Transcript Senate Meeting
March 31, 2015

Patricia Duffy chair: Welcome to the special called meeting of the University Senate. We don’t actually have any votes, but it’s clear to me that we must have at least one person from every department given the number of people in the room. I have looked at the sign in sheet it looks like we do have a quorum although we don’t have any votes so we don’t need a clicker to establish a quorum.

I just have a few remarks today about the report and how steering has decided that this report will be handled in terms of the process in the Senate. Larry Teeter will present the report today as an information item, we will bring it back on April 7. On April 7 the vote will be to accept the report or not to accept the report. What it will mean to accept the report is not that you found a typo on page 3 and you would like that corrected, but really to look at the recommendations. To look at the recommendations to accept the report is to endorse the recommendations. The recommendations are all collected at the back of the report. If by chance the Senate votes not to accept the report at the April 7 meeting, then the committee will be asked to reconvene with your comments and not to revise the text of the report, but to come up with new recommendations based on the comments that we have in the Senate.

I just want to let everyone know how this is going to be handled and this is what Steering wanted and rather than having a resolution or substitute resolutions or things of that nature, just a clean up vote on accept the report which means, endorse the recommendations. We cannot, as a body, adopt the recommendations because that is not in our authority, these are recommendations that would go only to the administration. If the Senate is not happy with the recommendations, the next step is to have a revised set of recommendations come back at the May meeting.
So I am going to convene the meeting, I forgot to wrap the gavel and I am going to turn over the rest of the program to Larry Teeter, who will present the report. [2:21]

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: It’s a pretty good crowd. I know we don’t have this many Senators, a good turn out.

I am here today to report the study initiated last June with the passage of a resolution that we establish this committee. The Provost was kind enough to help us assemble the committee, he’s provided 6 members from the administration, on this particular list we have 18 committee members. We met 8 times as a committee as a whole, although there were never 18 of us there. And then we had a number of other sub-committee meetings along the way. [3:41]

I’d like to point out that Drew Clark and Marcie Smith provided outstanding support of our committee both in terms of explaining the current budget procedures; the things that we have been using for a number of years now and also the proposed RCM method budget model.

This was the committee charge in the resolution; to present a report to the University Senate by the end of March. So that’s why it was scheduled for today. What we’ve done is we reviewed the budget proposal. We’ve developed a couple of suggestions for modifying techniques within the budget proposal and a few separate recommendations that really don’t have much to do with modeling.

I am going to go over about 10 or 12 slides for those of you who forget the Provost forum meetings we had about a year ago, I think the last one was approximately a year ago. Just an overview of RCM and the current budget procedures and then we’ll talk a little bit about some of our recommendations.

Auburn’s current budget model is made up of individual budgets for each of the 4 divisions. The one we are concerned with most with this particular review and the RCM model presentation is Division I, which is the AU main campus. Division I monies consist primarily of state appropriations and tuition. We have a long history of incrementally adjusting unit budgets up or down relative to the previous year in accordance with swings and revenues. This is led primarily over the last ten years since the severe decline in state support has occurred to the situation with the Provost’s Office has few resources just to respond to changes in enrollment or to fund new initiatives.
There’s a lot of reasons we’ve heard through our discussions as a committee to look for a budget model alternative. One is this reduced state support situation that I mentioned, increased tuition dependency risk, which means that tuition is a larger and larger percentage of our total budget and that can be risky. Increased price sensitivity regarding tuition increases. So we don’t know where we stand relative to our peers in terms of competitiveness. We hope we are still very competitive, but we know if we continue to raise tuition at some point someone will choose to go elsewhere. And we are not really sure how that will all play out. Increased competition for students and faculty, students and faculty cost money in terms of waivers, if we are going to give them to outstanding students. And if we are going to attract good faculty we are going to have to pay high salaries and give them decent start-up packages. So we have to come up with that money. Increased faculty/staff salary compression issues, also a resources situation. And limited funds for strategic support of growing areas of research instruction or outreach that are currently in place or to take advantage of new initiatives.

So these were findings that were listed, findings of the Provost’s Budget Committee of what they had determined when they were thinking about investing time into a new budget model. Shift in a process for budgeting funds is needed to allow for fund allocation that is based on planned priorities and not just history. If you’ve been here as long as I have, you’ve gone through several iterations of strategic planning and yet if there are not additional resources or enough resources it is very difficult to meet your objectives.

Long-term planning as opposed to short-term allocations that are simply reactive; we want to be able to plan for the future. Stake holders such as departments, colleges and units being empowered to enhance decision making with the needed authority, responsibility, and accountability. This is a big change from our previous budget model in that much more authority is put in the hands of the deans.

The budget committee as they met, I don’t remember how large a committee that was (was that 18) but came up with a set of guiding principles for a new budget model. Prioritize funding of strategic initiatives aligned with Auburn’s mission, deliver consistent, accurate, and realistic financial projections while allowing flexibility to respond to future opportunities and unknowns; promote authority, responsibility, and accountability both locally and university wide; provide incentives for effective management of both revenues and expenses, and reward creativity and innovation and be simple transparent and logical. [9:19]

So under the Auburn version of the RCM method, the Responsibility Center Management method, colleges and schools are centers and deans are managers. The model involves an all funds model, which includes restricted and unrestricted revenues. So all the revenues go first to the dean. Revenues will be classified as direct revenues or allocated revenues.

