Resource allocation

Resource Allocation Techniques Centralisation Decentralisation Budget Policies Implementation/transition Reporting, Monitoring Case: University of Botonda

RESOURCE ALLOCATIONS TECHNIQUES

1. 2. 3. 4. 5. 6. 7. 8. 9. Across the Board (exceptions) Differential cuts for differing units Cut across evenly and add back differentially Vertical cuts Selective allocation Market driven approach Functional budgeting Zero base approach Enrolment or any formula-based method

SCIEN CE Fiscal year ending March 31st Less Cutbacks: 1) Organic Chem istry Position Currently Vacant (Assoc) 2) Physical Geography (Prof) 3) Botany Position (9 m onths) 4) Field Trips 5) Travel 6) 2 Assistant Lab. technicians 90% of previous year Plus Addbacks: 1) Inflation Factor 2) Field Trips 3) Botany Position (9 m onths) 4) Physical Geography (Prof) 5) 2 com puters 6) Organic Chem istry (Lecturer) 7) 10 com puters (Com puter lab) Proposed Bud get com ing year 20,000 4,000 20,000 30,000 6,000 20,000 30,000 920,000 924,000 944,000 974,000 980,000 1,000,000 1,030,000 $B1,030,000 $B 1,000,000

25,000 30,000 20,000 4,000 5,000 16,000 $B 900,000

RESOURCE ALLOCATIONS TECHNIQUES

10. My favourite - ALL OF THE ABOVE

DECENTRALISATION DEFINITION

Distribution of the administrative powers or the functions of (a central authority) throughout local or regional divisions, branches

CENTRALIZATION
Total control in limited hands Less University politics involved Ease of decision making Better ability to manage reorganization Outsiders will view the University as in control

DECENTRALISATION BENEFITS

Deans and Managers can be held accountable. Deans and Managers are best placed to make local decisions. Deans and Managers can and will manage. In fact, they like it. The University likely gets the best value for the money. Promotes empowerment, quality and higher morale. Has a positive effect on the budget.

MIX OF CENTRALISED AND DECENTRALISED EXAMPLE

CENTRALISED: 1) Position Control for all permanent continuing positions.
2)

DECENTRALISED: 1) Hiring, left to the department.

Block funding for operating expenses.

2)

Department chooses where to spend for operating expenses.

Budget Policy/Strategy

1- All expenses controlled centrally 2- Supplies are decentralised as well as the related deficit or surplus 3- Travel and supplies are decentralised as well as related surplus/deficit 4- All expenses decentralised (except benefits) and related surplus 5- Everything decentralised 6- Same as 5 with a tax on surplus

Budget Policy/Strategy 1 Salaries Benefits Travel Supplies Surplus Deficit

Central Faculty/department/admin unit

tax

Implementation strategy
Will for implementation Define goals of the institution Choose appropriate budget method Existing governing structure Representation Avoid imposition by government Schedule of timing Approval process

Implementation/ transition
Communication Support Policies and procedures Information systems Training Reporting and monitoring

Communication

Provide background information Identify the issues Sell the problem before the solution Explain the process that will lead to a formulation of the possible options Keep the community appraised of progress made Seek support from University Council Explain implementation strategy

Support
Planning at unit level Accountability Policies and procedures Controls Information systems, who needs what, examples of management reports Help line

COMPUTERISED SYSTEMS
Human Resources & Payroll Budget

Student Information System

Finance System Management Reports Other Sub-systems

COMPUTERISED SYSTEMS Contd.

Sub Systems interfaces Physical Plant Science Stores Print Shop Mail Room Telephones Many others

Reporting, Monitoring
Take a snapshot of financial data at a particular point in time ie. 6 months into the fiscal year Forecast the needs to the end of the fiscal year Evaluate forecasted position

DEPARTMENT X - FINANCIAL PROJECTIONS TO MARCH 31 1 2 1+2=3 4 Actual Projections Annual Annual to 1/1/ Projection Budget 31/12 to 31/03/ to 31/03/ to 31/03 Salaries: Faculty (1) Administrator (2) Clerical (3) Beneffits 20% of salaries Other Expenses: Travel (4) Supplies Photocopying $ 270,000 34,000 8,000 312,000 72,000 $ 75,000 12,000 8,000 95,000 21,800 $ $ $ $ $ 345,000 46,000 16,000 407,000 93,800 $ 360,000 48,000 32,000 440,000 99,600 $ $ $ $ $

4-3=5 Variance surplus (deficit) 15,000 2,000 16,000 33,000 5,800

$ $

$ $

$ $

$ Total for Department Notes: $

6,000 19,000 8,500 33,500 417,500

$ $

2,000 7,500 4,000 13,500 130,300

$ $ $ $ $

8,000 26,500 12,500 47,000 547,800

$ $

10,000 25,000 12,000 47,000 586,600

$ $ $ $ $

2,000 (1,500) (500) 38,800

(1) 3 months' savings from Dr. Away's sabbatical starting 01/01 to 31/03 (3) New administrator started April 20 - 3 weeks' salary savings (4) This new position was not filled until Ocober 1 (5) Chair to attend SUMA in February

Case: University of Botonda

Part 1: Describe the process, methodology resource allocation techniques, decentralisation vs centralisation, funding models and budget policies helpful to address the financial predicament at UofB Part 2: Present your findings to the Finance Committee