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Friday, February 5, 2016

The Compact Process and CLA, 2016

In a post last year, I described in some detail how the University’s compact process works. In this post, I provide the basics to understand this year’s process. If you would like a fuller understanding of the compact process, I encourage you to read last year’s post. If you’d like a primer of many other aspects of our budgeting, check out Chief Financial Officer Brent Gustafson’s overview. [PDF]

Overall objectives of the process

The overall objectives of the annual compact process are (1) to balance the University’s budget across the colleges and campuses through inter-unit reallocations; and (2) to reallocate and reinvest within each unit in alignment with the unit’s strategic priorities. These objectives include President Kaler’s commitment to the Board of Regents to reallocate away from spending on leadership, direction, control, management, mission support, and facilities and toward spending on direct mission delivery. Last year an additional objective was added: advancing the implementation of the strategic plan of the Twin Cities campus. 

For the most part, this year’s process is the same as last year’s. In the fall, the administrative and service units on campus (IT, library, student services, human research protection program, etc.) went through their phase of the compact process. CLA and other academic units received their compact instructions in mid-January.

What CLA must contribute financially to the process

The instructions provide an array of financial data. Among the most important data are the “cost pools” the academic units are charged to pay for the administrative and service units, including the cost of utilities and debt service.
For fiscal year 2016-17 (FY17), CLA will pay $89.4 million toward the cost pools, an increase of about $800,000 or 0.9%. Cost pools account for about 35% of total CLA spending. Cost pool spending exceeds what CLA receives in state appropriations by about $30-35 million annually. CLA also must put on the table spending it would forego in order to help the University balance the budget and to reallocate internally to support strategic goals. This amount for CLA in FY17 is $1.79 million. Additionally, we must put funds on the table for implementation of the TC strategic plan. For CLA in FY17 this amount is $842,000. Thus the combined total we must find for reallocation purposes in the compact process is approximately $2.63 million. This is better than the nearly $4 million we needed to identify in last year’s compact process, but it is still a significant sum. It amounts to about 1.6% of CLA’s budgeted FY16 non-cost-pool spending.

What CLA can receive from the process

The compact process also allows CLA to propose investments to be made through the reallocation funds. (This is the pot of funds toward which CLA will contribute $1.76 million.) We can also propose investments consistent with the TC strategic plan. (This is the pot of funds toward which CLA will contribute $842k.) In other words, while CLA contributes into the reallocation and strategic plan pools, we also have opportunities to receive funding back from these pools. As we did last year, we have asked the Council of Chairs for input on investment opportunities. As part of the process last year, for example, CLA received funds to invest in student career services, provide research opportunities for first-year students, invest in graduate student support, and a new faculty research grant program, and so on.

Using the process to advance our priorities

Those examples from last year show that we can use the compact process to advance our priorities and goals. Indeed, given that we don’t have the luxury to opt out of the compact process, it is in our best interest to use the process in that manner. In both the “stop doing” and investment sides of the equation, we should be guided in this process by our vision of being a destination college and by focusing our budget on our collegiate strategic priorities. These are outlined in the CLA Roadmap and its goals of student readiness, research and creative excellence, diversity, and public and alumni engagement. The compact process is challenging, particularly identifying funds to put on the table into the reallocation and strategic plan pools. But our best stance is to use it as a means to continue aligning our budget with building an environment in which research and creative excellence thrives among a diverse faculty, staff, and student body; undergraduate and graduate students receive tremendous opportunities to grow and succeed, and our communities are served through mutual and reciprocal engagement. As always, please submit feedback, questions, or suggestions to my Suggestion Box or to cladean@umn.edu.