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The Northerner

NKU to switch to incentive-based budget model

Richard Cracchiolo, Copy Editor

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NKU President Geoffrey Means and Provost Sue Ott Rowlands unveiled plans at a forum to introduce an incentive-based budget of funding that will aim to reward departments and colleges on performance.

The forum’s purpose was to help develop the university’s new model, according to Mearns. He added that the forum was was also to help NKU as a whole understand how budget decisions were made. Because of this, last spring a task force came together to evaluate NKU’s funding model.

“We specifically charged them to evaluate various budget models,” Mearns said, adding that the task force wasn’t picking a model for the university, but rather looking for the model that most emulated the goals within NKU’s Strategic Plan.

According to Ott Rowlands, this meant developing a budget that incentivised growth and entrepreneurship in NKU’s departments and colleges, which is where the bulk of the university’s revenue is generated.  

The task force wanted to develop a model that was in between a Responsibility Center Management model, one where individual colleges and departments would be responsible for their own revenues and expenses, and one where the university allocates resources to departments.

“Currently, what we’re doing is developing the guiding rules and principles and agreements that will allow us to operate in that sort of middle ground of an effective, transparent, decentralized, incentive-based model,” Ott Rowlands said.

From there, Ott Rowlands said the university developed two groups: a steering committee and an implementation team. The steering committee is developing the model that will be presented to President Mearns and the executive team and the implementation team will be working through technical and training components of NKU’s transition to the new model.

According to Ott Rowlands, the teams used six guiding principles that they don’t want to deviate from: accountability, simplicity, transparency, performance-based, reasonable predictability and data driven, which she says aren’t all present in NKU’s current budget model.

Some concerns Ott Rowlands perceives faculty and staff will have includes possible staff reductions or budget cuts, which she ensured that it wouldn’t.

“The goal here is to review the process and incentives and establish timelines, and so no budget will be cut as a result of this process,” Ott Rowlands said.

To help with this change in budget model, NKU has hired a consulting group, Huron, who has worked with other colleges such as the Universities of Denver, Delaware and Florida. NKU paid Huron $360,000 for a 19-week service that began in began in January and ends at the end of May.

According to Jaime Ontiveros, a Huron consultant who spoke at the forum, NKU’s current budget model resembles something he called an incremental budget. He said that incremental budgets are typically centrally driven and focuses on expenses. He added this means that institutions who use this type of budget look to control how they grow rather than how they can further that growth. The incentive-based budget that NKU wants, according to Ontiveros, would foster entrepreneurship within the university’s departments, identify subsidies within the departments and colleges and encourage effective and competitive administrative services.

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The Independent Student Newspaper of Northern Kentucky University.
NKU to switch to incentive-based budget model