PCM Budget Glossary

The long-standing budget website also offers a glossary of common budget and financial terms.

Academic units

The College of Liberal Arts & Sciences and the Professional Schools at KU that serve the students on the Lawrence and Edwards campuses. Instruction is their main mission. For the purposes of the Budget model, this category does not include Undergraduate Studies, Graduate Studies or KU Libraries, which are often involved in or provide instruction as part of their service delivery.

Contingency funds

Funds utilized to ensure (as much as possible) that the budget a unit receives at the start of a new fiscal year is consistent with the budget estimate provided in the spring. Contingency funds are most likely needed in cases of an unexpected shortfall in state funds or a reduction in the tuition proposal as mandated by the Board of Regents. Contingency funds are not permanent budget adjustments, but instead are a system for addressing short-term and unexpected needs for a given budget year. Contingency funds are drawn from university reserves and must be restored by the receiving unit in the following fiscal year. This means the budgetary impact of the unexpected event must also be addressed in the unit’s budget the following fiscal year through both restoring the cash to university contingency funds and addressing a base reduction for the subsequent year budget.

Cost drivers

Aspects of our operations that influence the cost of KU’s services. These can include a variety of things such as salaries, utility usage, subscriptions, space, student services, even enrollment.

F&A

The Facilities and Administration rate is the mechanism used to reimburse the university for the infrastructure support costs associated with sponsored research and other sponsored projects. The F&A is essentially the overhead costs that support research activity at KU.

Guardrails

A mechanism to limit the fluctuation — both increases and decreases — of budget revenue allocations from one year to the next for academic units. Generally, guardrails prevent a unit’s budget from changing more than 1 or 2 percent (plus or minus). This supports planning by unit leaders, including the ability to make sound decisions related to abrupt budgetary fluctuations. Similarly, a unit that reaps benefits through the new model will do so in a more staged manner. Guardrails allow for gradual change that encourages planning and responsible use of revenue allocated through the budget model.

Historical model

A method of allocating funds, where each unit’s budget is based on the allocation from the previous year, with changes in budget possible only through additional agreements worked into the model. The unit’s allocation could rise or fall in response to the overall change in institutional resources, with these changes done across the board and not based on metrics or other factors. Also called Incremental Model.

Hybrid model

A budget model that combines elements of both incremental and responsibility centered management to better fit an institution’s culture or structure.

Incremental model

A method of allocating funds, where each unit’s budget is based on the allocation from the previous year. The unit’s allocation could rise or fall in response to the overall change in institutional resources. Also called Historical Model.

OOE

Other Operating Expenditures

Priority Centered Management (PCM)

A KU-developed model that uses some of the advantages of an RCM model and also encourages commitment to and success in the university’s strategic priorities.

RCM or Responsibility Centered Management

A decentralized approach to budgeting. Units manage their own revenue and expenditures.

SCH

Student credit hour, a measurement of educational output, often associated with revenue generation. SCH also becomes meaningful as a method to gauge cost of instruction, as such costs can vary widely by discipline. Notably, all models have some correlation between SCH and unit budget, but only RCMs and our PCM do so in a systematic fashion.

Subsidy

Subsidy is a budgetary pool of funds that allows for the rebalancing of revenue to guide the direction of the university. The allocation of the subsidy pool is informed by metrics with a particular emphasis on cost of instruction, as well as the discretion of the provost in a transparent manner in the model. Some academic units may always require subsidy, while others may require a temporary subsidy due to enrollment or other market forces. Guiding principles will be employed by the provost in determination of subsidies.

Support units

Offices on the Lawrence campus that facilitate the operation of the university, or provide support or enrichment services for students, faculty and staff. This category includes the Office of Undergraduate Studies, Graduate Studies, KU Libraries, Office of Research, Student Affairs and more.