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Activities-Based Budgeting FAQ

Why are we adopting the Activities-Based Budgeting (ABB) model?

In light of growing economic challenges, Sheridan is undertaking the ABB project to align academic authority with resource allocation, which will empower Faculties and departments to make informed decisions. ABB will help Sheridan proactively prepare for economic challenges in an environment where evidence-based decision-making will become vital.

What are these economic challenges?

Sheridan is facing economic challenges that limit revenue growth as well as raise expenses. Below are a few of the economic challenges that Sheridan is facing:

  • General operating grant from the province is flat-lining at best

Provincial grant funding has declined significantly over the last 40 years. For 2018/19, it has been confirmed that MTCU (Ministry of Training, Colleges, and Universities) will not increase the per student grants to the sector. The general purpose operating grant is the largest component of the grant funding that Sheridan receives and constitutes more than 25% of total revenue. The funding amount is determined through the corridor funding formula by MTCU on a “three-year average with two-year slip” basis. According to the funding formula, the general purpose operating grant is flat-lining at best.

  • Enrolment is growing at small growth rates

Our domestic enrolment is expected to grow only slightly, largely influenced by current demographics. International enrolment, while it has experienced strong growth over the last few years, its growth rate is expected to be significantly lower into the future. Our ability to grow is also limited by the level of support and infrastructure we have, such as the amount of available space.

  • Operations are becoming more and more costly

Sheridan is impacted by factors in the general economy such as inflation-like increases to prices of goods and services, as well as legislative changes that are harder to predict. For instance, salaries and benefits account for two-thirds of expenditures, and they are often impacted by cost of living increases, collective agreement increases, and latest legislative changes that increase the minimum wage and holiday pay.

Overall, in light of the limiting revenue growth and increasing expenses, Sheridan must better understand and manage its resources to achieve long-term operational sustainability.

What is Sheridan doing to protect its future?

Sheridan has identified three priority areas to safeguard its future: The Academic Plan, the People Plan and Operational Sustainability.  ABB is one of the five pillars under the priority area of “Operational Sustainability”.  Through this priority area, we are implementing the proper infrastructure, systems and processes to make informed decisions to achieve Sheridan’s institutional goals.

What is the history of ABB?

ABB (Activities-Based Budgeting), which is also known as RCM (Responsibility Centre Management), was first adopted as a strategic resource allocation model by the University of Pennsylvania in the early 1970s. Since then, ABB has been adopted by many U.S. and Canadian schools.

What other institutions are using this model?

A growing number of leading academic institutions have recently transformed their resource management model into one that has components of ABB. Canadian examples include University of Toronto, Queen’s University, York University, Wilfrid Laurier University, and Algonquin College, amongst others.

A few links to other schools’ website on their ABB-type model:
Algonquin College: http://www.algonquincollege.com/rcm/
Queen’s University: https://www.queensu.ca/provost/budget-and-enrolment-planning/review-queens-budget-model
York University (SHARP budget): http://vpap.info.yorku.ca/strategic-priorities-and-initiatives/

What are the benefits of ABB?

ABB has been shown to enhance budgeting transparency and create incentives for units to more effectively manage resources, revenues, and expenses. The benefits of ABB are:

  • Focus is on accountability rather than control
  • The institution is establishing appropriate incentives for engaging in activities that lead to better academic and financial outcomes
  • ABB promotes the delivery of effective, competitive administrative services
  • ABB reduces silos between departments and increases transparency and openness
  • ABB enables better, more relevant information for unit leaders to make evidence-based decisions

What is different under the ABB model?

Under the ABB model, Sheridan will shift more responsibility and authority to the units responsible for activities. This means unit leaders will acquire a more proactive role as stewards of their programs by directing resources to where resources are needed the most. A Dean will have more flexibility to determine which ideas to fund and support, while guided by the College’s principles, policies and guidelines.

What will change as a result of ABB?

Entrepreneurial thinking should emerge as a result of ABB, as unit leaders will have authority to invest in appropriate activities that suit their needs. There will be more openness and transparency regarding units’ revenues and more dialogue within and between units that are synergistic in nature. In the process, ABB may prompt us to rethink the ways we currently manage our resources, while the end result is an increase in total available resources.

How will resources be allocated under ABB?

All recommendations and decisions will be carefully reviewed to assess the potential impact on students and employees, and to optimize opportunities for student success, employee engagement and positive outcomes. Budget and operations guidelines will take into consideration institutional goals in the allocation of resources and will be done through fair, transparent and data-driven methodologies.

What are some new terminology under ABB?

New terminology will be introduced as a result of ABB, some of the key ones are below:

Revenue units are the units at Sheridan associated with the generation of revenue from academic programming, and course delivery is a primary activity for them.

