University of Nebraska – Lincoln Budget Manual
INTRODUCTION
The University of Nebraska system is comprised of seven institutions: University of Nebraska Central Administration (UNCA), University of Nebraska–Lincoln (UNL), University of Nebraska–Kearney (UNK), University of Nebraska–Omaha (UNO), University of Nebraska Medical Center (UNMC), Institute of Agriculture and Natural Resources (IANR), and Nebraska College of Technical Agriculture (NCTA). For discussion purposes, UNL which is comprised of City Campus and the Institute of Agriculture and Natural Resources (IANR) Campus is the only institution being represented in this presentation. UNL is governed by the UN Board of Regents under state law. Its authority for day-to-day management of the university system is delegated to the UN President and the campus Chancellor. The scope of this manual is to describe the budget model for the state aided unrestricted portion of the UNL budget. State aided unrestricted budget is funded from tuition revenue and state appropriations. The budget is comprised of permanent and temporary amounts. Permanent indicates an on-going commitment while temporary refers to a commitment of funds for only the current fiscal year (see appendix for additional explanation).
BUDGET MODELS1
Before discussing the specifics about UNL’s budget it is important to understand that budgeting in higher education can be developed by using different methods or models. There are four approaches used in budgeting in higher education. The approaches are not mutually exclusive and it is common to find elements of each appearing in the others. Despite some overlap, each approach places its focus and emphasis on certain types of information used to determine how to allocate resources. The main thing to remember is a budget needs to work for the institution and is driven by planning.
Formula Budgeting is a procedure for estimating resource requirements based on the relationships between program demand and program cost and allocating the resources accordingly. It is expressed in mathematical formulas. It can be as simple as a student-faculty ratio or as complicated as an array of costs per student credit hour by discipline for multiple levels of instruction (lower division, upper division, master’s, and doctoral).
Incremental Budgeting is a method employed to increase or decrease the base by a specified percentage rather than on an analysis of the activities being supported. It measures the change in allocable resources from one period to the next and then distributes the same percentage uniformly to each program or activity. This method relies on basic aspects of programs and activities being relatively the same from year to year.
Responsibility Center Budgeting (RCB) emphasizes program performance rather than central budgetary control. Under RCB, organizational units become revenue centers, cost centers, or a combination of the two. All revenues (college tuition, revenue from commercially viable products, and recovered overhead from sponsored programs) which can be connected directly to the efforts of the unit remains under the units control. In addition, the unit assumes responsibility for funding all of its direct and indirect costs (salaries, benefits, space-related costs for labs/classrooms, and funding cost centers which serve the unit such as the library, human resources and the budget office).
Zero-Based Budgeting (ZBB) assumes no budgets from prior years, thus each year’s budget begins at a base of zero. Each unit evaluates its goals and objectives and justifies its activities based on its benefits and the consequences for not performing it. At one level of the organization a priority ranking is given after considering the activity description, alternative levels of the activity, performance measures, costs, and benefits. Successive higher administrative levels then rank the activity and make the allocation decisions for each unit.
UNL's Budget Model UNL follows an incremental budgeting model where the prior year base budget is adjusted for enrollment, tuition rate, salaries, benefits, utility costs, special initiatives and new program changes. After each campus submits its enrollment forecast to Central Administration, the state appropriation is allocated relative to each campuses enrollment. In addition, incremental increases in state appropriations are made to fund any new legislative earmarks, for example LB 634-Wildfire Control Act (Neb Forestry Service).