Devolved Budgeting: Its not just about the money

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Devolved Budgeting Its not just about the
money!
Jane Barnett Sue MacGregor Melanie Wilkey
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Introductions

• Jane Barnett
• Cardiff School of Sport
• Background
• Sue MacGregor
• Cardiff School of Art and Design
• Background
• Melanie Wilkey
• Cardiff School of Management
• Background

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UWIC

• Background
• Part of the federal University of Wales until
  this year.
• Funded by HEFCW not HEFCE so slightly different
  structure.
• Top up fees fixed, supplementary income stream
  from Welsh Assembly.
• Change 9 Schools to 5
• Who here hasnt gone through re-org in last
  couple of years?

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UWIC

• Historic Financial structure
• Resource Allocation Model (RAM)
• Budget for staffing held centrally, discretionary
  funds allocated to Schools
• Budget based on student numbers with various
  different factors also applied.
• Space utilisation
• Cross subsidy
• Now Central Resource Model (CRM)
• All School expenditure including staffing
  delegated to Schools
• Based on student numbers plus Enterprise and
  Research income.
• Increased top slice by 1.5
• Created Academic Development Fund
• Can be bid from by Schools and Central Units

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UWIC

• Centrally driven by clearer strategic intent
• Increase the corporate capacity
• View that central units provide a resource for
  the Schools.
• Devolution of responsibility
• Clearer strategy should facilitate innovation
• Central advisory function
• View units as resource rather than constraint

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Timescales

• Schools were merged in August 2006
• New budget allocations advised April 2006
• Planned expenditure for following year.
• All Schools budgeted for a deficit.
• All came in with a surplus.
• Sounds good, but bad for cash flow.

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Riches Beyond Expectation?

• Allocations look large
• Salaries very large proportion
• Change of attitude in the Schools re filling
  vacancies.
• Assume 3 salary saving per year
• Problems with achieving this?
• Assume 1 on staff development
• Plus 1 for re-structuring
• Impacts of National Framework Agreement on
  salaries.
• Significant increases between 2006 and 2008.

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Whose Pocket?

• Control over previous discretionary spend
• Dean
• Appointment of 5 Business Support Managers
• Generally responsible for day-to-day advice and
  responsibility.
• Dean has overall control and higher
  accountability
• Regular reporting to Governors
• Delegated schemes of responsibility
• To a greater or lesser extent across the Schools

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Whats it to you?

• How is information shared?
• Monthly management reports
• Monthly meetings with Accountant and Director of
  Finance
• Access to Agresso (financial reporting system)
• Who needs to know?
• Not permitted by Finance to post Management
  Reports on intranet.
• Share with budget holders on a monthly basis
• Who are the stakeholders
• Dean
• BSM
• Directors
• Heads of Department
• Academics - Projects

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Ownership

• New Heads of Department in all Schools
• Some have budgetary and staff responsibilities
• Lack of formal training
• Differing approaches
• One size does not fit all
• Understand Accountability?
• No central bail out
• No central cover for sickness/maternity etc.
• School management teams understand
  responsibilities.
• Previous culture still embedded in many areas.

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Programme Viability

• Model centrally driven by Finance to add to the
  budgetary toolkit.
• Provides information and a challenge to the
  Schools
• Easier in some Schools
• Successful assessment of viability
• Modular matrix in others makes it complex.

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Programme viability /cont

• Gives initial indication of a contribution of a
  programme
• Better marketing of programmes by academics
• Some programmes kept for prestige and balance
• Finances just inform the decision, they dont
  dictate it
• Able to identify the cross-subsidies
• Can be difficult to communicate
• Not all staff understand the funding model
• Underlying data is a snapshot

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Whose money is it?

• HR compliance process
• Ostensibly to ensure equity and equal ops
• Add an element of central control.
• However, rarely say no
• Estates and facilities
• Issues when it comes to new builds little
  clarification of who pays for what
• Controls over non-grant and fee income
• Research and Enterprise projects.
• Many overheads/staff costs not included.
• Profits and hence top slice are overstated.