So examples of direct revenues; differential tuition and course fees, gifts and private support, investment income. Those are examples are things that will go directly to the dean. Allocated revenues are items such as gross tuition, state appropriations, mandatory fees, and indirect cost recovery. The proposed RCM model does not weight student credit hours, but the model does us an accounting of student credit hours to allocate tuition to the colleges and schools. I just mention that there because we talk about student credit hour weighting later in the presentation.

Allocating gross tuition. The gross tuition is divided into 4 separate pools, we have an undergraduate pool that is further sub-divided into resident and non-resident and the graduate professional pool, which is further sub-divided into resident and non-resident. And then there is an allocation within those pools; for the undergraduate it is 70% to the college of instruction and 30% to the college of record, meaning where you have your major. For the non-residents it’s the same and for graduate students, 100% in both cases goes to the college of record. [11:24] It will be clear in just a minute why that’s the case.

For student aid and waivers, total gross tuition is offset by the amount the university (I’m sorry I used a different version of PowerPoint to create this than what we are using here.) spent on student aid and waivers. The expense, for instance student aid or undergraduate waivers, those decisions are made centrally by the administration and then the share of those costs are assigned to colleges and schools based on its share of gross undergraduate tuition. When you get a high share of gross undergraduate tuition you get a high share of student aid responsibility and waivers responsibility.

On the graduate student side the decision to award is made by the college or school awarding, which is quite different for us that have graduate students coming through and asking for tuition waivers. The decision will be made by the college or school, the shares assigned based on the actual waivers awarded by the college or school. So you know there could be some innovative things here for colleges and schools. They may decide to waive graduate tuition as they always have done or may decide to waive half or a quarter or some combination. Or encourage sponsors to pay for some of the waiver.

On the revenue allocated side, Division I state appropriation side, 70% is directed toward supporting resident instruction and academic support and 30% is supposed to be directed toward sponsored program support. Now on the first one it is based on the gross share of resident tuition and for the second portion the 30% portion it’s based on the college’s share of total sponsored program direct revenues.

On the indirect cost recovery side, everyone know how the splits used to work previously, but now 100% of sponsored programs indirect costs are recovered back to the recovering unit. And those resources will be paid back later to cover the costs of some of the services.

So now we have categories of expenses. Examples of direct expenses include salaries, wages, benefits, equipment, supplies, the typical list of direct expenses. And then there is allocated expenses which will be pooled into 6 different categories. The model will pool the indirect cost of administration and support services, 6 separate pools and allocate them to the colleges based on different allocation basis.  So for instance for academic and student service the basis is credit hour taught in the college. So depending on your share of total credit hours taught in the college that will be your share of those services, those service costs. For Alumni Affairs and Development it is based on student head count. For Facilities, square footage., facilities maintained.

Something added to this particular model is the Mission Enhancement Fund (MEF). This is the key piece that everybody seems to be most interested in. How it will work. Under RCM a college or school total revenues may be less than the full cost of its programs resulting in a negative margin. Negative margin means your revenues aren’t covering your costs, right? So the basic intent of the MEF is to contain an amount determine what’s necessary to provide those colleges and schools with negative margins, adequate support to begin their fiscal year at a break even funding level, plus any identified resources requires for strategic investments. So there’s going to be a determination of how much is needed to recover from all the schools and colleges to make up for the negative margins plus a fund for strategic investments. [16:03]

The MEF is generated through application of a participation rate to eligible budget and revenues of all schools and colleges. We’ve got included revenues, these revenues get summed in the application, or the participation rate gets applied to that sum of revenues and then we’ve got some excluded revenues that you don’t have to include in that total. The example that we will be talking about most of today, the participation rate was 17.5%.

So that’s just some of the highlights of what we heard at some of the previous meetings regarding RCM and why we need a new model or why the Provost thinks we need a new model, why many people on campus think we need a new model. We need to be able to use our resources more efficiently. But the committee has some concerns. There’s a concern that the model could produce swings in the annual resources available for our college or schools operational expenditures that would make it difficult for them to plan. If they are in negative margin territory depending on what the allocation from MEF is on an annual basis that could cause difficulty in planning for the next year.

Number two, there’s concern about magnitude of the shortfalls associated with higher cost programs under the approach to tuition allocation being recommended. Under the currently proposed allocation method it’s unlikely that many colleges will reach the break=even level without MEF funding. The break even level is this finish line where if you go beyond just a little bit you get carry over monies for next year or maybe for strategic investments of the college’s interest.

How will the historical distribution of funds by deans within the colleges compare to the proposed RCM model distribution. This was talked about quite a bit. We’ve got a way to distribute money to the deans, but then with same sorts of incentives be in place for departments and faculty within those departments. So will there be comparable incentives in place for them to reward increased efficiency.

