Activity Based Budgeting (ABB) is the University’s budget allocation system that was implemented beginning in FY 2011.  It is a method of distributing revenue based on each College’s contribution to the whole.  Types of funding distributed by this method are tuition and indirect cost returns.

ABB – Tuition

The distributed tuition pool is the Net Operating Revenue (after state mandated financial aid set-asides, self-sustaining programs, and other similar set-asides).  The Provost retains 30% of the Net Operating Revenue and 70% is returned to the Colleges based on its performance.  As of FY18, the 70% that is distributed to the Colleges is based on the follow allocation method:

Undergraduate tuition

• Student Credit Hours – 80%
• Degrees awarded – 20%

Graduate tuition

• Student Credit Hours – 80%
• Enrolled majors – 20%

ABB funding is dynamic and dependent on performance.  As a result annual funding levels can decrease as well as increase.

ABB revenue comes as projected funding at the beginning of a fiscal year and true-up, which is calculated at the end of the fiscal year.  Projected funding is based on the most recent college metrics (i.e., previous year(s) historical data) and true-up is based on actual historical metrics.  Because ABB is based on metrics, funding always lags actual performance by at least a year (two years for degree production because projections are completed prior to when spring graduation counts are available).  For example:

FY19 Projections – funded in July 2018

• AY 17-18 for Student Credit Hours
• AY 17-18 for Graduate Enrollments
• AY 16-17 for degrees

FY 19 True up – funded in July 2019[1]

• AY 18-19 for Student Credit Hours
• AY 18-19 for Graduate Enrollments
• AY 17-18 for degrees

Historically, average College of the Environment funding has been as follows:

Funding trends are driven, in part, by increasing tuition and overall campus ABB production.

When ABB was introduced in 2011, unit baseline budgets were reconfigured as a percentage of earned tuition and a percentage of “supplement.”  Supplement is the portion of the total unit budget that exceeds the amount “earned” under ABB.  Each unit within the College of the Environment has a supplement.  This is the portion of the budget that is directly funded by the state and is subject to overall state budget cuts.

Through their existing budgets, units hold the vast majority of the 70% of ABB funds that are distributed to the College.  Uses of new tuition funding (projected and true-up) received each year are managed at the College level and redistributed to units in a variety of ways including, but not limited to:

• Merit increases for tenure-track faculty and core administrative staff
• Annual unit budget allocations for unit identified priorities
• Costs previously covered by the Provost’s Office, including faculty promotions
• Unit teaching and technology infrastructure investments
• Faculty retentions

Annual unit budget allocation process

When funds are available units are asked to submit funding requests for the subsequent fiscal year.  Although investments emphasize academic program enhancements, proposals for research and outreach initiatives are also encouraged.  Permanent and temporary funds may be awarded and the size of the pool varies from year to year.  Decision criteria include:

• Total funding available
• Unit performance metrics (long-term Student Credit Hour trends, decreasing student numbers, etc.)
  • Units with strong ABB metrics typically receive some amount of permanent funding as well as additional temporary funding
  • Units with persistent increases in ABB metrics receive more funding than they would if they had static numbers
  • Units with decreasing ABB metrics will not immediately be subject to a budget decrease but if metrics continue to decrease over several years a budget decrease should be anticipated
• Impact of proposed activities on ABB metrics
• Efficiencies achieved through collaborative, cross-unit efforts
• Alignment with strategic priorities

ABB – Indirect Cost Return

Indirect Cost Return (IDC) was wrapped under ABB in FY 2013.  The Provost retains 65% of IDC and 35% is returned to the College.  The College’s portion of ICR is distributed as outlined in the CoEnv Research Cost Recovery policy.  The vast majority of the IDC managed by the Dean is returned to the units for a variety of activities including, but not limited to:

• Faculty startup packages
• Grant match/cost share
• Research facility upgrades
• Faculty Retentions
• Annual chair incentives
• Research and/or cross-unit Initiatives

Additional Resources

Introductory ABB PowerPoint

Office of Planning and Budgeting (OPB) ABB Webpage 

[1] Note that true up is always awarded for the subsequent fiscal year and is not retroactive.

Effective Date:  11/20/14
Last Review Date:  11/20/14