As the University of Kentucky deals with a 6.4 % budget cut for the upcoming fiscal year, a steering committee is looking at different models for developing a spending plan. Like many colleges and universities, UK has an incremental budgeting model. The current fiscal plan is used as a base, with the budget adjusted up or down from year to year. That model depends on stable funding, which hasn’t been the case for Kentucky.
“Right now it’s very difficult for folks to know that if they do innovative or entrepreneurial things, that good things will happen; that there will be a return. So they tend to manage to expenses. They don’t really have ways to increase the revenues, only ways to decrease expenses,” says Dr. Tim Tracy, who is now interim provost at the university and chair of the committee.
The 12-member group has been analyzing budget formats for the past three months. It’s exploring the feasibility of an incentive-based model, which takes into consideration the costs and revenues generated by individual academic units as well as how many students they teach. But Tracy says financial considerations wouldn't be the only aspect of UK's budget format.
“There are some [departments] that can’t generate as much revenue as others because of their model or just what they do, but that doesn’t mean they’re not important. I won’t try to single out one, but you can’t think of different parts of this university that we have to have that or we’re not really a university.”
Tracy says several colleges and universities have transitioned to a performance or incentive-based budget model, including Florida, Minnesota, Michigan, Ohio State, and Indiana.
UK could have a new budget format in place for the fiscal year that begins in July 2013.