By MELISSA SCHILD
This month, we welcome Senior Vice Chancellor and Chief Financial Officer Hari Sastry, who shares his thoughts on the University’s new budget model, its development process, and ways the model supports the Plan for Pitt.
Q: Can you tell us why a new budget model has been developed for the University, and when will we start using it?
A successful budget model supports the University’s mission and strategic plan and does so in a transparent way.
Beginning in 2020, we undertook a review of the current budget model. The review uncovered a lack of transparency, limited authority or accountability at the responsibility center (RC) level, lack of incentives to raise revenue or reduce costs, and limited ability to support the significant strategic initiatives outlined in the Plan for Pitt.
The new incentive-based Budget ReSTART (Revenue Sharing to Accelerate Responsive Transformation) model addresses those concerns. It empowers RC leaders, as they have the best understanding of their operations.
Since Chancellor Patrick Gallagher approved moving forward with the model last fall, RC budgets are being developed under the model for fiscal year 2023 (July 1, 2022, through June 30, 2023).
Q: How was the Budget ReSTART model developed, and who provided input?
The new budget model was developed using feedback from discussions with faculty and staff over the past couple of years. Key to this process was the input from the steering committee that I co-chaired with Provost and Senior Vice Chancellor Ann E. Cudd.
The steering committee represented faculty and staff as well as administrative and academic leaders from across the University. The committee met multiple times over 10 months to develop the structure of the model, and their experience and knowledge were invaluable in helping to create the model.
Additionally, we held focus group meetings with all the RCs; had a retreat with all the deans; and conducted more than 50 meetings with deans, regional campus presidents and RC directors of administration. We also held sessions with key stakeholder groups including the Senate Budget Policies Committee, University Planning and Budget Committee, Faculty Assembly, Staff Council, Budget and Planning Community of Practice with directors of administration and business managers, senior leadership, and the Board of Trustees.
Q. How is the new model different from the current model?
The previous budget model was mostly incremental with budget funding primarily determined based on budgets from the prior year.
This year, for FY 2023, in the new model, schools and RCs will have a more comprehensive view of resources that will allow deans and senior administrators to evaluate and demonstrate improvements in their bottom-line performance over time. RCs will monitor progress using an income statement that will show a full picture of allocated revenues (e.g., tuition, financial aid, state appropriations, etc.) and costs (e.g., central support services) using the new model. This will enable the University to align resources with strategic priorities and award strategic initiative funding to high-priority areas that demonstrate favorably trending operating results.
While we recognize it will take time for people to become accustomed to the new model, we believe that over time it will provide greater transparency and will reward performance and innovation.
Q: Can you describe the governance structure that will support the new model?
The new model relies on existing structures and processes such as the unit-level Planning and Budgeting Committees (PBCs). We aim to further strengthen the existing PBC structure to ensure that faculty and staff are informed about and engaged in the planning and budgeting of their RCs through their PBC.
One additional committee — the Support Responsibility Center Committee (SRCC) — has been established. The SRCC will be an oversight mechanism for support costs that are allocated to the primary RCs. This committee will examine support RC budgets, review opportunities to improve service delivery and utilization of support RC resources and recommend budget levels that align with strategic priorities.
The existing Executive Budget Committee — composed of Provost Cudd, Senior Vice Chancellor for Health Sciences Anantha Shekhar and me — oversees the budget model and makes recommendations to the chancellor. This step is now a formalized part of the new model.
We developed a Budget ReSTART site that all Pitt employees can access to find more information about the new model.
Do you have questions about the Plan for Pitt or suggestions for implementation? Reach out to Plan4Pitt@pitt.edu.
Melissa Schild is assistant vice chancellor for strategic planning and performance and leads the University’s strategic planning efforts.