WLU accepts new budget approach

Wilfrid Laurier University will be moving to a new budgeting model, called the responsibility-centred management budget method.

The responsibility-centred budget model forces academic and administrative units to be in charge of decision-making to ensure they are “responsible and accountable for strategic and financial performance.”

Jim Butler, vice-president of finance and administration at Laurier, explained the responsibility-centered management budgeting method is about bringing all government grants and revenue to university faculties.

The responsibility-centered budgeting method classifies units as either “revenue centres”, which controls revenues they generate, or “cost centres”, which are funded from central revenues.

“Conceptually what it is it’s all the revenue, tuition and government grants and deploying it through to the faculties,” Butler said.

According to Butler, the resource management team conducted a study as part of the Integrated Planning and Resource Management process, also known as IPRM.

The team looked at different budgeting models, which recommended that universities should now be using a responsibility-centred management model.

This led to the recommendation of the method by the IPRM, which was approved at the February board of governors meeting.

“There’s a growing trend now which is called an RCM model, some people call it activity-based, the most common language is RCM, and universities are moving in that direction,” said Butler.

Laurier’s 2015-16 budget report reveals the university developed their budget using the historical-based cost method, which provided differential cuts and increases over a period of time.

“The goal of this new budget model is to provide for a greater alignment of resources to the activities, allow greater budget flexibility within units, and incent faculties to generate revenue and reduce costs,” said the budget report.

According to Butler, around 50 per cent of universities use a historical-based budgeting model.

Between 30 to 40 per cent of universities are moving into the direction of the responsibility-centred model.

According to Butler, an implementation meeting will be on September 24 to get committees working on different aspects of the RCM model.

“It’s just a different framework and a different way of thinking,” Butler explained.

“Budgeting does affect behaviour and we’re hoping that the behavior that is created is better aligned with the missioning goals of the university.”