New Internal Financial Model Overview
The University of Virginia is embarking on an initiative to implement a new internal financial model that will assign and empower academic units with the benefit and responsibility of greater financial stewardship. The new budget model will provide improved transparency, predictability and flexibility for all stakeholders, enabling the University to more effectively and efficiently support the goals of the institution in delivering the highest quality education, research, public service and patient care.
Background and Rationale
The University of Virginia is recognized as one of the country's premier public universities. Its goal of continuous improvement and leadership in higher education, research and service relies on the ability to efficiently manage and accurately predict sustained financial resources.
These goals cannot be fulfilled using the current budget model due to significant obstacles and concerns that have been identified. In particular, the current University of Virginia budget model:
- is historically-based rather than aligned with current activity;
- does not include incentives for innovation, creativity, and revenue generation;
- does not consider all available funds;
- does not link resources and uses or consistently allocate revenue and expenses;
- does not appropriately engage academic and financial leaders in collaborative and strategic application of resources toward shared goals
- is not as transparent as it should be; and
- does not enable multi-year financial planning.
A new comprehensive and sustainable budget model must be built that will align activity, responsibility, and accountability with the goal of supporting decision-making in furtherance of the institution's mission. This new budget model will be designed for flexibility and responsiveness to frequently changing conditions, at the University and unit levels.
This is a significant and complex undertaking that will require the commitment of the entire community, including schools and colleges, research units, academic support units, auxiliary units, and central and service units. To be successful, the project must follow several guiding principles, including:
Transparent, Simple and Accountable: Under the new model, all units will be responsible for their financial, administrative, and academic performance. Allocation of resources to, between, and among all units must be easy to understand and administer, transparent, available and in support of the institution's strategic goals. Transparency, in all forms, will be a foundational tenet in our community, along with accountability, collaboration, and quality of service.
Incentives to Innovate: Academic values must drive financial decisions. Appropriate incentives will be built into the system that encourages academic entrepreneurialism, flexibility, and sustainability – while preserving the core identity and values of the institution. Incentives will also provide for efficiency, reduced consumption, cost transparency, and collaboration, while discouraging duplication, insularity, and protectionism.
Quality and Stewardship: The assets entrusted to us must be protected, and whenever possible, enhanced. The core institutional values of quality, access, diversity, scholarship, and community must be always at the forefront of our efforts. Ensuring the sustainability of information infrastructure and access to research support, preserving and maintaining the University grounds and facilities, as well as respect for the human resources and the intellectual capital of the institution are non-negotiable.
The University recognizes that in order to engage in this effort and adhere to these guiding principles it will be critical to develop appropriate reporting and analysis tools, systems, and training as an essential parallel project to this work.