University of Central Missouri Strategic Resource Allocation Model Board of Governors’ Meeting June 18, 2015

rpkGROUP. All rights reserved. UCM Story  Growth with Quality- Continued growth in undergraduate, and a concentrated emphasis in adult, online and graduate programs.  Student Success – Continued focus on increasing student success, especially for undergraduate, utilizing existing and enhanced UCM Contract for Completion.  Driving the Business Model – Focus on: –Maintaining access and affordability –Communicating our unique value proposition through UCM’s Learning to a Greater Degree market position –Expanding partnerships and strategic collaboration opportunities –Increasing efficiency –Aggressively growing higher net revenue models  Accelerating growth with quality, increasing efficiencies and maximizing innovation – this is UCM’s way forward. 2

rpkGROUP. All rights reserved. Team 1 - Focus KPIs by Area Student Success UG Completing 24 Credits Percent of Rank Progressing by 30 SCH Retention Grad rates- 4/6 yr Employment – 6 mo out Quality: Gen Ed Growth with Quality Applications/Yield Headcount SCH Mix UG/Grad/Online/Int’l Transfers Total Degrees STEM/Health Degrees # of Graduates w/prof and applied tech degrees Sustainability and Efficiency % of E&G Revenue per FTE/Revenue by Source Cost per FTE 1. Institutional metrics will continue to be monitored internally and externally to ensure that UCM’s growth strategy is achieved in conjunction with student and programmatic quality. 2. Focus KPIs in bold = Performance Funding Indicators

rpkGROUP. All rights reserved. SRAM KPIs – Initiatives and Investments For each KPI, the Team 1 subgroups developed initiatives and identified resources to achieve the targets. The detailed analysis includes the following elements:  Initiative and Expected Impact  Ownership  Timeline for completion  Definition of success (metrics)  Investment by type – personnel, operating and capital

rpkGROUP. All rights reserved. Preliminary Initiative Investment Summary Note: Investment estimates provided by Team 1.

rpkGROUP. All rights reserved. Process for Initiative Approval and Implementation  Initiatives will go through strategic funding process as developed by Teams 2 & 3.  Resources required for student growth will be evaluated as growth occurs – in total and by programs - using the following calculation: 6 Student Growth Marginal Cost per Student Net Tuition/Fees, and State Revenue per Student Marginal Revenue for Strategic Initiatives

rpkGROUP. All rights reserved. Team 2- Resource Allocation Model  Guiding Principles –Support University of Central Missouri values and strategic priorities; –Embrace a process that is simple and transparent at all levels; –Afford budget managers flexibility to optimize decision making consistent with institutional priorities and fiscal responsibility; –Provide clear, intuitive and direct budgetary incentives to enhance revenues and to control costs; –Include mechanisms to support both revenue and non-revenue producing activity; and –Use unit/area benchmark/productivity/quality measures, as appropriate, to guide budget allocation decisions.

rpkGROUP. All rights reserved. Resource Allocation Organization & Decision Flow

rpkGROUP. All rights reserved. New Resource Allocation Model Funds Flow

rpkGROUP. All rights reserved. Next Steps for Budget Model Development July – June 2017 Phase III Continue to implement new model for FY 2018 budget January – June 2016 – Phase II Determine parts of the new model to implement for 2017 Continue to run pilot and make changes as needed Train on tools and reports July – December 2015 – Phase II Educate campus on new resource allocation model Run pilot budget along side of existing model Develop tools & reports May – June 2015 Assess tool and report needsRefine model with policiesPresent to Board

rpkGROUP. All rights reserved. Team 3 – Strategic Funding Process  Key Elements –Tied to strategic priorities (strategic goals and positioning platform) –Straightforward, transparent, consistent over proposals and time –Drives alignment with key priorities, and holds proposing units accountable in order to receive future funding, and uses KPIs and other metrics in decision-making –Incentivizes unit buy-in and the generation of returns on investment –Designed to support both revenue and non-revenue producing units –Provides for proposals to be supported through the annual strategic funding process and through ongoing discretionary funding 11

rpkGROUP. All rights reserved. Strategic Funding Organization & Decision Flow 12

rpkGROUP. All rights reserved. Strategic Funding Organization Components SLT Annually sets 3-4 evaluation focus priorities for ranking and rating proposals Reviews recommendations of Expanded Budget Working Group (President has final approval) Opportunistic funding outside of funding cycle using President, Provost and Senior VP discretionary funds Expanded Budget Working Group Solicits and processes proposals Rates and ranks proposals using established criteria Recommends proposals to be funded based on criteria and discretion, and alignment between strategic priorities and available funds Informs proposing units of funding decisions Monitors progress of funded proposals Proposing Units Follows unit-specific process for gaining approval to propose through senior leadership Prepares proposal articulating alignment with strategic priorities Secures unit buy-in, as evidenced by investment match Implements funded proposals Reports annually on progress 13 Note: Budget Working Group serves process in annually recommending funding levels for all special funds.

