Pitt to move forward with new budget model amid concerns over ‘rushed’ process

Pitt will transition from its current incremental budget process to a new model called Budget ReSTART in fiscal year 2023, which begins July 1.

Chancellor Patrick Gallagher recently approved the new Responsibility Center Management-style budget model, which Pitt said “aims to empower academic and administrative leaders with greater oversight and decision-making authority.”

According to a Nov. 2 press release, the new structure gives more power to responsibility centers, or individual schools and other similarly sized business units within the University. The new model includes giving schools the ability to control their revenue and gives the University more control of the money that feeds into central support services and costs. The previous budget model afforded all of these responsibilities only to the University.

Provost Ann Cudd and Hari Sastry, Pitt’s chief financial officer, obtained input for the new budget model from 40 of the 46 RCs, 13 committee meetings and more than 50 meetings with deans, regional campus presidents and RC directors of administration. The University’s previous budget model used the prior year’s budget as a base before adjusting it for certain changes, such as employee compensation adjustments, in order to determine the budget for the following year.

“After nearly a year of input from University stakeholders including multiple meetings with deans, faculty, staff and shared governance groups, a new budget model has been developed and approved by the chancellor to move forward,” a University spokesperson said.

An RCM budget model allows entities that generate revenue to be in charge of how they choose to spend and manage that cash. For example, with the new RCM model, a Swanson School of Engineering student can still take classes in the Dietrich School of Arts and Sciences, but a set amount of that student’s tuition will go directly to Dietrich. Swanson would then decide what to do with the remaining money. In the current budget model, tuition money goes to the University at large, before specific expenses are paid out.

The University spokesperson said the budget model’s name — ReSTART — stands for revenue sharing to accelerate responsive transformation. The new budget “provides Responsibility Center leadership with greater authority and autonomy, and it enables them to resource and implement the strategic objectives in the Plan for Pitt,” according to the spokesperson.

But some shared governance leaders have concerns about the process used to develop the new budget model.

Tyler Bickford, co-chair of the University Senate’s Budget Policies Committee, said the planning for Pitt’s new budget model was “rushed.” He said administrators didn’t properly consult the committee, and the provost’s office has finally agreed to begin discussing oversight of the new budget model with the committee at its Friday meeting.

“My question is, is there even real participation and inclusion [in the budget planning]?” Bickford said. “The structures for overseeing the new model were treated as an afterthought. When the public found out that they were redesigning the budget model, faculty and staff were concerned that this was being done in private and without any true consultation.”

Bickford said Pitt did not inform faculty and staff of the budget remodel process until after the planning had already started.

“The actual structure of the budget process itself was done by a private steering committee chosen by the University,” Bickford said. “The administration, along with the Huron Consulting Group, decided to plan to complete the model in 18 months.”

Bickford said this time period to create the budget model was “aggressive,” and most universities spend three years developing RCM budget models, given their complexity when initially introduced.

“Administrators noted that this was an aggressive time frame,” Bickford said. “There was not an opportunity to involve all of the necessary participants.”

The University spokesperson declined to comment.

Pitt’s Faculty Assembly passed a resolution in May proposing the budget planning process be paused. Bickford said the budget model used by the University should not be changed until a “robust process can take place for overseeing it, the process and how it can move forward in a way that is inclusive of everyone who should be involved.”

Adriana Maguiña-Ugarte, the managing editor at the Center for Comparative Archeology and staff representative on the Senate Budget Policies Committee, said she remembers feeling confused when Huron first presented the new budget model to the committee in February.

Maguiña-Ugarte said she was even more “confused and disheartened” when she learned that the planning process for the new budget model ended in March, as Pitt had only started the process in 2020.

“I believe all faculty, staff and student representatives should sit together at the proverbial table to learn from the administration about the proposed budget model, the data, the application, the simulations and expected outcomes,” Maguiña-Ugarte said, “In return, faculty, staff and students should educate themselves on this matter and provide honest, productive input to the administration, as well as concerns they may have.”

Maguiña-Ugarte said faculty and staff have thought “for many years” that budget-related issues were “already too decentralized.” She said the Staff Council considered themselves “stakeholders,” but Pitt did not involve the council in the budget planning process.

“I felt that the new model was almost cemented and that my input was not really appreciated,” Maguiña-Ugarte said.

The University spokesperson declined to comment.

Maguiña-Ugarte said it’s important that every employee’s voice is heard in processes that may affect them. She said she hopes the new budget can ensure a better distribution of funding and compensation.

“I hope the budget model promotes collaboration, research and a recognition that every employee, and other stakeholders, contribute the same effort to the outcome,” Maguiña-Ugarte said. “I also hope that the new budget model does not create uneven areas where one compensates their employees better than other areas only because they have more funds.”

Bickford said he is open-minded and thinks an RCM model could work and be inclusive, provided there is more time and increased transparency.

“At some universities, faculty experience RCM budget models as a power grab by central administration, who control strategic investment pools that can be quite large. An inclusive oversight process would ameliorate those concerns,” Bickford said, “However, we do see a lot of institutions with RCM models that are creating distrust and pitting Universities and faculties against each other.”