition revenue, Brown said, colleges may offer courses that don't traditionally fall within their academic territory, duplicate efforts elsewhere on campus, or restrict student movement between colleges.

"(Responsibility center management) can lead to all kinds of perverse incentives, like engineering schools that want to teach English," he told Insider Higher Ed in 2010.

Farrell said curriculum committees in the UNL colleges will be charged with ensuring class sizes aren't being increased in order to drive new revenue, or that new courses don't repeat similar courses elsewhere.

She also said UNL's revenue-sharing model will help spur collaboration between colleges, rather than having the units wall themselves — and their students — off from one another.

"We don't want to incentivize the type of behavior where colleges are competing against each other to attract students," Farrell said.

The idea behind the new model is not for colleges to push for a bigger slice of the existing budget pie, Farrell said, but to create a bigger pie where colleges can ensure more students are successful at UNL.

"Ultimately, a successful student is going to be successful in the discipline area they are interested in," she said.

Reach the writer at 402-473-7120 or

On Twitter @ChrisDunkerLJS.


Be the first to know

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Get up-to-the-minute news sent straight to your device.


News Alerts

Breaking News

Husker News