rpkGROUP. All rights reserved. Strategic Priorities Drive Progress  Each proposal must clearly define promotion of strategic priorities –How closely the initiative aligns with strategic direction and priorities, including movement of KPIs (growth with quality, student success, and net revenue) Benefit: Builds momentum for strategic alignment across UCM  Proposal must include clearly defined, aligned business case 1. Who will be affected, how, and the impact on the KPI metric(s) identified 2. Financial pro forma that shows: a) the amount of investment required (one time and recurring) and the time frame; b) the amount that the requesting unit will be contributing from its existing resources; c) the impact on revenues and the related revenue drivers such as enrollment; and d) (where relevant) the amount of net revenue (margin) generated. e) (where relevant) demonstration of demand and ability to succeed 3. Execution plan and training needs Benefit: Applies a business model lens connecting mission-market-margin across a diverse set of ROI 14

rpkGROUP. All rights reserved. Consistent Criteria Transparently Guides Decision Making  Proposals will be rated on each criteria using a point scale to represent the range of alignment, from most to least, demonstrated by the proposals.  The criteria and the weights assigned to each will be decided annually by the SLT in consultation with the ESLT. Examples of both are shown below: 1. Extent to which initiative would have a measurable and significant impact on strategic priorities –Student success –Growth with quality –Efficiency 2. Evidence of an investment match [reserves and/or reallocation of resources]  Reviewing group will rank proposals based on points and discretion, considering the amounts requested and available, as well as strategic alignment and additional institutional factors. 15

rpkGROUP. All rights reserved. Initiatives Outside of Strategic Funding Cycle  The President, Provost & Senior VP for Administration and Finance may opportunistically fund compelling initiatives that arise outside of the strategic funding cycle.  Applications will include descriptions of proposed initiative, alignment with strategic direction and priorities, how the initiative meets the criteria, and impact on specific KPIs Benefits:  Strategic Funding Process maintains integrity, and UCM has ability to distribute funds appropriately without taking a “first come-first serve” approach or without needing to withhold funds “just in case.”  Simultaneously, UCM has flexibility to fund great ideas, at the discretion of leadership, as they emerge  Expedited, rolling proposals include same components as those proposals included in the Strategic Funding Process to allow for consistent review and ongoing analysis. 16

rpkGROUP. All rights reserved. Resource and Training Needs  UCM will need to allocate new & reallocate existing resources to support successful implementation. Some of the considerations include: 1.Training on workflow for the intake, tracking, execution of new strategic initiatives 2.Public-facing portal and communication strategy for the sharing of new strategic funding process and initiatives. 3.Process for tracking progress of new initiatives and their associated funds 4.Training, process and portal for executing and tracking ratings, rankings and proposals for analysis 5.Training on university financial systems 17

rpkGROUP. All rights reserved. Summary: Attributes of Strategic Funding Process  Supports University of Central Missouri values and strategic priorities and ties to KPIs;  Embraces a process that is simple, consistent, and transparent;  Affords UCM flexibility to optimize decision making consistent with institutional priorities and fiscal responsibility;  Provides clear incentives to enhance strategic priorities and bolster buy-in across units;  Supports funding both revenue and non-revenue producing activities that further strategic priorities; and  Accounts for the funding of proposals within and outside of strategic funding cycle 18

rpkGROUP. All rights reserved. Next Steps for SRAM Development 19 Step IV Continue to implement new model and processes in response to pilot testing Step III Assess initiatives through Strategic Funding Process Run pilot budget and make changes as needed Step II Develop resources and train on data, systems, and reporting for KPIs, Budget model, and strategic funding process Step I Vet estimates on investments to achieve KPIs Educate and disseminate resources on new budget model and strategic funding process