Budget Model Redesign

This project created a new budget model at WVU that defines cost and revenue allocation aligned with the institution's strategic objectives and budget management philosophy. Implementation of this new model is intended to improve institutional transparency, support decision-making and align around the University's strategic goals.

To begin the project, the project team established guiding principles and a vision for the budget model redesign. The project was divided into phases. The project initially was expected to last approximately 18 months from start to finish; however, this timeline was extended to support FY2023 and FY2024 financial planning and WVU's transformation activities.

Phase 1: Assessment and Visioning

This phase included data collection and review. Data collected included reports from our current systems and interviews with stakeholders. The data collected was used to assess opportunities and challenges.

Phase 2: Financial Modeling

This phase included designing a draft or test budget model using the information gathered in Phase 1. The project team socialized, refined and validated the test model using various scenarios. Our budget model foundation team will work to ensure that the model and assumptions align with the established guiding principles and objectives for this project.

Phase 3: Consensus Building

During this phase, there was additional stakeholder engagement and model customization. The work in this phase moved the budget model closer to a customized product. Throughout this phase, there was a series of meetings with University leaders to discuss budget model elements and framework. Additionally, broad campus communication events will be held to facilitate understanding of the model project as it progresses. The consensus-building activities began in FY2022 and continued into FY2023.

Phase 4: Infrastructure Development

This phase involved developing the infrastructure for the new budget model, including the refinement of processes, procedures, and policies to align with the new model design elements. This work was primarily completed during FY2023 but refinement of the model will continue through the parallel process phase in FY2024. View the FY2024 Financial Plan.

Phase 5: Parallel Process

The final phase involves testing our redesigned budget model through a parallel reporting process during FY2024. This phase involves comparing FY2024 data in our current budget format as well as the new model format.

The new budget model will be implemented completely by July 1, 2024 (FY2025), but budget preparation activities will begin in Fall 2023.

• Lisa Sharpe, Team Lead and Assistant Vice President of Financial Integrations for Strategic Partnerships
• Paula Congelio, Project Sponsor and Vice President for Division of Finance and Chief Financial Officer
• Paul Kreider, Vice Provost
  
• Victoria Thomas, Controller and Senior Finance Director for Health Sciences
  
• Dixie Paletta, Chief University Budget Officer and Assistant Vice President for Health Sciences Budget and Planning
  
• Vince Alvarez, Sponsored Projects Director for Shared Services
  
• Jaime Bunner, Director of Financial Projects and Compliance
  
• Jacob Kidwell, Assistant Director of Administrative Financial Planning for Division of Finance
  
• Tina Levelle, Associate Dean for Financial Planning and Management in the Eberly College of Arts and Sciences
  
• Jason Dean, Assistant Dean for Administration in the Benjamin M. Statler College of Engineering and Mineral Resources
  
• Simon Dover, Executive Senior Associate Athletics Director
  
• Julie Thalman, Assistant Provost for WVU Online
  
• Dan Stalnaker, Director for Facilities Management
  
• Mark Gavin, Associate Provost for Academic Budget, Facilities and Strategic Initiatives
  
• Katie Stores, Assistant Vice President for Strategy and Research
  

Model Structure

As part of budget model development, we focused on our organization and differentiating between primary units and administrative support units.

The proposed new model for WVU is an incentive-based budget model. This type of model shares five common elements related to the flow of revenues and expenses across the University:

• Direct Revenue Alignment is the revenue created by the revenue-generating unit, such as college tuition.
• Revenue Allocation transfers revenue ownership from central administration to the primary units that generate these revenues, including University tuition and fees, state appropriations and indirect cost recovery.
• Direct Expense Alignment is the direct expenses incurred by the respective academic units, like faculty salaries.
• Support Unit Cost Allocation pools central support costs and allocates these pooled costs to revenue-generating units through an allocation metric.
• Central Funding Mechanism is the ability for the University to create a pool of funds in the model by assessing a fee on select unrestricted revenues generated by the colleges, schools and other units. The funds generated from this fee will be used to support mission-critical units with under-funded operating costs, as well as enable University leadership to invest in strategic initiatives and mission-critical functions.

Each element may contain incentives applied through allocation rules or algorithms used to promote them.

The move to an incentive-based budget model would provide individual units with incentives to achieve positive financial performance. Each unit would have greater control over the revenue they generate and the costs they incur.