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Whose money is it? /cont

• Communications and Marketing
• Lack of clarity over who should pay for School
  specific advertising.
• Collaborative provision
• Schools only get small percentage of
  collaborative provision income.
• Institutions strategic plans
• Filtered down into School plans
• Growth in overseas markets
• RDAPs/RAE
• Schools need to achieve targets, so budget
  allocation can be dictated by these

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Exercise

• What are the implications of moving from
  centralised to devolved budgeting?
• What do you think would be the barriers to
  success?
• How would you measure success for a devolved
  budgeting regime?

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What are the implications of moving from
centralised to devolved budgeting?

• Requires a clear idea of authority and
  responsibility e.g. for sign off
• Rely upon qualified administrative staff
  Faculty Managers etc.
• Danger of making decision that are not in line
  with strategy.
• Increased risk as well as benefits of being
  stand-alone.
• Tensions from central unit letting go of control.
• Need very good financial information.
• Be aware of grey areas, e.g. Service Level
  Agreements need to be defined with Central Units.
• Training issues level of budget management
  skills and experience within the School.
• Even though Schools given control and
  responsibility there may be restrictions, for
  example using preferred suppliers who may be more
  expensive.

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What do you think would be the barriers to
success?

• Fear of change
• Lack of knowledge
• Poor communications leading to rumours
• Lack of trust from senior managers and finance
  departments
• Lack of involvement in the budgeting process.
• Dont know how they are derived can lead to
  issues with effective management
• SLAs Understanding central unit and School
  responsibilities.

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How would you measure success for a devolved
budgeting regime?

• Planning decision making over a longer period.
• More informed decision-making.
• Using cross-subsidies to diversify and add value.
• Effective spending
• Is the annual planning year artificial?
• Preferred suppliers
• Better value for money
• Upskilling making managers more capable
• Change behaviour to enable achievement of the
  strategic plan.
• Balancing staying within budget and expansion.

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Cardiff School of Art Design - Background

• Academic Background
• 1800 Students
• 80 Academic Staff approx
• Few pathways are modular in nature
• Mainly standalone programmes approx 30 degrees
• General Background
• Merged Schools of Art Design and Engineering
• High union involvement

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Cardiff School of Art Design - Background

• High staffing cost versus income
• Programme viability exercise introduced
• Policy to reduce staff costs
• Succession planning in line with Portfolio
  Review
• Introduction of 5 department structure
• Involved further costly recruitment
• But needed for better management control

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Cardiff School of Art Design - Background

• Benefits of re-configuration and devolved budget
• Strengthened management and financial control
• Ability to recruit additional administrators
• Restructure of administration and support
  functions
• Problems include
• Managing expectations in tight financial
  situation
• Sickness absence due to stress
• Accusations of managerialism

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Cardiff School of Sport - Background

• Academic Background
• 1400 Students
• 70 Academic Staff
• 7 Undergraduate Courses
• 8 Postgraduate Courses
• Pathways are modular in nature
• General Background
• No merger
• Low union involvement

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Cardiff School of Sport

• Difficult to attain desired SSR
• Complex relationship between School, Sports
  facilities and AU
• No longer cross subsidises other Schools
• Historical financial information inadequate
• Many surprise expenditure items appearing in
  first year of budgets.
• SMPT had a lack of knowledge and background
• Items moved from central payment.

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Effects of Devolved Budgets

• Director of Learning Teaching
• Tighter financial management
• Better tracking
• Responsibility, flexibility, accountability,
  transparency
• Greater reflection of cost / expense of staff
• Greater time required for financial issues
• School is paying for resources that were
  previously supported centrally

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Effects of Devolved Budgets

• Finance Administrator
• Quicker decision making
• Better monitoring, and evaluation reduction in
  nugatory expenditure
• Better financial planning
• Less money for staff development
• More staff empowerment
• Recognition of administrators as relevant experts

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Effects of Devolved Budgets

• Head of Department UG Programmes
• More pressure and responsibility for management
• Consideration given to financial implications of
  management decisions
• Generally doesnt affect academic staff on
  day-to-day basis

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Staff Development

• Requirement to complete proforma for all staff
  development
• International Conference Committee
• Consideration of all other applications at
  Management Meeting
• Enterprise
• Individuals understanding there are other ways to
  get staff development
• Brought into project costings

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Effect on Recruitment Retention