More detail is needed for procedures for monitoring the effectiveness of any new modeling framework that’s ultimately adopted. There are some provisions for committees to monitor on a regular basis because right now I think the interval is 5 years on how this model is working and make some adjustments. We think maybe a little bit more attention be placed on those modeling procedures.
[19:10]
Okay, the next few slides deal with some modeling suggestions in relation to those concerns that we have. High cost programs will likely never get to a break even without help from the MEF and as a result seldom, if ever, be in a position to build reserves with carry over funds. So the committee sought alternative ways to get resources at the top. Allocate those tuition resources so that fewer units were left with large negative margins. So the sum of the negative margins was less. Two approaches were examined.

First one is weighted student credit hours. The idea here was that there is an acknowledgement that there are differences in the cost of instruction per student credit hour across the 65 departments on campus. A number of other universities implementing RCM have chosen some approach to weighting, some have chosen weighting student credit hours. According to the national study of instructional costs and productivity, referred to generally as the Delaware Cost Study, national norm costs per student credit hour by department range from $158 to $618 per student credit hour in those disciplines in which Auburn University has instructional programs. This was fiscal year 2012 data.

So since fiscal 2012 was the year that kind of was the base year for demonstrating the applicability of the RCM model, we have lots of information about fiscal 2012. We decided to use Delaware data from that year and then compare the modeling experiences that we had with the original presentation.

Weights were determined by normalizing the cost of instruction for each unit to the mean cost of instruction for the 65 departments. In fact they were slightly less than 65 departments, we’ve had to estimate costs for several that are not monitored in this Delaware Cost Study. For instance Veterinary Medicine.

These weights were used in combination with data on student credit hour taught by department to determine weighted student credit hour for each department. then we aggregated the weighted the student credit hours at the college level and determined the shares of university total weighted credit hours for each school and college. So you come up with a different way of sharing the pie, cutting up the pie, than was originally done. These shares were used to reallocate allocable gross tuition and fees.

We did have two slightly different assumptions from the base case, the original case that we were presented with. And first we made no distinction between in-state and out-of-state students with the rationale that it cost the same to teach a student from Alabama as it does to teach a student from Georgia, and that it is inefficient to use department college funds to recruit students from out-of-state, to use those funds in multiple states to recruit that out-of state tuition number. The university’s brand is primarily responsible for attracting out-of-state students. That was just an assumption.

The second change in the assumption is that all gross tuition and fees goes to the college or school of instruction. This assumption simply acknowledges the fact that there are no similar date, no good data, comparable to the Delaware data on the separable cost of advising working with students in house in your major.

So this is an example of when using student weighted credit hours how the 2 methods differ in terms of allocating tuition and fees. So on the top we have the original allocation, on the bottom we have the weighted allocation. And you can see the differences aren’t huge, but they do make some substantial differences…you will have to read it in the report, I’m sorry. Do you want me to read any of them out? (referring to type being small to read on the screen). [24:09]

I can go across the line If you want. Agriculture is 11.9, followed up by 13.1, Architecture was 20.9 and it goes to 21.3, Business was 53.2 and it goes to 43.8, Education was 30.4 and it goes to 31.1, Engineering was 41.9 and goes to 49.2, Forestry is 2.9 and it goes to 2.7, human Sciences 15.6 goes to 11.9, Liberal Arts 90.8 goes to 76.7, Nursing goes 6.9 to 5.9, Pharmacy goes from 14.6 to 23.6, Sciences and Math goes 63.0 to 61.0, Vet Med goes 15.9 to 26.1

There is significant differences, but at the same time you don’t have more losers in terms of their relation to their…how deep they are in the black. They are just different. This is just an example of what we call the executive summary sheet so you can see some of the other information that comes into play here.  Items 17 through 21 (I forgot how small this would project.) but those are direct expenses. We talked about those before. The key I wanted to mention is we’ve got revenues up here at the top where your tuition and fees is the only number we are allocating here. We’ve got direct expenses, you’ve got central unit allocations, costs to those central unit services. Down here the number we are going to be referring to is margin before Mission Enhancement Fund. If that’s negative that money has to be made up from the Mission Enhancement Fund. If it’s positive then, I don’t know what this college would do with 17 million dollars in the black, but I bet they wouldn’t get to keep it.

Using this redistribution of tuition resources and leaving other costs and amounts as they were calculated in the un-weighted case, the sum of the negative margin presented in the budget models as margin before enhancement fund (MEF) is reduced from negative 33 million to negative 13 million, nearly 60%. [27:09] So we have the Delaware weights in blue and the original un-weighted model in red.

Similar result for fiscal year 2013, the original model had a sum of negative margins of 24 million 8 hundred (24,800,000) thousand, and the weighted model had a sum of negative 9 million 3 hundred (9,300,000) thousand.

So what we are seeing is the reduction in this variance, this variability that units are facing. For instance here, we have a unit with a negative probably 7 and a half million-dollar deficit, and here with it weighted they have a slight positive, maybe a million dollar positive. Okay, that was just one approach. There’s a few more details in the report but we are just trying to demonstrate method really.

The second modeling approach was even more objective. I know when people hear weighted student credit hours it involves some value judgments with certain people. So this avoids value judgments associated with weighted SCH.

