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President Taps Budgets for Special Fund to Encourage Innovation

The University is moving ahead to identify funds for internal reallocation to be designated specifically for new ideas and initiatives in ways the normal biennial budget process does not allow.

To accomplish the reallocation, beginning with the 1997-99 biennium, 1 percent of all designated operating fund (DOF) and general operating fund (GOF) budgets will be collected and established in a central fund, to be known as the Fund for University Initiatives. It is estimated that the amount to be collected in the fund in 1997-99 will be approximately $8 million. On behalf of their schools, colleges, or units, deans and vice presidents will be able to propose programmatic initiatives for funding . The initiatives may be disciplinary or interdisciplinary and are intended to enable the University to respond to emerging needs in important areas for which there may not be an immediate, identifiable source of funding. Discussions of how the funds will be allocated are still in progress, though the decision-making process will be consultative.

In his speech to the campus last Nov. 14, President Richard L. McCormick cited the need to think strategically as a university and called on the campus "to make the hard choices to seize the right opportunities," and he spoke of influencing the University's evolution "in a directed way." "Those abstract words need a mechanism to make the idea real, to give it substance," said McCormick in commenting on the 1 percent assessment. "If we are going to do as I proposed last November, we need to have some flexible resources at hand to be able to fund some of the innovative and cutting edge developments around here, activities which we should be pursuing if we are to remain a leading, competitive, ever-changing and vibrant institution. To put it another way, as a University we are currently over extended, with no flexibility to do some of the exciting things of which I know we are capable. This 1 percent assessment will give us that small amount of flexibility to make some new and creative things happen."

The idea for the assessment has been the object of discussion for several months in the Senate Committee on Planning and Budgeting and the University Budget Committee. It has also been discussed by the Presidentís Council and received support from the Board of Deans. While there is a general recognition of the difficulty of turning back 1 percent for this purpose, there has emerged a consensus among these groups on the need to develop the institutional capability to fund such initiatives. The Board of Regents as well has been supportive of the University moving in this direction.

"Do we need this kind of fund?" asked John Junker, chair of the Faculty Senate. "I think any sensible, realistic person looking at the funding possibilities for higher education from the legislature, federal government and private sources would say Yes, new initiatives must be funded with existing resources, at least to some extent." Junker continued, "So what is the least bad way of getting this funding? A 1 percent charge per biennium, administered without exception across the campus, and available for new initiatives without exception across the campus, is the best notion Iíve seen of how to do this."

McCormick made it clear that the purpose of the fund is not to substitute for initiatives that can be pursued through existing biennial budgetary channels. It is intended to give the University the capability to move quickly in taking advantage of situations that arise outside of the two-year budget cycle. He also acknowledged that he has no misconceptions about how difficult it will be for deans and vice presidents to find the 1 percent money. "I am fully aware of how lean our budgets are. But we cannot let that fact prevent us from pushing the University forward, to force change in exciting and emerging new areas. We have to do it if we are to remain competitive with our peer universities who are not standing still."

Sue Hegyvary, dean of the School of Nursing and chair of the Board of Deans said, "The Board of Deans supports establishing the reallocation fund, because the University must have some funds available to respond to extraordinary opportunities on short notice. We know all too well that implementing a 1 percent reduction repeatedly in all units will require us to think differently than we have in the past--more toward long-range planning and less on short-term linear thinking. The key to success will be not only to reallocate the money to the right causes, but also to plan differently in all the units. In previous budget reductions, weíve tended to see only two possibilities: across the board, or vertical cuts, i.e., program eliminations. We have to create additional alternatives--integrating programs, updating support systems, collaborating across traditional departmental and school boundaries. The need to think differently is not unique to the UW. Itís happening all over the world."

"The notion of a true reallocation fund for the University is an exciting and timely concept," said Dean of Arts and Sciences John B. Simpson, "even though it will cause difficulties in its inception. This sort of fund has long been needed in this institution to enable us to respond to changes and opportunities in the academic world."

The following guidelines for using the fund emerged out of discussions among the deans, the University Budget Committee, and the Senate Committee on Planning and Budgeting:

  1. Resources from the fund will be dedicated to important programmatic initiatives, new or existing, that will result in a significant enhancement to the quality of the University.

  2. The fund will be established initially for a 10-year period and will be replenished by a 1 percent charge in each biennium. There should be periodic formal reviews of the effectiveness of this policy.

  3. The fund shall not be used as a general budgetary reserve or to "fix" problems such as unfunded inflation costs or state budget cuts.

  4. Support unit budgets will also be subject to the 1 percent charge. They should expect on average (but not individually), to receive allocations totaling at least 50 percent of the amount they provide.

  5. Proposals may be originated by deans, vice president and the provost. The provost will consult broadly and regularly with the Senate Committee on Planning and Budgeting, the Board of Deans, and the University Budget Committee on the use of the Fund.

  6. In circumstances of exceptional economic hardship for the University, the president may suspend or reduce the 1 percent charge.

  7. To the extent possible, allocation of the fund should be separate from the regular budget cycle.

  8. Discussion about the process of allocating money from the fund will continue in the Senate Committee on Planning and Budgeting, the University Budget Committee, and the Board of Deans.

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