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University Exploring New Funding Model

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In a landmark session of student senate Wednesday, Ohio University administration officials visited the body to discuss potential new models of funding and tuition costs at OU.

John Day, associate provost for budget, spoke about a new model of funding that the university administration has been exploring recently. Responsibility Center Management funding is a model for university funding that aligns university funds with the academic needs and successes of individual colleges within the university.

The ultimate goal of changing how the university allocates money is to more clearly balance the financial and academic needs of the university as well as providing a more simple and transparent budget that can be more easily understood.

The proposed system would allow the deans and administration of each individual college to make assessments on their financial needs and base their funding on the markers for success that the colleges themselves would create.

“One of the key components of the model is to drive the decision-making down in the organization to the college level. So one of the major points is to empower the deans to give them more decision-making power in aligning resources with their academic goals, and, in addition to that, this is balanced by those deans becoming more accountable and responsible for the decisions they make,” said Day.

This new model has been developed over the past five years through a partnership between the deans of the various colleges, the office of the provost, and Huron Consulting, a leadership management consulting firm hired to review OU’s funding system.

The markers determining how the funding will be split are largely based on factors such as enrollment, graduation and retention rate, but could be such things as student involvement in internships and career involvement, pending the deans’ preferences.

The current model is incremental budgeting, which Day described as obscuring how money is allocated to each individual college.

Many other state universities across the country use this type of model, including Indiana University and the University of Pennsylvania.

The timeline for this model’s implementation shows that full implementation of the plan will be completed in fiscal year 2016, with a gradual implementation and review process occurring over the next several years.

Vice President for Finance and Administration Stephen Golding added his remarks, elaborating on the fact that the proportion of university funding that has previously been dominated by state funds has flipped, leading state universities to make decisions based on tuition-majority funding rather than state funding.

In the second presentation of the meeting, Executive Vice President and Provost Pam Benoit outlined two very preliminary ideas for overhauling the way Ohio University approaches tuition.

“The conversation that we are trying to set up with our Board of Trustees as we look to the future if state support is going away… the revenue streams that have traditionally supported higher education and paid for the quality of the institution are no longer sustained… There’s a finite period of time for us to figure out how we’re going to fund higher education in the future,” said Benoit.

She stressed that these are very preliminary ideas with no certainty of implementation at this point. Discussions regarding the overhauling of tuition plans will be begin over the next two days, beginning tomorrow at 10 a.m. in Walter Hall.

The first was a program called Differential Tuition, which essentially refers to differing tuition costs based on the program, major or college the student is enrolled in.

“One of the benefits of a Differential Tuition program is that colleges that choose to implement that Differential Tuition use that tuition to provide new services to students, support new majors in the program that they weren‘t originally able to provide, address costs in the program and respond to the market demand for new degrees,” Benoit said.

Benoit described this plan as being the most cost-effective. By making the more expensive majors cost more to be enrolled in, the university could more accurately charge students for their given program of study.

She also outlined the dangers of this type of program, including potentially scaring certain students away from expensive but important programs like engineering or the various sciences with high research and lab costs.

Various business, engineering and nursing colleges around the country have adhered to this model in the past, amounting to 143 public institutions nationwide.

The second proposed model by Benoit was the idea of Guaranteed Tuition, which would essentially lock a student into the tuition he began paying at the beginning of his college career. This would require restructuring of current costs, but might end up saving students in the long run, as compounded costs are often more expensive than total costs under this program.

She described this program as having “predictability,” however she outlined several obstacles as well. Such a structure would require state approval in order to be implemented.

“Sometimes it’s gone wrong, and a lot of times it’s gone wrong because they didn’t set tuition rates at the right level, so they couldn’t sustain the program,” said Benoit.

Also in the meeting, senior Student Trustee Allison Arnold announced that applications for next year’s student trustee position were now available, and that an information session about the position with be held with her and junior Trustee Amanda Roden on Nov. 29. The applications are due Dec. 14.

 

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