The method uses partial least squares regression to estimate the weights. The weights are applied as above to the allocable gross tuition and fees, so we come up with a different set of weights from a different process but they are used the same way in distributing funds. This is the simple little equation that was used to estimate what are called true weights in this approach. Tuition and fees plus the margin divided by tuition and fees is the weighting factor. Now we have the advantage here of having data from a past year so you can create true weighs from the data from a past year, and then determine whether you have some other variables that you can use to estimate those true weights to use in the future.

So this was, given the same 2012 data referenced above, true weighted tuition could be estimated and true weights determined. So these are the true weights that were determined. Now this vector of weights is what we want to estimate using other data. [30:03]

So 22 different variables were examined with this method and determining which of these objective measures gets us closest to that true weight in the final equation and of those 6 variables are selected. It seems crazy that they were this simple, but; resident undergraduate students, resident graduate and professional students, non-resident undergraduate students, non-resident graduate and professional students, the number of faculty, and the square footage of classroom space. So those were the 6 variables that were carried forward in the method.

So then the PLS model combines these variables in different ways to build components. Kind of like principle component analysis in that regard. And predicts the weight of these components and then ultimately predicts the weight of the tuition. So here we have what we called true weight. Here we have what we call predicted weights. Not exact of course. We could spend some more time looking at objective variables to build in the formula, but we come up with a set of weights that’s similar to the true weights. Then we can apply those weights back to the total applicable tuition and fees and come up with different allocations to each unit.

These weights were then used to allocate back to the units as was done with the weighted student credit hour example. So you can see how much the variation is reduced from zero when you use the weighted case. So particularly for the units that are in the negative, they don’t have to worry quite as much about making their break-even point. Or another concern expressed in committee asking some future Provost for money to make their break-even point to make their budget. So they don’t have as much money, they are not in the red as much so they don’t have to ask for as much. [32:33]

These are the final committee recommendations that we would be asking you to approve or not. Tuition and fees should be allocated according to some form of weighting procedure in the model. Wide variations in margin before MEF are not conducive to incentivizing deans and faculty. Two investigations of weighting methods, both gave more units a better opportunity to produce a break-even budget. Cost of instruction weighting is the most common approach used by other schools if they choose to use weights at all, but the PLS estimation approach presented here provides the best opportunity to arrive at a set of weights that will get all 12 schools and colleges as close to break-even as possible while minimizing the value judgments. [33:33]

Another recommendation. Reexamine the rationale for splitting tuition into various components; resident, non-resident, department of instruction, etc. If a weighting method is adopted as described above these splits will unnecessarily complicate the allocation of tuition and fees to units that need them to balance their budget.

This was talked about quite a bit. The potentially wide swings in how much could be required from the Mission Enhancement Fund and how much could potentially be held back by the Provost’s Office. So year to year reductions in funding should be kept to 3% of total revenues. That’s still a pretty big number for a lot of colleges, a couple of million dollars.

Many of the academic units will face a negative margin as they are forecasting the revenues and costs. In the 2012 example, 2 units faced a shortfall of over 10 million dollars. If the MEF contribution to the unit makes it solvent there is no problem, but if in budget negotiations the Provost suggests awarding less than that amount that reduction should not exceed 3% of the units total budgeted revenues for the year.

We understand that this situation would provide a Provost needed leverage in many cases, in some cases. So we are not trying to say that it has to come back to normal, but 3% seems like the most reasonable figure (as we discussed around the table(in committee)) to come up with.

Review the selection of basis for determining contributions to the central support allocation pool. One of the proposed guiding principles of the RCM process is that the process is simple, transparent, and logical. As part of the 5-year review steps that need to be taken to insure that no individual colleges carry a disproportionate burden of the costs of central support functions beyond their actual use of such services. We know that that’s in place in some of the outlines of how the committees will be structured for reviews. Just think that there needs to be an emphasis place on looking at those bases.

Institute a policy that encourages colleges and schools to prepare guidelines providing for the participation of departments and their faculty in the budget process. Many suggest that some sort of budget monitoring process be incorporated at the department levels that dovetail with procedures at the college/school level to ensure faculty buy into the new procedures. Faculty need to be confident that they are being treated equitably with respect to other faculty in other departments within a college.

That was it. So are there questions?
[36:54]

Patriciaia Duffy, chair: If you have comments or questions please go to the microphones at the side of the room and state your name and whether you are or are not a Senator. Thank you. If you are a senator, your department.

Ed Youngblood, Communications and Journalism, senator: This is going to sound somewhat selfish because I’m in CLA, but as I look at those figures I see CLA going from possibly the most profitable unit on campus to not being able to make its budget. In part fairly typically pay the faculty a fair bit less than say the Veterinary School. So what that means is you’ve got less chance for a program like CLA to then come in and raise faculty salaries to be more competitive if you are basing it on those figures. I don’t know if that makes sense? But, this is selfishly coming from somebody in CLA I am concerned when I see the unit going from extremely profitable to, on both models, loosing money. Somehow, I understand the need to even things out but that seems a little overly even. If you see what I mean.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:: Going from black to red is not a pretty picture I’m sure. I’m sure everyone saw their own college up there. You are not going to get away with any implementation of this method. There are going to be people who are in the red and some who are in the black. If it’s substantially in the black, I don’t know, we’ve talked about these numbers for a long time and I can’t see a particular unit keeping 17 million dollars in reserves.

