CBE Forward Memo 1
Colleagues,
As we move into the coming year facing unprecedented challenges resulting from colliding crises, I hope you are all as well as can be expected. You’ve been getting information about the measures that UW and CBE are taking to keep our community safe and healthy, and more information will be coming in the next days and weeks. If you haven’t checked CBE COVID information page lately, it’s being updated frequently and is the best source of information. If you have questions or concerns about health or safety, please send an email to <CBEresponse@uw.edu>.
This summer has been unusually busy and there are developments in several topics for which I wanted CBE faculty and staff to be informed since they are critical to the strategic planning process, culture, and daily operations of the college. I’ll be issuing a series of “CBE Forward” memos and will set up a page on our CBE Intranet so you can reference this information without having to dig through your email. I’ll do my best to keep the memos as legible as possible, however they may be dense with information and conceptual mapping to the strategic plan discussions. Thanks in advance for your patience and engagement to read them through.
This first memo addresses something I know many of you are curious about, how the college is positioned to respond to the economic crisis created by the pandemic and how we will do so with innovation, equity, strategic focus and interdepartmental collaboration in mind. Our strategic planning process has shown us that we are stronger when departments and college work as a team complementing each other organizationally, pedagogically and in our research and community impact. The complementary approach is equally important for college finances and below I outline how this will play out.
Budget Overview:
Our college total annual budget is about $26M, this includes a range of revenue sources and expenses. The majority of our revenue is from tuition and the majority of our expenses are salaries/benefits, leaving a relatively small margin of discretionary expenses to work with in the reductions (see phase 1 and phase 2 below). It’s helpful for our budget planning to distinguish between revenue that is recurring (considered relatively consistent annual income such as tuition, fees, and endowments) and those that are non-recurring or time limited such as research grants, non-endowed gifts. This distinction is important in context of our recurring expenses (for example salaries of tenured/tenure track faculty or full time staff) compared with non-recurring (for example part-time or limited term faculty or staff). There are also funds each year that are not spent, some is flexible and some is restricted in its use. These “carryforward” funds will be critically important to ease these budget cuts so their impact can be lessened. Another use is a kind of internal bridge fund so we can continue to make strategic investments even as we are reducing in some areas.
UW also makes the distinction between General Operating Fund (GOF) and Designated Operating Funds (DOF) which are important to our calculations of the reductions outlined below but the explanation of the math and technical distinctions are too long to cover in this memo. Let us know if anyone wants a tutorial. Most universities, UW included, run on an annual fiscal year starting on July 1 and ending June 30. There used to be a biennium budget but this has been shifting to an annual budget basis at UW, though it is still beneficial for the college to plan our budget over multiple years and it is still the basis of how UW submits budgets to the state legislature. The nomenclature can be confusing since the academic year 20-21 (AY20-21) falls in the fiscal year 21 (FY21). This memo concerns the current FY21 which started in July 2020.
In CBE, we look at our budgets in 6 main buckets: One for each department and one that we call the “college” or “dean’s office” for everything not covered by departments. The majority of each department’s revenue has some relationship to the tuition earned by classes assigned to that department and the number of majors, known as Activity Based Budgeting (ABB), and the majority of expenses are in salaries/benefits. The ratio of faculty to staff and students varies, as does the proportion of salaries for tenured/tenure track faculty, affiliate/part-time faculty with some departments more heavily weighted to tenured/tenure-track and others more heavily on affiliate/part-time. The amount of carryforward also varies in each department, most is non-recurring and some is restricted.
Guiding Principles for Investment and Reductions:
Invest strategically – even in a time of reduction, choices can/should be made to invest in the future of CBE, ensure continued impact, and position us for the future. We will not “eat our seed corn” and we will use funds that can stimulate future revenue and advance goals outlined in our strategic plan.
Transparency – communicating key information at the appropriate level of detail for understanding and decisions, building trust through transparency, inclusive decision-making, clarity of roles in the decision-making process.
