New budget framework
The development of a new budget framework is a corporate priority for the University. The project began at the end of 2004 with release of a discussion paper and some underlying budget principles. Subsequent developments overseen by a Reference Group have led to an approved framework for implementation on 1 January 2007. The project is now integrated into the re-engineering of Finance One (the University’s financial system)
The aim of the project is to implement a new budget framework that better supports University strategy (hence the title given to the project “Better Alignment of Business Strategy and Budget Framework”). Like many other institutions in the higher education sector, the University has recognised that incremental improvements to the budget framework would need to be supplanted by a more integrated approach to budgeting.
The development of a new budget framework has involved a review of both the financial management reporting framework and revenue allocation models. Issues addressed include incentives, fairness, transparency, investment and transition. Some features of the new framework include the following:
- Gross revenue presented for all “business” areas (i.e. divisions/schools/institutes) of the University;
- A new service teaching model that recognises the role of the program holder;
- Discretely set expenditure budgets;
- A focus on Operating Result (i.e. the contribution made by each business area to overhead and strategic items);
- More direct costing to divisions/schools/institutes and recovery of University-wide (e.g. central unit) costs by means of levies on revenue; and
- Separation of University-wide costs from University-wide strategic items, with strategic items now funded from division/school/institute surpluses.
Under transition arrangements, no budget area will be better or worse off in 2007 as a result of moving to a new budget framework.
Medium Term Financial Plans for 2007 have been prepared in the existing budget format. The Finance Unit will recut these plans into the new budget format in late 2006 for application from 1 January 2007.