Ed Youngblood, Communications and Journalism, senator: If I may, what those numbers are suggesting is not reducing that slightly, it’s putting the unit in the red, which is different than leveling things. It institutionalizes lower salaries. It does.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: We could have this discussion another time, but my guess is the market institutionalizes salaries.

Ed Youngblood, Communications and Journalism, senator: I can tell you in some fields we are not paying SEC averages.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Probably in not very many on campus.

Ed Youngblood, Communications and Journalism, senator: …in Veterinary as well.

Tom Smith, Human Dev. & Family Studies, senator: This is a big decision for us to come back next week and vote about. I am just wondering if we are going to have access to for example the original budget committees information and these reports online somewhere for the weekend; look at them, study them, talk with our faculty. It might not be a question for you.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: There’s lots of information on the Provost’s Web site and the Office of Institutional Research Web site.

Tom Smith, Human Dev. & Family Studies, senator: The original budget committee’s reports? Thank you.

Mike Stern, Economics, senator: Being an economist I’m not sure what the basis of cost weighting revenue flows is, I understand what the political basis is, I don’t understand what the economic basis is. However, since you committee proposes using weights and particularly estimated weights, I do find it odd that standard errors of your estimates are not reported. Normally when you estimate something statistically you will have to report a standard error, so I know about the reliability of it. If there is a wide standard error in those weights you are talking about unreliable allocation of tens of millions of dollars. So I would like to see the standard errors of those PLS estimates and starters and then show some confidence range, even 90% confidence range, within what the allocation looks like. That’s the same thing if you are going to use data from Delaware study to form weights. Depending on which year you use, you get different weights, which you also need. Millions of millions of dollars of differential, right. And since over time you can look at the Delaware data over years and looking at how much variation you typically see in time, so again, you are going to be looking at how much variation and the reliability of those numbers are because they’re sample data as well. Right? So if you are going to get into estimating any of that stuff, what method you choose, how often you draw the data for re-estimation, which year you use will make a difference and so forth in terms of millions of millions of dollars. Surely if you are going to run some regression scheme with some method and report some weights, the standard errors and those implications I think have to be reported.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Good point.

Connor Bailey, not a senator: I have concern that if a unit, any unit, goes 3% less, that can still be substantial numbers of dollars and given that a very high proportion of all college budgets are tied up in salaries, at some point if a unit was subject to that deficit and a future Provost, I’m sure the current Provost would never do this, a future Provost were to have some reason to want to downsize a particular unit, at some point you will have to start letting faculty go. So has your committee considered the implications for not only hiring new people but even possible financial exigency being declared and letting faculty go because of this reallocation model?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: We have had those discussions. (laughter)

Connor Bailey, not a senator: Go on… (more laughter)

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: And if we implement an RCM model at all, I think that will be an artifact of the model, that some money could be taken away from units on a regular basis to get it to behave in a different way whatever that might be. [44:01]

Connor Bailey, not a senator: In an extended period of time that could lead to financial exigency being declared for a unit and faculty being released?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Do we have votes on that? No, but we’ve talked about stuff like that. We are all worried about that, but we are hoping the model works great and we make more money in the future.

Cindy Bowling, Political Science, not a senator: I have two questions. One is thinking about how departments become more efficient. First thing that pops into my mind are larger class sizes, which is not a very good idea pedagogically. Second question I have has to do with graduate tuition waivers being completely allocated the particular colleges. So if my understanding is correct there is an incentive to take in-state tuition waivers instead of out-of-state tuition waivers. How exactly will graduate tuition waivers be allocated?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: There’s a difference between I think, there are some other people here who work with the budget numbers more, but we are budgeting ahead for next year right? So how many graduate students are you going to bring in? If you are going to bring in X number of graduate students you add the tuition dollars associated with those graduate students and then you decide whether you want to give them waivers or not. You can keep that money and not give them waivers or you can allocate the waiver.

Cindy Bowing, Political Science, not a senator: What exactly does that do for the incentive to recruit the best and brightest graduate students to increase our reputation?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: What incentive does that give me or you as a faculty member?

Cindy Bowling, Political Science, not a senator: Any college.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: You get to write better papers and do better research if you get the best and brightest working with you.

Cindy Bolling, Political Science, not a senator: But now we have less incentive to hunt out the best and brightest. We have more of an incentive to do an in-state tuition waiver than an out-of-state tuition waiver if we are paying for it all out of a college that doesn’t have a whole lot of money for graduate education. [46:25]

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: I’m not sure I understand that. As far as I’ve understood, it’s almost like a paper transaction. You

Cindy Bolling, Political Science, not a senator: Who is paying for the tuition waiver?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: The college. If a graduate student came and handed you $1,000 and you handed it right back to them that’s kind of a net zero.

Chris Newland, not a senator: The cost of graduate education is different than the cost of undergraduate education, especially the cost of freshman and sophomore education which takes place frequently in large classes. Within a college or some colleges there’re discrepancies across departments within a college as to how important graduate education is versus undergraduate education, but the weighting factors and so forth are all done by college. Was there any discussion in your committee about what kind of impact this would have say for departments within colleges that are heavy on undergraduate education and are struggling to mount a doctoral program? Alternatively is there a way of allocating weights more on a departmental basis or based on the density of graduate students in certain departments?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Well, the weights were determined at the departmental level and we only used the doctoral level institutions

Chris Newland, not a senator: But are they being allocated on a college level. The weights…

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: No, you applied to the student credit hours that you produced in your department and then they are aggregated to the college level.

