Budget Primer
Purpose
UTRGV’s Division of Finance and Business Affairs in collaboration with Executive Leadership is responsible for developing a long-range financial plan, an annual budget, and a budgeting process that are all transparent, align resources with strategic priorities, and create incentives for structures that support advancement toward university goals. The purpose of the Budget Primer is to provide an overview of UTRGV’s financial budget model, an explanation of revenue and expenses, the annual budget process, and roles and responsibilities with the goal of providing readers a shared understanding of key elements and terminology that encompass budget resources, development, and deployment.
Budget Model
A budget model is a set of budget-related practices and processes used by an institution to generate its annual budget. Historically, UTRGV has generally used an incremental budgeting model where the current fiscal year permanent budget is used as a base to which incremental budget is added or subtracted from the base amounts to determine the following fiscal year budget. In specific circumstances, zero-based budgeting is performed on specific cost centers or departments as needed. Budgets may also be developed for specific initiatives as warranted. More recently, a pilot activity-based funding model was implemented with summer course offerings to begin looking at a more decentralized and incentive-driven budget model. UTRGV is also exploring Responsibility Centered Management (RCM) budgeting models or a hybrid of to provide a more decentralized budgeting system in the future. During this transition, UTRGV’s current model can be described as a hybrid model that includes incremental, zero-based, and initiative/activity-based budgeting.
Goals and Principles
The following budget process goals promote optimal utilization of limited financial resources.
- Link budgeting decisions with the UTRGV’s strategic plan.
- Prioritize new initiatives that promote student success, while maximizing revenues.
- Reallocate funds as needed to meet the institution’s highest priorities.
- Continue multi-year initiatives that provide salary and wage adjustments for students, faculty, and staff.
UTRGV applies the following budgeting principles that provide structure for the annual budget process and keeps individuals informed about key priorities and objectives.
- The budget process framework promotes and supports financial stability and sustainability while encouraging innovation.
- The budgeting process is committed to fulfilling UTRGV’s core priorities.
- The annual budget cycle is clear and consistent, with an established timeline, instructions, and prescribed processes.
- The interrelation of maximizing revenues while managing expenses are central to the budgeting process.
- Enrollment projections are developed and reviewed with input from Strategic Enrollment, the Provost, the Office of Strategic Analysis, Institutional Reporting, Student Success, and Graduate College (Enrollment Projections Team).
- The budget process involves long-term planning, including a 5-year forecast of spending needs, multi-year commitments, new initiatives, and revenue collections.
- Appropriate levels of funding for each school and college to support teaching activities is top priority.
- Unexpended balances (carry-forward funds) from budgets identified to have allowable carry-forward balances are considered part of the budget process.
- Clear goal-setting and established policies on items like the use of recurring and non-recurring revenues, new academic program budgets, and debt guide budget development.
- Operating budget documents include a baseline estimating the cost of continuing all existing programs and activities while considering cost increases, enrollment growth or decline, and other factors that may affect ensuing year budgets.
- Performance monitoring and evaluation of programs informs budget development and stresses accountability of resources.
- Transparency: UTRGV maintains its Annual Operating Budget and Legislative Appropriation Requests, and policies/procedures online. Planning and Analysis provides reports, and presents to campus community, including students, as needed.