1. The Vote Formula Imperial College’s Resource Allocation Methodology Carole Hobden Planning April 2010

2. Resource allocation We will be covering: – The resource allocation process – Provide an overview of the College’s resource allocation model called the Vote Formula

3. The resource allocation process Resource allocation takes place from January to March and is overseen by the Resource Allocation Committee (RAC) The RAC is responsible for the methodology (Vote Formula) used in allocating general recurrent funding to the faculties and Business School The RAC reports to the Management Board, its membership is: –Chairman, Deputy Rector –Principals (Faculty and Business School) –COO, Director of Planning, Director of Finance, Deputy Rector (Research), College Secretary

4. The resource allocation process The RAC meet three to four times each year A few days before the RAC meetings members of the Planning Division meet with the FFOs and FOOs The final Vote Formula allocations, as proposed by RAC, are presented to the Management Board in March for approval

5. What is the Vote Formula? The College’s main mechanism for distributing general funds to the faculties (and the Business School) Most (but not all) income from HEFCE and from fees that the College receives is distributed to faculties through the Gross Vote Formula Some of that resource is retrieved through the Infrastructure Charge mechanism to fund the College’s non-academic departments

6. Resource Allocation: General Objectives EQUITY in the distribution of HEFCE grant and tuition fees INCENTIVES to change behaviour to further the strategic objectives of the College Financial STABILITY

7. Why a formula? Principally: Based on performance, not influence Also: Is relatively transparent Provides gearing with HEFCE’s formula, but takes College circumstances into account “Formula reflects but does not mimic HEFCE’s formula” Allows organic change in academic profile Can be used as a planning tool

8. Disadvantages of a formula Data are historic; a time lag is inbuilt so faculties that are expanding are restrained and those that are contracting are buffered Difficult to take special factors into account Danger of lack of transparency if becomes too complicated over time Strategic direction of College must be mediated through formula; strategic initiatives and new academic activities have to be provided for in other ways

9. Overview of the Vote Formula The Management Board (in February each year) determines the total amounts to be distributed to faculties and non-academic departments These two together form the Gross Vote Pot

10. Overview of the Vote Formula Firstly, four items are allocated directly to faculties from the Gross Vote Pot: – HEFCE funding for charity funded research (c stream) –HEFCE funding for strategically important and vulnerable subjects (s stream) –100% premium element (premium fee less the standard fee) (p) –25% standard overseas fees (o)

11. Overview of the Vote Formula The remaining Gross Vote Pot is then divided into two portions, one for Teaching (T) and one for Research (R) This division is done using the R:T ratio which is calculated on the basis of College income from HEFCE and fees, less the directly allocated items

12. Overview of the Vote Formula Gross Vote Pot (funds Faculties and non-academic departments)

13. Overview of the Vote Formula RT Items directly allocated to faculties The remainder is split into a Research (R) pot and a Teaching (T) pot:

14. Overview of the Vote Formula RT Items directly allocated to faculties Infrastructure charge

15. Overview of the Vote Formula Net Vote to faculties (includes directly allocated items) Faculties Infrastructure charge Non-academic departments Infrastructure charge Non-academic departments

16. Formulae are used to distribute each of the six streams of the Gross Vote Pot between the Faculties (and the Business School). The Vote Formula: the Gross Vote R T All the resource that is available is allocated to the Faculties in the Gross Vote allocations. Then some of it is retrieved through the Infrastructure Charge mechanism. Four directly allocated items (s, c, p, o)

17. The Vote Formula: the Gross Vote In both the R and T formulas: -Volume measures are used to determine the activity occurring in departments/faculties - Weightings are applied to each stream of volumes to affect the relative importance of the various streams

18. The T Vote: Volume measures The T formula uses STUDENT LOAD data for its volume measures. Student load is used rather than student registrations to reflect the fact that various departments/faculties may contribute to a student’s teaching. Student load information is collected annually through the Student Load Exercise.

19. The T Vote: weightings Weightings are applied to the volumes in relation to: Type of student (Undergraduate or Postgraduate Taught) Type of teaching (own, service or exported) Subject matter (clinical medicine, lab-based, maths, other)

20. The R Vote: Volume Measures R volume is measured through the following streams: FTE of 2008 RAE-active staff (Category A) Postgraduate Research (PGR) Student Load FTE Staff expenditure on all research grants and contracts

21. The R Vote: weightings Weightings are applied to the volumes in relation to: Performance in the 2008 RAE Subject matter of teaching for Research students (clinical medicine or lab-based, maths, other)

22. The Vote Formula: the C and S streams C stream As UK Charity sponsors do not usually pay full economic costs, HEFCE receives funds from the UK government to pass on to HEIs to support charity research. These funds are mapped from UoAs to the most appropriate faculties. Resource is passed directly to the faculties in what is referred to as the c stream. S stream HEFCE provides extra funding in relation to certain science subjects. We pass this on to the relevant faculties.

23. The Vote Formula: Overseas Fees Faculties receive 25% of the appropriate full standard overseas fee for each overseas student, a year in arrears. Overseas students are also funded through the gross T or R vote, at the same rates as Home/EU students.

24. The Vote Formula: Premium Fees Some faculties charge fees that are higher than the standard College fee for a particular type of course. These are referred to as premium fees. The premium fee element is the margin between the actual (premium) fee level and the College standard fee for a course. Faculties receive 100% of the premium fee element, one year in arrears.

25. The Vote Formula: Premium Fees & Overseas Fees Example: UG Y1 Overseas student on Mechanical Engineering course £20,400 £1,100 (Premium fee) GROSS POT Faculty of Engineering O/S fees element £4,825 (25% of £19,300) Remainder £14,475 (75% of £19,300)

26. So now, each of the six streams in the Gross Vote has been divided up across the Faculties (and the Business School). The Vote Formula: the Gross Vote Next, the Infrastructure Charge is applied to retrieve resource to fund the non- academic departments. R T Four directly allocated items (s, c, p, o)

27. The Vote Formula: Infrastructure Charge Recovers cost of non-academic departments Total amount is decided annually by the Management Board Divided into streams related to four main types of activity: - Student load FTEs stream - Staff FTEs stream - Space sqm stream - Research £k staff expenditure stream Resource Allocation Committee (RAC) decides how much of the total Infrastructure Charge amount should be distributed against each volume stream

28. The Vote Formula: Infrastructure Charge Infrastructure Charge

29. 6% Student Load 34% Staff 16% Space 38% RG&C Exp. 12% The Vote Formula: Infrastructure Charge

30. Student Load 34% Staff 16% Space 38% RG&C Exp. 12% ENGINEERINGMEDICINE NATURAL SCIENCES BUSINESS SCHOOL 37% 32% 24% 26% 48% 3% 37% 31% 2% 32% 20% 24% 58% 1% 24% 8% 31% 25% 29% 21%

31. The Vote Formula: Infrastructure Charge ENGINEERINGMEDICINE NATURAL SCIENCES BUSINESS SCHOOL 33% 35% 28% 4%

32. The Vote Formula: Conclusion Each Faculty (and the Business School) receives a Net Vote allocation This consists of its share of the Gross Vote Gross Vote = T + R + c + s + o + p less its share of the Infrastructure Charge (InfCh) Net Vote = Gross Vote – Infrastructure Charge

33. Outside the Vote Formula In addition to formulaic allocations, the Resource Allocation Committee may also distribute additional resource alongside the Net Vote allocations. Other sources of income to the Faculties include: Research Income including Overheads and fEC income resource from HEFCE earmarked for specific purposes allocations from SIF

34. The Vote Formula Questions and discussion