Chris Newland, not a senator: Right.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Is that what you meant? So if your department produced 100 credit hours in 2011 and your weight was 1.2 then 1,200 weighted credits went forward to be aggregated with the other departments.

Chris Newland, not a senator: To the departments or to the college? All the weights are being allocated on a college by college basis, right?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: No, department basis.

Robin Jaffe, Theater, not a senator:[ 49:09] I work in the Theatre department, we never make money guys. So I’ve got two questions. You did a report based on one year possibly looking at 2012 or was it 2013?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Both.

Robin Jaffe, Theater, not a senator: Okay, can you go back 10 years and look at the data as you go through each year and what it would do to the college? If you are taking 14 million dollars every single year from the College of Liberal Arts to even out everything else, something seems not right because we lost money, so the next year do we get more money to balance that to the point where we are all balanced at one point? I don’t think we’ve seen enough data based on the years that exist to see what would actually happen.

The other thing that I have a question about is Facility costs. Who is going to pay for this? Does each department pay for…

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: The college.

Robin Jaffe, Theater, not a senator: The college. That’s a lot of money off the top. I know when we try to report to our NAS Association what costs have been covered, we use the data from the Facilities Division to talk about what was cost. When they come over to change a light bulb, when the come over and paint and touch up things, based on that, basic cleaning, basic maintenance there is going to be a point that buildings are going to start to fall apart because a department has to choose between giving money to their faculty, the students, or the building. Because there ain’t enough money to go around. I know that they have a differed maintenance plan, I have been working with Facilities for a long time, but that money is going to come from colleges? It is going to be a very difficult thing for everybody to swallow.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: I mean, we’ve got problems now.

Jerrod Windham, Industrial Design, senator: When this budget proposal was originally proposed the word incentive was thrown around quite a bit and talk of incentive toward faculty members, departments, the educational institution, the academic units and as we weigh whether or not to pass this next week, the recommendations, you spoke a little bit about one of the recommendations was to take a deeper look at the central allocation. And I was wondering where the incentive comes for the central allocation which I think is somewhere around 17% of revenues–where the incentive is for entities that are funded by the central allocation? Where is the incentive for them to cut costs? So if we can incentivize, the word tax was frowned upon, but incentivize that tax to come down. I would recommend that we put some kind of language in there related to that.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Are you talking about the charge that that pool would make and have to be allocated to the colleges and schools?

Jerrod Windham, Industrial Design, senator: Yes. It’s my understanding that all the revenues at some point, 17%, are taken from the units, the colleges and distributed amongst the central allocation.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: No, that was separate, that was a mission enhancement fund. If you are talking about that 17.5 number that I mentioned in the talk. That was a Mission Enhancement participation rate.

Jerrod Windham, Industrial Design, senator: Participation rate that’s required to fund all the schools right? But at some point you say that 70% of tuition as the budget model is currently proposed 70% goes to instructing unit and 30% to…that’s 100%. Ultimately somewhere expenses come out and I can’t remember what that number is. If I remember correctly, in the College of Architecture, Design, and Construction, we were very close to breaking even as far as revenues and our expenses were concerned until we needed to pay the central allocation fund. I guess my point is there is lots of incentive being thrown around toward the academic units to find ways to be more efficient and cut costs. Your recommendation toward that central allocation to reexamine how much that is that the units pay that is distributed across those units, it would be nice to see some kind of incentive toward those units to cut costs and ultimately cut that payment that each college makes. That’s just a recommendation to potentially to put in your recommendations.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: When we saw that variation shrinking with the 2 allocation methods, what that was doing was open the door for a lower participation rate. Then you’d have less negatives to have to pay back from the fund and depending on what the Provost needed for other initiatives, that rate could be quite a bit lower than 17.5%.

Jerrod Windham, Industrial Design, senator: right, and again all of that is the academic side of things. I guess I am talking about the administrative side of the university that is not bringing in students.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: We didn’t address that at all. [54:53]
(Some question not heard ) and LT response: To look at them again. I think it is the final one isn’t it?

Drew Clark, Director of Institution Research and Assessment, not a senator: I direct the Office of Institutional Research and Assessment and I just want to address your question. It is not a distinction between the recommendation coming from the Senate committee and the original model, both what you are hearing from the Senate committee and the original recommendation do allocate central unit costs to the revenue producing units, just as you described, perfectly accurate about that. I believe that the model in front of you does provide incentives for administrative units to control their costs because it sets up a governance group called a Central Unit Allocations Committee with faculty representation on it, htat would over time examine the budgets of each of the central support units over time and recommend values for them. This would lead not only to close analysis of these budgets in some cases for the first time, but would also lead to clarification of service expectations to address Robin’s question, What is in fact your contribution to the budget of the Facilities Division entitling you to on a periodic basis, and what would be an over and above charge? So I believe that the model being considered does try to bring focus onto those expenses. They are not mission accomplishing expenses they are necessary for the accomplishment of the mission but to the extent possible we ought to control them. [56:45]

Hulya Kirkici, Computer Engineering, not a senator: My question is and I understand weighted student credit hours is discipline specific, but have you also looked at the level specification, in other words, freshman and sophomore students usually cost less and whereas PhD students or Master students cost more. And if not do you think that could perhaps negatively influence the reputation of PhD programs? Because there is no incentive to recruit  PhD students.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: There is no distinction in the weights that we created. We took them from these norms of doctoral programs on whether they had many doctorate students or not in their programs or graduate students in their programs and when they contributed their costs information, I don’t know. At least we allowed for the fact that they had graduate programs on the books.

