Why is a new model necessary?
Why has UF Changed its Budgeting Approach?
Extensive stakeholder engagement with over 200 individuals described UF’s historical budgeting approach as overly complex, lacking transparency, and posing barriers to understand investment levels across the organization. UF’s new budgeting approach establishes a simplified, data informed approach to direct resources to strategic priorities and provides a standardized, transparent view of sources and uses of funds within each university unit. These changes enable UF to regularly evaluate the optimal deployment of resources and continuously maximize their impact.
Why are Changes Necessary Now?
While UF is in a relatively strong financial position, the university is not immune to fiscal pressures facing higher education today. Modifications to the University’s budgeting approach establish a stable, healthy foundation and prevent more drastic funding adjustments in the future. Furthermore, the new budgeting approach supports a more nimble and financially sustainable model as the university navigates external pressures and pursues internal strategic initiatives.
UF’s new budgeting approach will help the University effectively manage, and successfully leverage, its resources in the years ahead. Below are a few examples of how these changes support a more effective fiscal management strategy.
- Strategic Investment Capacity / Operating Cost Profile – Since 2017, UF’s budgeting approach has excluded a substantial portion of operational cost increases in specific areas (e.g., Libraries, Student Life) from being passed through to revenue generating units. These unbudgeted cost increases have been funded using one-time strategic reserves. This approach has distorted a comprehensive picture of operating costs and reduced capacity for needed strategic investments in mission-critical areas. UF’s modified budgeting approach incorporates all operating costs into its comprehensive budget to achieve a more accurate and transparent cost profile.
- Inflation – Like other institutions, UF is facing significant cost increases for status-quo operations due to inflation (e.g., Utilities costs are estimated to increase roughly 20% in FY24). The historical budgeting approach is not nimble enough to account for these cost increases and has required the use of reserves to cover deficits. This practice is not sustainable in the long term and prevents reserves from being leveraged for more strategic purposes. The modified budgeting approach increases flexibility for the university to address inflationary pressures and provides leaders with detailed information to make resourcing decisions and mitigate cost increases where possible.
- Examination of Central Costs – UF has historically been intentional about managing central administrative costs and has rejected most central unit funding requests in past years. The modified budgeting approach provides campus with more data on central unit costs and establishes a rational, data driven approach to allocate these costs to units who ‘consume’ central services. This increases accuracy into the totality of costs associated with revenue generating units while enhancing transparency and promoting healthy dialogue between academic and administrative leaders. As an example of this collaborative dialogue, UF convened a strategic budget planning workshop with administrative, academic, and research leaders in December 2022 to identify short-term and long-term operational efficiencies within central administration.
- Long-term Fiscal Sustainability – UF is embarking on numerous, large scale strategic endeavors over the next 5+ years. The modified budgeting approach provides UF a clear understanding of current resource utilization and investment levels, enhances accountability around strategic commitments, and informs capacity for new initiatives. Ultimately, this elevates the University’s ability to perform long-range forecasting to achieve strategic priorities in a financially sustainable manner while avoiding potential fiscal risks.