We are moving to an incentive-based budget model. This new approach aligns our investments and resources with our strategic priorities by incenting the types of activities that drive both student and financial success. This includes generating funds, reallocating our resources toward our strategic priorities and better containing costs. Along with the incentives built into the model, we are developing a planning and budgeting process that creates a forum for schools, colleges and the central support units to discuss strategies and work together to achieve our priorities.
CU Denver has long used an incremental approach to resource allocation. This is a traditional, commonly used budget model in which budget proposals and allocations are based on the funding levels of the previous year. Under this model, new revenue results in equal percentage increases for all units; in hard times, budget cuts are typically across-the-board in reach.
This approach can be successful when revenue is steadily climbing. However, when a university (like ours) is financially dependent on enrollment and prone to swings in enrollment, an incremental budget can lead to financial uncertainty. Incremental budgeting typically does not encourage the type of action needed to create growth, properly reallocate financial resources or contain costs.
In Fall 2016, Chancellor Dorothy Horrell established five priorities to guide our ongoing success:
· Student success
· Scholarly preeminence
· Community impact
· Inclusive excellence
· Long-term financial sustainability
The budget redesign clearly supports the fifth priority, as this new approach provides us with more control and transparency around our resources to plan for long-term success. However, financial stability is the foundation for all our other efforts. Without a strong financial core, we cannot meet the needs of our students, support our faculty and staff or create a vibrant campus community. Our new incentive-based budget model is being designed to align our goals and actions with our strategic vision.
As Colorado’s only public urban research university, we must clearly articulate what differentiates us from other universities and invest in those unique strengths. With help from leadership at all levels, we can have important discussions, make strategic decisions and implement a more sustainable budget model. Ultimately, our hard work will allow us meet our goals and contribute to the economic, social and cultural vitality of our metropolitan region, our state, and beyond.