The Budget Transformation Initiative launched in January 2023. The goal of this initiative is to support the university’s strategic goal of developing a budget that reflects Rice’s values and vision. The new budget model will enhance transparency and include incentives that enable schools and administrative units to better align revenue with the university’s priorities. During Phase I Discovery, campus engagement sessions and stakeholder interviews set the tone for collaboration and helped identify areas of opportunity for the new budget model.
Phase II Model Design, which began in May 2023, has progressed significantly over the summer and fall. The new model will be finalized in 2024 and implemented for the 2025 fiscal year as a hold-harmless year. The remarkable collaboration throughout the project exemplifies Rice's cooperative community.
During Phase II Model Design, the following key activities occurred:
- Committee Collaboration: The Steering and Design Committees have continuously been involved in pivotal budgeting decisions. New specialized working groups were also introduced to focus on space utilization, research finance, graduate finance and administration allocation methodology, Auxiliary indirect charges, and graduate tuition. More than 100 people have been directly involved in one of the committees, including faculty and staff.
- Actuals Model Formation: The university successfully crafted a model to reflect the current financial status, ensuring an accurate crosswalk to the new model.
- Preliminary Budget Structure: A prototype of the FY24 budget was prepared, serving as a foundation for decision-making about the structure of future budgets.
- Growth Planning: The team has assessed various growth scenarios to refine strategies and solidify decisions. Additionally, there is a working group with academic and financial leaders to provide support, validate data, and ensure a smooth transition.
The budget planning cycle for FY25, which begins in January 2024, will be based on the new model. Some of the key design decisions that were made include the following:
- The new model will be incentive-based. The new model is designed to promote and celebrate contributions to institutional goals rather than simply allocate budget to units based on the prior year (as in the existing incremental model). With the initial budget model roll-out in FY25 (hold harmless year), schools will see new incentives for instructional and research activity, as well as space utilization, allowing them to directly experience the impact of their work; support units and auxiliaries will see an incentive for space utilization as well as potential changes to distributive charges. Incentives may be adjusted and added in future phases (especially for non-academic units) as the Budget Transformation Initiative team continues to collaborate with units across campus and learn from implementation. This work is largely planned for FY25, with full implementation in FY26. Initial incentives create transparency, support strategic priorities and allow for direct impact of decisions that are made. Future refinements and continual improvement are expected as the university collectively implements and learns from the new model.
- A strategic investment fund will be incorporated in the new model. Some funds will be set aside for the university executive leadership to use on projects that match the university's central mission and goals. To realize its goals and vision, the university must base decisions on data and invest in significant opportunities that align with its mission and strategic priorities.
- The new model will impact all schools and support units. All units - whether school, support, or auxiliary - will receive funds through the new model, but schools are expected to be the primary focus of model changes and incentives in the near term (FY25). With the initial model roll-out, schools will see new incentives for instructional and research activity, as well as space utilization; support units and auxiliaries will see an incentive for space utilization as well as potential changes to distributive charges. This enhances simplicity and transparency while allowing for appropriate treatment of different unit types; including all units in the same model enables university leadership to track budget impact and make data-driven decisions.
- Net tuition will be used for undergraduate allocation. Undergraduate financial aid will be covered before any allocations to university units. This ensures Rice's commitment to affordability remains a top priority and removes any motive to cut financial aid spending.
The full decision log is available on the Budget Transformation website.
As the university steers through this phase, the community will be informed through email updates, Admin Forum presentations, announcements from unit leaders, and the Budget Transformation Initiative website. Community members who want to connect with the project team can email budgettransformation@rice.edu.