NU leadership: Allocation changes serve students’ best interests

Following more than a year’s worth of analysis and planning by senior leadership, the University of Nebraska will begin making adjustments in 2018-19 to the way it allocates state dollars to the four campuses to more fairly serve all 53,000 NU students.

The modest allocation changes will not result in any campus state-aided budget cuts, although ongoing budget-reduction efforts are taking place as a result of cuts in state appropriations. The changes in allocation will more accurately reflect the costs of educating students and will advance the university’s highest priority of ensuring excellent education for all, according to President Hank Bounds, University of Nebraska at Omaha and University of Nebraska Medical Center Chancellor Jeffrey P. Gold, M.D., University of Nebraska-Lincoln Chancellor Ronnie Green, and University of Nebraska at Kearney Chancellor Doug Kristensen.

“Our goal is to make certain every University of Nebraska student has the very best opportunity to be successful, no matter which campus they attend. The dollars we spend need to advance that goal,” the president and chancellors said in a joint statement.

“Our goal is to make certain every University of Nebraska student has the very best opportunity to be successful, no matter which campus they attend. The dollars we spend need to advance that goal.”

“Together with our colleagues in business and finance and academic affairs, we’ve spent a significant amount of time looking at the data and debating the pros and cons of various allocation strategies. Our approach going forward is pro-student, pro-University and pro-Nebraska – the standards by which we measure all our decisions. It fits where our university system is today and it puts us in the best possible position to provide all our students with a high-quality education. We are proud of the collaborative work that’s been done in the interests of our faculty, staff and 53,000 students, and we’re excited about where we’re headed together.”

NU’s current approach for allocating state dollars, in place since the early 1990s, is based largely on salary costs.

President Bounds, the chancellors, chief business and academic officers and others – aided by data from experts at the National Center for Higher Education Management Systems and in regular consultation with the Board of Regents – conducted a careful review of the current methodology and concluded the 25-year-old approach was no longer the fairest way to distribute the university’s limited state dollars.

Beginning in 2018-19, NU will allocate a portion of state dollars based on student credit hour production, with weights to account for programs that are more expensive to deliver, like engineering and doctoral programs.

Allocations will not purely be distributed on student credit hour production. Funding will also be influenced by the size and scale of NU’s institution and the unique role and mission of each campus. For example, funding for Cooperative Extension and the Agricultural Research Division in the Institute of Agriculture and Natural Resources will not change because of the new approach. Additionally, UNMC’s allocations will be based not on student credit hours but on a comparative analysis of peer institutions.

The impact of the changes is modest, particularly given that state dollars represent only a portion of the university’s overall resources. Each campus’ share of NU’s total state-aided budget is projected to change by less than 1 percent.

Bounds noted that while the review of NU’s allocation processes happened independently of budget-reduction work, any allocation changes are made more difficult when cuts in state funding mean there are fewer overall dollars to distribute. Thanks to lower-than-projected health insurance rates for next year and the good work of the university-wide Budget Response Teams, no campus will be required to make permanent cuts in the current biennium beyond the BRT efforts, assuming current state appropriation levels remain unchanged.

Fiscal challenges remain, however, and Bounds said university leadership anticipates difficult decisions ahead on top of budget-reduction work already being done. The Budget Response Teams are expected to capture $30 million in long-term savings to operations – savings that have helped protect, though not completely, affordability and the academic enterprise. Both tuition and academic programs will be impacted directly as the university continues to address fiscal challenges.

Unrelated to the state funding distribution changes, additional budget modifications are taking place on some campuses to address campus-level challenges like reallocation of funds for campus priorities and lower-than-expected student credit hour production.