Bob Locy, Biological Sciences, senator: I was also serving on the committee. Larry, I hope I am going to help you here a little bit, but if I am not just tell me to sit down. Relative to the issue of colleges that go from positive margins to negative margins, I think all of us on the committee were concerned about that, but we need to remind folks that the numbers that you showed were pre-Mission Enhancement Fund contributions, so in any of the models it isn’t that there’s positive revenues that remain with the college necessarily because there is a mission enhancement funds provided in all of those models to bring us all back to equitable, to even at the end of the year. Am I not correct with that?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Well after the application of the Mission Enhancement Fund (MEF) there it’s not clear what happens to a program that’s in the black, even with the application of the  MEF participation rate it is still in the black. I’m guessing that they don’t get to keep lots of money.

Bob Locy, Biological Sciences, senator: The only point I wish to make was that is isn’t one college could be highly positive and wind up negative and therefore they have to sustain that negative balance at the end of the budget year, that’s what the MEF if for, to bring everyone back to equal. It’s only a question of how transparent we are with how much in the red or black they were before the Mission Enhancement Fund contributions, and trying to lower the overall Mission Enhancement Fund contribution that makes us consider weighted SCH averages as a method for allocation tuition. [1:00:02]

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: I think the MEF is designed so that it can bring all the units back to zero.

Ed Youngblood, Comm & Journalism, senator: If I may, if the MEF can bring everybody back to zero and if we can…if a unit is making an extra 14 million, say, well we’re going to take 10 million off that off the top, why do we need weights?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: they can bring them all back to zero. If you are 10 million in the hole and you’ve been brought back to zero for 5 or 6 years and all of the sudden a new Provost says that we want to go in a different direction with that program, I’m not going to bring you back to zero I am going to within 1 million bucks of zero.

Ed Youngblood, Comm & Journalism, senator: The idea if I, to make sure I understood, we were looking at non-weighted. You are looking at tuition dollars that a college is bringing into the university and how those are divided up, is that correct?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Right now they are not divided and past out as tuition dollars.

Ed Youngblood, Comm & Journalism, senator: I understand, I’m with you, but I am making sure I understood what the original proposal was. To say, you bring in x amount in tuition dollars therefore we are going to give you a percentage of that. Right? Okay, just checking.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: Could be higher or lower to the weighted scheme.

Beverly Marshal, Business, member of the Huron Steering Committee, not a senator: A question, under the original proposed budget model. You know we had this Mission Enhancement Fund as well, but there was excellent data in terms of really understanding the cost of instruction and the various programs. If the concern is abuse of power somewhere down the road, and large changes or swings in how colleges are awarded the MEF, was anything looked at other than weighted student credit hours about perhaps a plan to minimize any swings on the original proposal. Do you understand what I am saying? Leaving the allocations as they were, but putting in a mechanism like a committee or what ever that would be in place to make sure there were not large swings on any annual basis to the MEF allocations.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: The only stopguard put in was the 3% limit.

Beverly Marshal, Business, member of the Huron Steering Committee, not a senator: But I’m saying if you left the proposal without weighted and still had a Mission Enhancement Fund with restrictions as to how much that could swing you would still have valuable information about the cost of instruction and in the different units. And you are loosing that with weighted student credit hours. That’s my point.

Mike Stern, Economics, senator: I want to t urn back since I think the principle recommendation here is the weighting versus the original structure. I’d like to bring up a point that I raised when this committee was formed about this committee being un-weighted and then it recommends that we have weighted system. So I brought up when this committee was formed that the formation of this committee was not weighted to the size of the college or the fraction of the budgets or anything else, it was equally weighted between the colleges. Apparently that is a good thing to do to have equal weighting for representation, but when it comes to counting dollars from the different units, well those need to be discounted, but the voice of the college are not being made in proportion in making that decision. So I find it a little ironic that and unweighted committee recommends that we engage in weighting.

Pedro Cebollero, Foreign Language & Literatures, interim senator: I have a question that has partly been discussed, but I still have some doubts. This plan includes as I see only academic units, but I suppose also the administrative units in the university also have the control or costs and then share with the cost control and any possible reduction in budgets of the academic units. Is that also being included here? Was there any plan for administrative units to also do something similar? So that we can all share.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: We didn’t address that at all and I didn’t see any data on costs of administrative unit’s functions.

Pedro Cebollero, Foreign Language & Literatures, interim senator: Do you think it’s needed as something that should be added to this, to also include administrative units?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  In this particular budget model?