Collaboration – belief that our differences are complementary and working together to create a common foundation, which the CBE admin leaders have been calling “big boat” , that will raise the level of investment and impact for everyone, developing deep understanding for the different mechanisms that departments bring in revenue and set priorities for expenses, work towards shared values even if there are differences in the ways those values are applied to decisions
Equity – acknowledging different programs and departments have their own cultures around money, different levels of current needs, desires, assets and potential revenue sources. We will use equitable practices and policies in decision-making and make decisions that advance strategic plan equity goals.
Planning:
This year UW is facing reductions and will use a set of UW planning and budget guiding principles to determine how those reductions are met. All colleges, including CBE, will contribute to helping the university meet those reduction goals. At the same time, we are committed to continue to invest guided by our principles and our strategic plan. The reductions may slow the pace of investments, but they are essential to positioning us well for the future and for continuing to make progress on our goals. CBE leadership has developed plans for responding to budget reductions that are expected to roll out in 2 phases. Phase 1 has been initiated. Phase 2 reductions are likely to be announced in January, but planning is underway.
Phase 1 Confirmed Reduction: CBE has a confirmed reduction of $138,000 to our recurring revenue. We plan to make small reductions in each of our six budget funds.
Phase 2 Possible Reductions: Much is still unknown, but on Aug 5, the UW Office of Planning and Budgets asked Colleges to model three levels of reduction to a particular portion of our GOF funding, the levels and impact to the CBE are: 5% ($700K), 10% ($1.4M), or 15% ($2M). The reductions fall more heavily on the department budgets compared to the general college budget since it’s related to ABB income that supports GOF. After extensive study and discussion, I asked the chairs to target reductions that are 19% of GOF for two departments which were less dependent on GOF and 15% for others. Depending on the department’s reliance on GOF and the percentage reduction, the net effect on departments’ overall reduction ranges from 2%-10% of their total budget. Timing and amount is not known, the very worst case scenario is a reduction $2M that would be retroactive to the start of this fiscal year (July 2020) and as an ongoing permanent reduction. However, other more likely scenarios include a phased and potentially limited duration reduction, and it may be at a lesser level of reduction. It is anticipated that the legislature will start their session in January and UW decisions on college budgets would come in February 2021. If the worst case does not occur, we are the happy position of accelerating investment (see below on Goals 2 and 3).
CBE Approach:
Over the summer, chairs, associate and assistant deans have met regularly to have in-depth discussions on a variety of approaches to the current budget crisis as well as historical alignments or misalignments in how ABB was allocated relative to actual student activity. Each of the six budgets have been analysed to identify carryforward, flexible endowment funds, areas of potential reduction, potential for future revenue growth, committed funds that are inflexible. Unsurprisingly, there were variations in each budget. Consistently, discussions included the goals arising from the task groups and strategic planning process last year and we mapped how those goals connected to factors driving the different models. The CBE administrative leadership group explored investments that would benefit everyone, the conditions for justifying shifts from current budgets, and timeframes required for implementing change. We clarified three distinct goals:
Goal 1: prepare for worst case $2M reduction due to the pandemic economic impact
Expected Outcome: immediately adopt manageable and equitable reductions for each of the six budgets to be discussed in the department meetings in mid-september.
Note: If the worst case does not occur, funds can be used to accelerate progress on Goals 2 and 3
Goal 2: Develop the common foundation that will benefit all of CBE
Expected Outcome: 2-3 year plan to establish and invest in common good, immediately begin exploration of investments that will bring most value to the college, such as growing and coordinating current classes with broad appeal, new large classes if market demand is known, PhD investments, new faculty hires, other initiatives related to the strategic plan
Goal 3: Reach equity of resources, support, and contribution across departments and throughout the college
Expected Outcome: 2-3 year plan to achieve equity between and among departments in the college, immediately begin work to determine activities we have been valuing and see if they should change, look at differences and similarities in how departments handle revenue and expenses, reach agreement on what equity means for faculty and staff workload and contributions, and for student experience.
The CBE community will no doubt face challenges, but my goal is for us to make decisions in the context of a larger plan for transparent, strategic, and equitable investments that will help us as CBE moves forward. As always, I welcome questions and feedback, especially if the impact does not match the intent expressed above. I’d be happy to attend faculty meetings or meet with any of you in my office hours or other forums.