The University administration has refused to release publicly last year’s annual revenue and cost attribution study, and is questioning the utility of the study (March 5 University Times). The study attributes annual revenues and expenses for each of the University’s major responsibility centers.
The Senate budget policies committee (BPC) disagrees with this decision because it is a departure from earlier years, and the Planning and Budgeting System (PBS) document (http://www.pitt.edu/~jdl1/PBSdoc.htm) states that “planning and budgeting decisions are legitimate only if they are both based on full information and arrived at through an open, formal process.”
I prefer the transparency (openness) that BPC seeks, but concede that the revenue/cost study is a complex document that can be misunderstood and misused by individuals who are not familiar with its purposes.
Moreover, keeping the revenue/cost study an internal document does not necessarily compromise the PBS process, provided unit heads and planning and budgeting committees (PBC) “provide opportunities for the relevant faculty, staff and students to participate as fully as possible” and the latter “have access to the proposals which are sent forward,” as the PBS document mandates.
Far more troubling to me is the questioning of the revenue/cost study’s utility by some University planning and budgeting committee (UPBC) members. It is not used to determine a unit’s annual budget and never was intended for that purpose. Consequently, the suggestion that the revenue/cost study should be discontinued because it is not used to determine annual budgets is a “red herring” argument.
The University’s 2001 self-study for the Middle States Association of Colleges and Schools states “the primary purpose of the [revenue/cost] study is to identify and categorize revenues and expenses for the University’s major responsibility centers,” and “The study is not aimed at changing the University’s method of budgeting for units, but rather at providing meaningful data to assist in the overall operational and long-range planning and budgeting process.”
The PBS mandates that each department and responsibility center develop an annual operational plan and budget. To aid in developing the annual plan and budget, the chancellor is charged to provide to each department, responsibility center and senior vice chancellor area “historical data … for a multi-year period on such matters as enrollments; student credit hour production and consumption; staffing information with regard to faculty, staff and graduate students; financial information by source and use of funds, and summaries of annual budget modifications.”
Much of the same information is included in the revenue/cost study, which goes one step further and attributes indirect costs and revenues to units. If the administration is required each year by the PBS to compile most of the information in the revenue/cost study anyway, how much extra work is it for a trained accountant to attribute indirect costs and revenues to units by a fixed formula?
I suspect not much, in which case the statement from the Office of Budget and Controller (that the revenue/cost study is “a very time-consuming enterprise. As resources get constrained, that’s when the question of utility comes to the fore”) makes no sense, unless of course they are not doing what the PBS mandates them to do in the first place.
In addition, the PBS document explicitly states that “the most recent revenue and cost attribution study also will be distributed” every year to each department, responsibility center and senior vice chancellor area, and “the policies and procedures specified in this [PBS] document shall remain in effect unless and until modified through the appropriate processes of University governance.”
Thus, any change in distributing the revenue/cost study each year to all units that participate in PBS requires the approval of the appropriate processes of University governance. The Senate leadership and BPC will be happy to work with the administration and UPBC to improve the utility of the revenue/cost study, if that is their wish. Until then, we stand behind the University’s statement in its 2001 Middle States Association of Colleges and Schools self-study that the revenue/cost study provides “meaningful data,” and expect it to be distributed as PBS requires.
I also take issue with the implication that BPC does not have budget oversight responsibilities. BPC is an official shared governance body of the University. Its mission is to offer advice on “the fiscal health of the University, the economic welfare of its faculty and staff, and the appropriateness and sufficiency of funds provided for the academic programs of the University.” That advice does not have to be taken, but we are all better off when we work together.
The PBS document states that BPC “is responsible for reviewing whether the PBS processes are followed and whether all constituencies involved are provided adequate opportunities to participate in the process and to be informed of its outcomes.” That cannot be done without access to information, and it sure strikes me as a budget oversight responsibility.
John J. Baker is president of the University Senate.