Building Excellence from the Ground Up: New Systems and Tools Modernize UMD’s Budget System
The world of biochemistry has changed dramatically in the past 25 years; so have the worlds of architecture, business, political science, and virtually any discipline taught on UMD’s campus today. To prepare students for promising careers in these fields, universities must stay one step ahead of the practice, maintaining a nimble curriculum that includes new methods, technologies and advancements.
The same case could be made for a university’s financial operations; it’s difficult to make meaningful advancements as a campus without the latest information and practices that drive the business. Yet, while UMD has done an exceedingly good job at delivering the most relevant, cutting-edge education in the classroom, it has lagged in enhancing the fiscal engines that keep the lights on.
The idea that a first-class education is powered by a first-class, well-oiled institution has prompted a sea change at the most foundational level—how UMD sees and spends its money. For the past three years, under the auspices of the Offices of the Provost and the President, the Administrative Modernization Program has tapped the financial knowledge base of over 100 campus subject matter experts, including nearly half the campus College Budget Officers, and representatives from the Office of the Vice President for Administration and Finance, the Provost Office and the Vice President of Research. Working together, they are developing budgeting practices that tap into the university’s financial information in new and unprecedented ways, empowering financial managers with better data to inform decision-making, leverage their resources and plan intelligently.
“The budget re-model is an important first step in modernizing the processes that drive the university’s values and propel faculty, staff and students towards excellence,” said Cynthia Hale, Associate Vice President for Finance and Personnel. “As a university, we have seen enormous growth and innovation in the past decade. The budget model signifies our efforts to deliver state-of-the-art operations campus wide that are in line with that growth, and that position us for the future.”
During the first two phases of the project, the team pinpointed the challenges and limitations of the existing model to develop enhanced and practical methods that efficiently measure spending. The team’s efforts touch every aspect of the budget system and builds a framework that creates a never-before seen level of transparency, critical for tracking financial health and planning campus investments down to the local level. Several critical actions are integrated into the new framework, including:
Provide improved tools and analytics for campus decision makers: at the heart of the new model is a centralized system and set of financial tools—including enhanced reporting capabilities and streamlined expenditure codes—that empower campus financial officers to track revenue and expenditures easily, intuitively and consistently. This provides more accurate analysis, reliable projections and facilitates strategic decision making.
Broaden the budget scope for greater forward-looking detail: while historically the budget model has centered on state funding and tuition revenue, the new model broadens the budget scope to include additional divisional activity, adding department-level details for more than $75 million in annual spending; this provides a more accurate revenue and expenditure picture.
Enhance transparency to reflect actual use of funds: the new model applies more rigor in documenting the movement of funds across campus by fund type and by division, bringing more clarity and discipline to fund transfers.
“This is the biggest thing we’ve accomplished,” says Daniel Ramia, Assistant Dean for Finance & Management at the College of Agriculture and Natural Resources, and a core member of the budget team. “These processes, which were done off the books for so long, are now part of the system of record. This provides faculty and staff one place to see how they’re performing revenue/expenditure-wise. In turn, it allows the campus to determine where they are financially and provides a more realistic idea of what we will ask the state for in terms of spending authority. It benefits everybody along the way.”
The team is currently focused on phase three of the remodel, a fringe benefit pilot that began this year with the Colleges of Agriculture and Natural Resources, Behavioral and Social Sciences, the School of Public Policy, and the Division of Administration and Finance. Historically, the value of fringe benefits—enhancements like healthcare and pensions—haven’t been concretely linked to the cost of employee compensation or program costs. The new pilot integrates a calculated fringe benefit rate structure into the budget of each of the pilot departments; a dashboard developed for the pilot group recalculates the rate each pay period, allowing the team to see the true cost of fringe benefits and a more precise picture of how the pilot project is doing. This will allow campus leadership to determine if fringe benefit rates are the proper way for UMD to move forward.
AMP and the budget model leadership team continues to work with campus stakeholders to refine the model and forecast its long-term impact. An overarching goal is for the model to cross-cut all levels of financial administration; putting tools and training in place will be critical to this effort, ensuring a seamless transition and understanding for those handling financial tasks.
“We’re asking people to budget for things they’ve never done before, and we realize that can be intimidating,” said Ramia. “We want this campus to continue to be great and continue to excel. Our philosophy is to keep it basic and keep it simple, while arming the community with the tools they need to feel confident and comfortable moving forward.”
“Our financial information has been a largely untapped resource; the new budget model will ultimately help the university allocate money in more meaningful ways,” said Paul Dworkis, UMD’s Chief Financial Officer. “Bringing forth and relying upon enhanced financial information will help align the university’s administrative engine with benchmarks for achievement while stimulating the innovation that contributes to a thriving campus culture.”
Follow progress on the budget remodel project here.