by Enedina Perez
Editorial Assistant
To increase resources and have a greater sense of control over its own destiny as a school, the University of La Verne is finalizing a new budgeting process.
According to Dr. Len Hightower, assistant to the President, the new process, being handled by President Stephen Morgan and other senior management members, can be referred to as an “incentive-based budgeting approach.”
“It allows those who generate revenues to keep a portion of those revenues for their own use,” said Dr. Hightower. “So, in other words, the more additional enrollment that you generate, the more of the income from that enrollment you get to keep and use it in your own area.”
This process will help those units fund their strategic plans because, according to Dr. Hightower, “The University does not have large sums of money sitting around available for people to use, so you have to create a way in which they can.”
ULV will use a budgeting process that has been used by many other institutions since the late 1960s and early 1970s.
“La Verne is not new at this,” said Dr. Hightower. “We’re probably one of the very first schools like us beginning to apply this methodology, so in that sense, we’re kind of out on the cutting edge, where the approach has been tried and tested.”
This budgeting process was proposed by Dr. Hightower several months ago. It was then brought up to Dr. Morgan, as well as to the senior management team. It has consisted of having many discussions and conversations about it.
Dr. Hightower, along with Steve Grey, chief financial officer, and Avedis Kechichian, treasurer, have dedicated a lot of time into conducting analysis on how the process would apply to ULV, as well as looking at the budgets to determine if they would actually be able to work with this new process and figuring out how the numbers would look if they were to do this.
“The piece that has been critical to this is the completion of what’s called the indirect cost study,” Dr. Hightower said. “One of the things you have to understand of these types of approaches is good management of your resources, along with your direct cost or your indirect costs.”
According to Grey, the rate of the current spending will stay the same unless the University experiences enrollment growth.
“Areas are able to increase expenditures as much as the percentage of that new growth,” said Grey, referring to changes under the new plan.
“If a unit is experiencing growth with the done budget, they will benefit from the funds by being able to use them for the further betterment of their programs,” Grey said.
“It’s one of those things where we’re at a point in time in La Verne where we have a lot of good ideas, we have a strategic process,” said Dr. Hightower. “Because of that process, we have identified a lot of key issues and we want to address them in terms of quality and things going on campus.”
A concern from this has been figuring out where the money to pay for all of those needs was going to come from. This is why they realized that they had to look at a different option.
“To have a larger amount of resources at ULV means that we probably have to go with enrollment, with the amount of students that we serve,” said Dr. Hightower.
He also emphasized the importance of keeping in mind the issue of quality admission while they are trying to balance it out.
“This budget system is like a tool that enables us to get closer to accomplishing this,” Dr. Hightower said.
Although they are going to adopt this new budgeting process, they are “not locked in this system forever,” said Dr. Hightower.
The University will drop the new plan if it realizes that it is not working for ULV, but in order to evaluate the outcomes, it needs to use this process for three to four years.
According to Dr. Hightower, right now they are using a rather centralized approach to budgeting. The University Council hears all the budget requests coming from the various units of the institution.
He became aware that the problem to this was arising during the last several years, when the system became gridlocked, caused by “so many requests coming in from so many different parts of the institution and so many perspectives that in the end, you don’t get much accomplished in terms of really funding people to do the things that they do,” said Dr. Hightower.
He also discussed the issue of increased competition as being a possible downside from using this new budgeting process.
According to him, increased competition occurs when schools create similar programs to one another and are targeting the same students. The problem from this is that students would be receiving mixed messages from the same institution.
Although this is one of the biggest concerns from this approach, Dr. Hightower does not think that this can happen here at ULV, due to the small size of the school, but could expect that to take place in a larger institution.