• Need to recruit high quality students to target
• Retain those students
• Review marketing strategies
• - Magazine ads
• - Mail shots to schools
• - Open Days

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Cardiff School of Management - Background

• Academic Background
• 2800 Students (2000 on campus)
• 100 Academic staff
• 18 Administrators
• 14 Undergraduate degree programmes
• 6 Masters programmes (7 pathways on MBA)
• 2 Taught doctorates
• 2 Postgraduate certificates
• Pathways on all programmes are modular in nature
• Validating 1 new UG programme, 2 new PG
  programmes
• General Background
• Created by merger of UWIC Business School and
  Welsh School of Hospitality, Tourism and Leisure
  Management.
• High union involvement

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Cardiff School of Management

• High staffing levels
• In comparison with other Business Schools
• Maintained through merger
• Refresh portfolio
• Changed focus of staffing
• Added dedicated personal tutors
• Work placement co-ordinator
• Increase administration for more professional
  service
• 10 to 18
• Re-configure School
• Both old Schools had all staff directly line
  managed by the Head of School.
• Set up 6 departments in 2006/07.
• Reduced to 5 in 2007/08

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Cardiff School of Management

• New non-academic Dean
• Renewed focus on strategic planning
• Focus on employability
• Forging stronger links with local business
  community
• Advisory Board
• Sponsorship of local Business events
• Conflict with Union
• Lively dialogue with Research community
• Managerialism vs collegiality
• Historic Issues
• 2 sides of School wouldnt engage with process
  until 1st August 2006

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Cardiff School of Management

• Tensions with central Finance over funds from
  MBA.
• Trip fee top sliced.
• View that CSM subsidises the rest of the
  institution still prevalent within School
• New Heads of Department
• Experienced academics and programme directors.
• Inexperienced in line management, financial
  management and budgeting.
• Passing responsibility back up the line
  management chain.

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Cardiff School of Management

• Heads of Department
• Ad hoc training by DLT and BSM
• Away day and strategic planning sessions
• Issues with ownership
• School Directors
• Not used to having separate budgets
• Some were disengaged from process.
• Planning new building
• Opportunity to change how we work
• Less hierarchical
• Embedding of Enterprise with business as usual
• Increasingly broad ownership

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Cardiff School of Management

• Student Numbers
• Pressure to maintain profitable overseas post-
  graduate students.
• Discontinue programmes with low numbers of UGs.
• Research Enterprise
• Cultural change
• Academics are beginning to understand need to buy
  out time
• New Directors of Research and Enterprise for
  2007-08
• Changing focus.

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Conclusions

• Greater Awareness
• Security (poor security costs money)
• Insurance
• Enterprise
• Internal and External Grants available

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Conclusions

• Culture Change
• Staff more accountable in terms of staff
  development activities and conference attendance
• Equipment planning
• Finance becomes part of all major plans
• Awareness of pennies
• Reprographics
• Printers
• Laptops vs Desktops

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Conclusions

• Culture Change Required
• In Schools
• Across university
• Need for better communication
• Need for training (financial, management?)
• Clarification of financial responsibility
• Continuous professional development
• Academic community good at self-evaluation
• Innovation

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Do

• Ensure all relevant staff have appropriate
  training.
• Practical costing budgeting
• Soft skills
• Review processes and procedures
• Staff development
• Recruitment
• Control mechanisms
• Communicate
• Finance to the School
• School management team to staff
• Relationships with central units

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Do /cont

• Enable decision-making
• Ensure right staff in place
• Build positive relationships with central units
• Be proactive
• Be consistent
• Need to be fair
• Decisions need to be justifiable

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Dont

• Take for granted historical financial data
• Therell always be surprises!
• Assume everyone has same level of understanding.
• Many academic managers may have little budget
  management experience.
• Lose control
• Ensure that income and expenditure is correctly
  monitored.
• Be over cautious
• Predicting an overspend and coming in
  significantly under budget, can raise questions.

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Dont /cont

• Assume everythings in the right place
• Many transactions are coded manually into your
  accounting software.
• Expect culture change to happen overnight
• Gradual process.
• Burn bridges
• Central units can be a useful source of support.
• However, dont expect them to necessarily
  consider you when making decisions.

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Any questions?
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