This fall, we held for the first time faculty and staff convocations at the opening of the academic year. During these events, I had the opportunity to discuss some “big picture” issues with you and to look back at some of our successes and forward to some of our challenges and opportunities. Now, with the fall semester well underway, it is time for me to provide a campus update on matters that may be of interest to you.
We are nearing completion of a two-year effort to build an all-funds budget for the campus, which clearly identifies each of the different sources of revenue that are available to support campus operations and capital projects, and that also clearly identifies how this revenue is allocated to the campus. As you may remember from previous messages from me, this task has not been easy for a number of reasons. For example, due to a historical disconnect between hiring and budgeting processes, we had a number of permanent, filled positions that had never been budgeted.
Once completed, the all-funds budget will provide the campus with the critical tool it needs to create a stable financial model for advancing the mission of the university and addressing its most critical needs. Additionally, and importantly, it will provide much greater transparency with respect to UC Merced’s current financial state, existing challenges and future plans.
Currently, we have a reasonably accurate macro-level account of all revenue sources and macro-level operating base budgets as of the beginning of the current fiscal year. By “macro level” I’m referring to the largest campus divisions such as Office of the Provost, the schools, Division for Business and Administrative Services, Division for Development and Alumni Relations, Office of Planning and Budget, Office of Research, Division for Student Affairs and central funds.
The next step in the process is to build a much more detailed all-funds base budget that represents the budget categories most useful for planning, strategic management, accountability and transparency purposes.
For example, my own office includes three major areas—University Communications, Governmental and Community Relations, and the Office of Campus Culture and Compliance—and it will be useful for me to see these areas broken out in my budget.
Additionally, there are broad expenditure categories that cut across divisions (for example, information technology, advising, business management, etc.) that we may want displayed annually in the campus’s base budget for benchmarking and other strategic-management purposes. The heads of the university’s major divisions are providing feedback to the Budget Office regarding the categories within their divisions and across divisions for a more detailed budget display.
These changes are both new and important. To date, the campus has lacked a budget system and has displayed financial information in the categories used for accounting purposes. However, those categories are not always the most useful for strategic budget management and transparency purposes.
One question I continue to hear is, “When will units get their budgets?” The answer is that base budgets for the major university divisions are in place at the macro level while more detailed budget displays await the work described above.
The dollars currently allocated to these major university divisions may be augmented during the fiscal year once we are able to determine if there are any significant changes in the revenue and expense assumptions used to build the budget base. In the meantime, if there is an urgent need to augment the budget of one of the major divisions, a process has been established for doing so.
Another question I am often asked is, “What’s included in campus funds that are held centrally?” In addition to reserves needed to protect the campus, these funds are currently held centrally. (Some of these funds will be allocated to appropriate divisions in the near future.) Everything else currently available to the campus has been allocated to the university’s major divisions.
The final question I am often asked is, “What happened to the annual budget request process?” That process, used in the campus’s early years to request new positions and operating funds, yielded an enormous list of requests that far exceeded available funding and provided no clear process for prioritizing the requests and for making final decisions. With an all-funds budget in place, we will be in a much better position to understand projected revenues and expenses over time and to move to multi-year funding plans for new positions and operating budget enhancements. For example, every major division will have an approved and affordable strategic workforce plan that will be built into our budget model and, barring significant changes in the revenue and expenditure assumptions informing that model, divisions will know when they can expect funding for those positions to come on line.
This year, new funding was reserved almost exclusively for prior commitments (e.g., staff equity adjustments), mandatory cost increases (e.g., staff and faculty salary increases), and several “big ticket” items that the provost and vice chancellors collectively agreed were critical (e.g., faculty start-up funding and stabilizing the IT infrastructure). Here is the complete list of estimated commitments for this fiscal year.
Workforce planning—intricately tied to the campus budget process—involves planning to meet our most critical workforce needs as the campus grows to 10,000 students. While the first phase of the planning process was extremely illuminating, it also uncovered a fatal flaw: workforce plans did not align to budget, resulting in plans that we could not afford. Therefore, we froze the planning process until the budgets could be aligned.
With that completed, we now move to the next iteration of workforce planning, which will be guided by the hypothetical scenario that funding for new staff hires in each of the divisions will be roughly proportional to the percent of new dollars allocated to the divisions for such hires in the past. This may be a flawed assumption if it turns out there are greater future needs in some areas than in others, but the exercise will help bring budget reality into the process.
Our all-funds budget allows us to model the resources that we will have available for future staff hires and thus enables us to think more strategically about how to build that workforce within the constraints of fiscal reality.
Workforce planning needs to be based on “big picture” thinking and planning that looks at our future state. For example, how should our schools be structured as we approach 10,000 students, and what kind of alignment of staff support will this structure require? Are there divisional consolidations or realignments that make sense as we look forward to 2020 and the completion of the construction phase of the 2020 Project? Are there areas where we can gain efficiencies or enhance revenue through greater consolidation or collaboration?
