Strategic Budget Planning and Constituent Communication

Linda M. Kroll

Associate Vice President for Finance

University of Notre Dame

Office of Budget and Planning

101 Brownson Hall

Notre Dame, IN 46556

574-631-9135

Summary:

To provide a process that ensures that incremental resources support the University’s highest priorities, the University of Notre Dame conducts an annual budget process that links resources investments to strategic priorities. This process is guided by and includes participation from the executive leadership of the University, working in conjunction with University leaders and the Finance Committee of the Board. The process also includes a communication to the full campus community each fall on budget performance, the current budget, special interest financial projects and the future budget climate.

Introduction of the Organization:

The annual budget process and campus budget communication, entitled University Financial Update and Budget Outlook,benefits the entire Notre Dame community. The University of Notre Dame has an annual operating budget of approximately $1.2 billion for the fiscal year of July 1, 2011 to June 30, 2012. This operating budget is comprised 45 percent from educational and general operations, 38 percent from research/donor-restricted operations, 17 percent from auxiliary operations. The focus of the annual budget process is on the resource allocations and plans for the educational and general and auxiliary operations of the University, as these are the resources over which the University can designate use.

Overall, the University of Notre Dame, founded by the congregation of the Holy Cross in 1842, is a private, Catholic University located on 1,250 acres in South Bend, Indiana. The University serves a graduate and undergraduate population of approximately 12,000 students. Of the student population, 80 percent of undergraduates and 18 percent of advanced students live on campus. The University is centralized in its financial operations, meaning that revenues from each college are pooled and allocated through an annual budget process, rather than being assigned to colleges based on major or credit hour production. This practice enables the University to centralize decision making to focus on the highest strategic priorities. It also enables the application of University-wide cost saving programs, such as common procurement contracts and administrative systems.

Problem Statement:

With a centralized structure, annual resource growth from educational and general revenues and net auxiliary operations create resources to allocate to new priorities. To advance in the University’s strategic aspirations, new and existing resources need to be focused on the highest priorities. Also, to ensure there is common understanding of priorities, the campus community needs to be engaged in the process and have a regular form of communication to provide them with updates.

Design:

For the resource allocation process, the University benchmarked other schools to understand their annual budget processes and their methods of communication. Notre Dame also spent time exploring the culture and needs or our organization and structuring the approach by answering questions, such as:

  • Who needs input into the resource allocation process?
  • Who will need to support and communicate resources allocation decisions?
  • How do we ensure allocations are linked to strategic priorities?
  • How do we work collaboratively with campus and with our Board?
  • What forms of communication, and at what level, will be needed?

These questions were answered by internal brainstorming with key constituents. Annually, our processes and communications are re-evaluated and adjusted, as needed, by conducting surveys on key communications for feedback and by providing a feedback session for key participants to give their thoughts on the process.

Implementation:

From this work, it was determined that it would be beneficial to have participation from the executive leaders and communication and collaboration with both the campus community and the Finance Committee of the Notre Dame Board of Trustees. Having these groups involved ensured that resource decisions were supported and vetted at the highest levels and communicated across the Notre Dame Community.

To accomplish this, the Budget Working Group was formed. This group is an internal Notre Dame group, consisting of the President, the Sr. Advisor to the President, the Provost, the Executive Vice President, the Vice President for Finance, the Sr. Assoc. Provost, the Associate Vice President for Finance and the Sr. Director of Budget and Planning. This group meets throughout the fall to execute the following responsibilities:

  • Considers the environment and review analysis on core budget decisions, such as tuition, salaries and endowment payout, to name a few
  • Meets individually with each Vice President and Dean on their budget needs, including reviewing a template that is used by each area to show how any resource requests link to strategic priorities
  • Makes recommendations on core budget decisions and the areas for additional investment to the Finance Committee of the Board
  • Works collaboratively with the Finance Committee to show the linkage of the budget to the University’s strategic priorities
  • Communicates at the end of the process with Vice Presidents and Deans on what requests were funded, which were not, and why

In terms of communication, several approaches were developed to ensure that different groups received communications at the appropriate level. For the Vice President and Deans, individual meetings are conducted to review their needs and then, following budget deliberations, to review the outcomes of decisions. For the Finance Committee of the Board, meetings are conducted to review decisions of the Budget Working Group throughout the deliberation process. For the full Board, the Finance Committee chair provides regular updates at each board meeting (which are held quarterly). In addition, a document is prepared each year, and distributed prior to the budget approval, which provides each board member with narrative and financial information on the key budget decisions being recommended and the rationale behind these decisions.

For communication with the campus community, an annual document is created each fall entitled University Financial Update and Budget Outlook. This document is shared with all employees and outlines information on the financial performance for the year most recently completed, the decisions for the current year budget and information that will set the tone for future budget deliberations. Information on special projects is also included in this document, such as the status of fundraising, campus construction and other special projects. This document is available in electronic format and can be requested in hard copy. This communication is reinforced by Town Hall meetings conducted each fall and spring by the President and Executive Vice President, which provide the campus community an opportunity to receive updates and to ask questions on a variety of topics, including finances. To reinforce both of these messages, the faculty and staff newspaper also runs stories, timed with the fall communication and with the Town Hall meetings, to reiterate key messages.

Benefits:

Overall, this process is beneficial as it ensures resource allocations are aligned with strategic priorities and that all constituent groups receive regular and appropriate communication on the budget process.

Retrospect:

Each year, the Budget Working Group and the Finance Committee are asked to provide feedback on areas that are working well and areas that provide opportunity for improvement. For the University Financial Update and Budget Outlook document, an annual survey is conducted for feedback. Readership statistics are also analyzed. Since this document is delivered electronically, information can be collected and analyzed on document views per section, as well as overall document access and time spent in the document. Information from both of these forms of feedback is used annually to improve the process and the communications.