Pedro Cebollero, Foreign Language & Literatures, interim senator: yes

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  I don’t know how to respond to that. I don’t know how difficult that data are to come by.

Pedro Cebollero, Foreign Language & Literatures, interim senator: It seems as I see it, administrative units are keeping, are staying the way are whereas for example I come from a college CLA which is going to see a sharp reduction. Are we all sharing the cost of this type of budget, the academic units and the administrative units? That’s my point.
[1:06:00]

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: That a good one.

Bruce Smith, Pathobiology, substitute senator: I am hearing a lot of confusion and a lot of discussion about dollars. So I am coming from Vet Med and we’re gaining in the new model, but the first model and people talking about loosing 17 million. You don’t have that 17 million, this is a model, it is not what today’s budget is. The numbers that would be really helpful for us to see, I think, would be actual number under the model compared to what the numbers were. In other words, real numbers, such as in 2012 CLA had a budget of this much and under the model the budget would be…under model A this much more, this much less, etc. The mistake people are making are looking at the first model and going, we are in the black that’s great- we are making a lot of money now, I don’t’ think you are, I think that’s the model. (We are not looking at what is the actual figures) I personally am very pleased to see a model which brings things closer to the line because I come from a college where we significantly enhanced tuition costs because of our cost of doing instruction, so I think weighted for college expenses is very important when you look across the breadth of the university. I think it is important to actually look at what the numbers in the end would be with each model. That would be useful if you could generate that kind of number.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  I’m not sure what the 2012 model was, but I think they used actual numbers

Marcie Smith, a committee member: That’s a great point but we tried to do an exercise like that, 40 million dollars comes off the top of the budget allocations before the colleges even get a budget for just graduate tuition waivers. The cost of square footage, all the cost of facilities, so in going through that exercise it’s difficult to compare now because every college has those expenses allocated to them in a budget model where they don’t in the current budget, so they don’t have to cover those costs.

Rusty Wright, Fisheries, senator: I have a couple of points. What did you all use when you say classroom square footage? What do you define as a classroom? And second is I keep hearing the term incentives kind of bounced around. Are these incentives just for cost savings? Or are these incentives, what are these? I don’t see a pool growing here this is a fixed budget and we are just talking about moving the deck chairs around.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member: I don’ know where those numbers for square footage for those different cost categories come from, Facilities probably was involved, but I really don’t know how it was calculated.

Rusty Wright, Fisheries, senator: And are there any incentives for revenues? I am not certain what those are. I haven’t had a chance to look, I see incentives for cost savings, but are there incentives for enhancing revenues?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  Grants and gifts it looks like are good to me.

Rusty Wright, Fisheries, senator: So things that don’t appear in the allocation model.

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  Students in your program

Leonardo De La Fuenta, Entomology and Plant Pathology, senator: First I want to thank the committee for doing all this work. You have worked many, many hours to explain this to us and we appreciate it. I’m a biologist not an economist, but the question that I feel like you have not addressed is that it feels like what you are trying to do is minimize the damage of the new model. That’s what it feels like . So if there is damage with the new model how would that compare to just keeping things as we are now? What is the advantage to change to a new model when we have to minimize the damage?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  Someone else might have a better response, but I see a big part of the new model is in establishing a pool of resources that could be used to allocate the new initiatives. Or respond to changing conditions. That’s something that could be probably done with the old model, but never has been done with the old model.

Lisa Kensler, EFLT, senator: My question backs up a little bit. It is related to incentivizing and what the model is actually incentivizing versus what our strategic plan says we want to move towards. I think, at least one of the themes I heard in terms of criticism across our college for the new budget model is that it incentivized competition between departments and colleges. If we are incentivizing competition and yet saying that we also want increased collaboration and interdisciplinary work and innovation in those areas, did the committee grapple with that paradox at all? And if you did what did you find out?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  we discussed quite a few times the noise we’ve heard about OCM models and how different units will teach out of their discipline to try to attract students, create a course such as Forest Economics, something like that. Create a course where you wouldn’t expect to find that course., but because you hired and economist you can go ahead and teach economics and draw in student credit hours and that sort of thing that kind of competition we discussed quite a bit. I don’t know what you can do about that behavior wise, there are things that can be done along the way but…and curriculum committees need to approve those classes would have to be pretty observant.

Lisa Kensler, EFLT, senator: What are the implications for interdisciplinary type work or cross-departmental collaboration when you’ve incentivized competition?

Larry Teeter, chair-elect and Ad Hoc SCSB Committee member:  I am trying to think of what about what we just talked about incentivized or de-incentivized the cross-unit collaboration and the only thing would be is awarding money to the home college as opposed to the place where the instruction is done. Otherwise, somebody has got to claim that project. [1:13:44]

Any other questions?

Patriciaia Duffy, chair: I want to thank everybody for coming out. This is our third meeting in March, when we count the Faculty meeting, so I appreciate everyone’s willingness to come today. We are not having a vote today, the vote to accept the report which means endorse the recommendations will be on April 7  at our next Senate Meeting next week. If that doesn’t pass then we will ask the committee to come back with some modified recommendations in May.

Thank you very much if  there is not any new business or old business. Everyone is leaving so I guess I can adjourn.
[1:14:35]