Update #57

TO:	The CMU Community
FROM:	Michael Rao
SUBJECT:	CMU Update 57

I hope that this update finds you well. Discussed below are some budget-related issues, efforts currently underway to clarify these issues, and plans regarding budget development for 2006-07 and 2007-08 and beyond.

With evidence that there was a lack of clarity regarding budgeting at CMU, in October 2004, the Budget Restructuring Review Committee (BRRC) was appointed and charged with reviewing the current operating budget policies and procedures at CMU and to make recommendations to enable greater budget management effectiveness and better connect spending with priorities.

Key Budget Issues

There are some complicating issues associated with the budget:

• CMU partially adopted a budget model known as Responsibility Centered Management/Budgeting (RCB) in 1998-99, prior to my arrival. When I receive both specific and general inquiries regarding the budget, it becomes clear that this decentralized budgeting model is not clear to many on campus. Most of the questions that I receive regarding budget matters on campus truly are not answerable in the president’s office under RCB. In fact, most can only be answered in the offices of budget center administrators where the majority of dollars are dedicated by virtue of the RCB process. Nonetheless, many members of the university community and beyond still believe that the president makes most budget decisions—including many of the smallest decisions which, in the context of a $300,000,000 budget, would be impossible for one person to manage, much less even be aware of.
   
• Currently, 31 budget centers exist at CMU, all of which hold responsibility for budgets in their particular areas. However, budget administrators lead differently and have different ways of gathering input on the budgets that they administer.
   
• The shared governance matrix, developed in 2001, offers limited guidance on budgeting processes at CMU and does not offer a comprehensive sense of how the budget is assembled: http://www.provost.cmich.edu/docs/expanded-shared-governance.pdf  (see section 4 on budget). It wasn’t intended to serve as even a guide for budgeting, but without explanation, the process of budget development at CMU remains unclear to most.
   
• While the creation of the Budget Review Advisory Council (BRAC) was designed to foster greater input from faculty and students before a final budget would be submitted to the vice presidents and me, most of the last five years have involved budget reductions. For two of these years, the reductions were deep enough to involve significant personnel actions that, according to legal counsel as well as my own experience, could not be discussed openly prior to informing the individuals whose employment was affected. Furthermore, BRAC’s role is unclear in a highly decentralized budgeting system in which budgets are developed at the center or unit level and also within divisions. As several former academic senate chairs and members of BRAC itself have reminded me, it’s not clear that there’s a meaningful role for BRAC.

Budget Development and Shared Governance

For faculty, it appears that the implementation of RCB in 1998 may have shifted consultation to the colleges from what may have been a more central level. Despite attempts through BRAC and other means to engage the faculty in budget development, it is evident that in an institution of our size that uses RCB, the most important opportunities for faculty engagement in the development of a budget remain within the academic and service centers within which most professors are assigned.

Completing the Implementation of RCB and Developing a Budget for 2006-07, 2007-08 and Beyond

To help the university and members of the BRRC clarify the RCB budget process at CMU, a founder of RCB and former economics professor, Ed Whalen, was hired. Dr. Whalen wrote a preliminary report containing recommendations that I ask you to review. The complete report as well as a summary of recommendations is posted at the following website: http://www.budget.cmich.edu/budgetUpdate/budgetUpdate.html. Open forums, at which Dr. Whalen will be present, will be held in March to provide the university community an opportunity to learn more about the consultant’s report, ask questions, and offer ideas and suggestions. I request your feedback regarding the report and budgeting at CMU no later than May 1 through a comment section that will be established at the budget web site (address to be provided when it is activated) or through one of the BRRC members:

George Ross, co-chair, Vice President for Finance and Administrative Services
Thomas Storch, co-chair, Executive Vice President/Provost
Karen Adams, Dean, College of Education and Human Services
Ray Christie, Vice Provost for Academic Administration
Barrie Wilkes, Interim Associate Vice President, Financial Services and Reporting
Gary Dunbar, Past Chair, Council of Chairs
Maureen Eke, Associate Vice President, Institutional Diversity and International Education
John Fisher, Associate Vice President, Residence and Auxiliary Services
Carol Haas, Director, Financial Planning and Budgets
Angela Haddad, Past Chair, Academic Senate
Robert Kohrman, Dean, College of Science and Technology
Marvis Lary, Dean, College of Health Professions
Sue Ann Martin, Dean, College of Communication and Fine Arts
Thomas Moore, Dean, Libraries
Terry Rawls, Interim Vice President/Executive Director, ProfEd
Bruce Roscoe, Dean of Students
Gary Shapiro, Dean, College of Humanities and Social & Behavioral Sciences
Daniel Vetter, Interim Dean, College of Business Administration

Two previous academic senate chairs, members of the BRAC itself, the vice presidents, and Ed Whalen have all advised me to dissolve BRAC. I get the message and hereby disband the BRAC. Although I am dissolving BRAC, I remain grateful to the current and past members who have served on this body.

I still think that we need a functional group, however, that can provide advice on the budget, particularly in that CMU needs to begin quickly to develop a budget for 2006-07. While it would be my preference to spend a few weeks gathering feedback on how best to secure advice on a 2006-07 budget, it appears more prudent to follow the advice of Dr. Whalen and form an interim University Budget Advisory Council (UBAC [referred to by Whalen as the President’s Council]). UBAC will be chaired by me and comprised of 17 budget directors, who will be assigned to represent all of the university budget centers (some of which are their own and others that are assigned to them to represent), plus the addition of two professors—the chairs of the Academic Senate and Council of Chairs. The charge to UBAC may be found at http://www.budget.cmich.edu/budgetUpdate/budgetUpdate.html. The UBAC members are:

Michael Rao, chair, President
Karen Adams, College of Education and Human Services
William Dailey, Academic Senate
Michael Fields, College of Business Administration
John Fisher, Residences and Auxiliary Services
David Heeke, Athletics
Monica Holmes, Council of Chairs
Robert Kohrman, College of Science and Technology
Marvis Lary, College of Health Professions
Steve Lawrence, Facilities and Energy Management
Michael Leto, Development & Alumni Relations
Sue Ann Martin, College of Communication and Fine Arts
Thomas Moore, Libraries
Terry Rawls, ProfEd
George Ross, Finance and Administrative Services
Bruce Roscoe, Student Affairs
Gary Shapiro, College of Humanities and Social & Behavioral Sciences
Thomas Storch, Academic Administration
Kathy Wilbur, Government Relations

As suggested by Whalen, the budget center structure will be reviewed by BRRC and possibly consolidated. Finally, the vice presidents and I will meet in the next month with the budget center directors in our divisions to begin and identify funding requests for new initiatives for 2006-07.

An approved Six Sigma project was initiated to seek coordination and alignment of the development of the university’s operating budget development process with the university’s strategic and vision planning process. The objective was to allow for timely development of the budget and to effectively plan and fund the strategic initiatives specified in the university’s strategic plan. Final recommendations for the Six Sigma project included a fiscal year budget calendar that aligns the strategic planning process with the development of the university’s operating budget. Please visit http://www.budget.cmich.edu/operatingBudget/operating.html for the calendar for development of the 2006-07 budgets (operating and capital).

Further changes in the budget development process for 2007-08, including implementation of additional recommendations from Whalen’s report, will be contingent upon review by BRRC and feedback received from the university community. BRRC will recommend CMU Budgeting Principles later this year that will guide the development of budgets for 2007-08 and beyond.