The 2020 Project is the shorthand designation for our capital expansion plan. As many of you already know, we are pursing this as a hybrid availability payment concession project, which entails a long-term DBFOM contract with a private partner. DBFOM stands for design, build, finance, operate and maintain, but our hybrid version keeps much of the operational and maintenance components of this model in-house. The only exception is major building systems—the day-to-day care and upkeep of facilities and minor building and ground repairs will remain the responsibilities of the university. None of the jobs of our current operations and maintenance staff will be impacted by this project, and indeed we anticipate considerable job growth, especially among AFSME employees.
The modified DBFOM model that we hope to use—pending approval by the Board of Regents—will allow us to reduce the total cost of the project due to efficiencies of scale and will deliver new facilities in a more accelerated time span. Additionally, because it requires a private partner to maintain major building systems to a comprehensive set of specifications over the life of the contract, the campus will avoid the problem of deferred maintenance, which is challenging many older UC campuses.
Later this year, we will release a request for proposals from three qualifying world-class teams. Those proposals will include master plans for the second phase of campus development, partial building design, expansion of the Lake/Belleview intersection, proposals for accommodating parking and reducing disruptions during construction, in addition to many, many other elements. I am confident that the talent and competition between the qualifying firms will result in compelling proposals.
Still, this confidence carries the uncertainty of “not yet knowing” what our future campus will look like, how many buildings we will have, who will go into those buildings, and many other factors of interest and concern to the campus community. Once we have seen the submittals and entered into a contract with one of the three qualifying private partners, the campus will begin the process of determining the occupancy for new buildings and considering related matters.
A scoring committee—comprised of the provost, vice chancellors, deans, and faculty and staff representatives—will score the technical submittals, which will be judged based on criteria in seven different categories including: academic facilities; student life facilities; living and learning community design; community and workforce engagement; delivery; maintenance and operations; and sustainability. Technical expert panels, which include subject-matter experts in each of these areas, will provide technical assistance to the scoring committee. These technical scores, together with the financial bids, will provide the basis for UC Executive Vice President Nathan Brostrom and me to select the preferred bidder.
As with the transition to an all-funds budget and workforce planning, the 2020 Project requires significant changes in how things were done in the past. Change introduces uncertainty and at times confusion. It has not and will not always be perfectly managed, and when this occurs, the best we can do is to reaffirm a commitment to learning from mistakes and to engaging in robust communication and feedback processes. A tremendous amount of work has gone, and will continue to go, into these efforts, and I am deeply appreciative of all who are involved.
A Focus on Campus Climate and Diversity
We enjoy a wonderfully diverse campus, particularly with respect to our student populations. As a result, UC Merced is designated as both a Hispanic-Serving and Asian-American/Native American Pacific Islander-Serving campus. Not surprisingly, one of our first national rankings is directly related to this diversity. I am very pleased to report UC Merced has earned a #12 ranking in BestColleges.com 2015 list of the country’s 50 most diverse colleges, universities and other institutions that offer undergraduate credentials. (The rankings are based on four data points including rates of: acceptance, retention, graduation and enrollment.)
While we can take pride in the diversity of our student body, that diversity alone does not create a campus climate where diverse populations of faculty, staff and students feel equally respected and with equal opportunities to learn and succeed. And so, even as we celebrate our diversity, we must also be mindful of ensuring that we create a campus climate of inclusion and respect for all who work and learn here.
This summer, I authorized hiring UC Merced’s first Director of Campus Climate within the Office of Campus Culture and Compliance housed within the Chancellor’s Office. This position was created to coordinate and support strategic initiatives that promote diversity and inclusion at UC Merced for all campus constituents. Through this unique position, Director De Acker is working with others throughout the campus on accountability, infrastructure and resources that support inclusive excellence, where equal opportunity, mutual respect and cross-cultural collaboration are fostered. She is also developing an integrated conflict-management system for faculty, staff and students to voice their concerns, work to resolve issues and contribute to a conflict-competent organization.
In addition, this year we are launching the UC Merced Chancellor’s Dialogue on Diversity and Interdisciplinarity that will bring leading scholars to campus to discuss pressing issues confronting higher education today. At UC Merced, we value inclusion of multiple perspectives in all we do—in our interdisciplinary scholarship and in our strong commitment to diversity and inclusion among our student population, faculty and staff. The Chancellor’s Dialogue is designed to explicitly link these core values through a series of conversations as well as public lectures. The first lecture and discussion will be led this spring by Carlos Castillo-Chavez, Regents and Joaquin Bustoz Jr. Professor at Arizona State University.
In conclusion, although this campus update has been a bit longer than usual, I hope you found it informative. Please let me know if you have ideas for future topics you would like addressed, and please remember that I am available for open conversation on topics that you choose in my monthly Lunch with the Chancellor for faculty and staff. I look forward to seeing you there!