Shared services units are the units at Sheridan that provide services to the College as a whole, such as the Library, Human Resources, Centre for Teaching and Learning, Student Services, IT, Occupancy, etc. They are not associated with the generation of revenue from academic programming or Ancillary Operations.
A glossary of terminology is being developed and more will be shared.

How will shared service areas be impacted under ABB?

The ABB Task Force will review services provided by shared services units and understand their drivers. These costs will be allocated to revenue units as indirect cost allocations in a way that properly reflects revenue units’ use, or activity. The Task Force will also consider incentives for shared services units to provide efficient and competitive services.

Will there be program cuts under ABB? How will Faculties be impacted under ABB?

Despite ABB, Sheridan has an existing policy on program suspensions and cancellations. The ABB project is not designed with intentions to cut programs or cause job losses. ABB should increase the revenue pie by creating the right incentives, rather than shrink the pie or merely redistribute the pie. However, ABB will provide more transparency on the revenues and expenses and is expected to induce review of current ways in which resources are being utilized. When designing the ABB model, the Task Force is placing strong focus on creating the right incentives for optimal outcomes.

What is the timing of the project?

The Task Force’s work on model design began in September 2018 and is expected to continue until March 2019. Members will invest an average of three hours per week within the six-month span to substantially complete their work. Following completion of the model design phase, there will be a parallel period of one year for the FY2020/2021 budget, and full implementation of ABB in September 2020, for the FY2021/2022 budget.

What are we trying to achieve with the ABB?

The goals of the ABB model are as follows:

  • To align authority with fiscal responsibility while improving transparency and accountability
  • To create incentives for leaders to increase revenue and optimize expenses
  • To create incentives for the delivery of effective and competitive support services
  • To grant leaders the authority to make evidence-based decisions while central administration retains sufficient resources to achieve institutional goals

Who is overseeing the ABB project?

The project Co-Sponsors are Melanie Spence-Ariemma, Provost and Vice-President, Academic, and Wayne Steffler, Vice President, Finance & Administration and CFO. They will provide overall direction and leadership to the ABB project, review the recommendations presented by the Task Force and make final decisions regarding policy, implementation and action plans.

Will Sheridan receive input from a third-party source?

To help initiate this effort, Sheridan is partnering with Campus Strategies, LLC – a management consulting firm that provides services to colleges and universities throughout North America. Our lead consultant, Larry Goldstein, brings 40 years of experience to this work.

How will the ABB project be implemented?

From the start, the ABB project has been a transparent and collaborative process. A Task Force consisting of members with diverse representation from the College has been formed. We are drawing upon Sheridan’s wealth of talent and knowledge to build an ideal budget model, and we are seeking to create a consensus among College leaders on the final model principles.

What is the function of the Task Force?

The Task Force’s responsibilities include: establishing principles for the specific ABB model at Sheridan, reviewing departmental financial information, considering academic priorities, and reviewing promising practices from other similar institutions. Ultimately, the Task Force will develop position papers summarizing key issues, identifying available options, and recommending the optimal model for Sheridan.

How was the Task Force selected?

During the summer of 2018, Sheridan asked the community to nominate members for the ABB Task Force. The call for nominations was met with great enthusiasm. From the pool of nominations, a team of 20 individuals were selected to form a diverse mix of faculty and staff from across the College.

Who is part of the ABB Task Force?

The members of the Task Force are as follows:


Member

Department

Vito Picicci

FAST

Douglas Greenwood

PSB

Brandy Strangway

Ancillary Services

Robert Diltz

FAAD

Leslie McGale

FAAD

Christian Knudsen

FHASS

Deborah Metrakos

HR

Amy Halliday

Office of the Registrar

Lia Tsotsos

Research

Mike Emery

International

Alexa Roggeveen

FAHCS

Agnes Bielecka

CAPS

Lorraine Cipparrone

PSB

Farzana Jiwani

CTL

Ronni Rosenberg

FAAD

Pitsa Davey

Facilities

Raj Dhaliwal

FHASS

Jackie McCann

IT

Marian Traynor

Library & Learning Services

Nadeka Boothe

Student Services

How will the Task Force ensure fairness and objectivity?

The Task Force has committed to the following governing guidelines in the way we participate in ABB meetings:

  • Deliver on Commitments
  • Engage in Respectful Discourse
  • Participate by Actively Listening and Engaging
  • Maintain a One-Sheridan Focus
  • Be Solution-Focused

Some departments do not have a representative on the Task Force. Is the Task Force considering all areas within the College?

The ABB Task Force is composed of twenty individuals from around the College, bringing with them their experience and knowledge to the table. Where there is any knowledge gap, the Task Force intentionally seeks out information from specific areas within Sheridan, and brings the knowledge back to the team as a learning opportunity for all the members on the Task Force. We are also adopting a “One Sheridan” mindset, which means we are designing the ABB model with the entire College’s best interests in mind.

How will the Task Force address my individual question or concern?

The Task Force is seeking a broad consensus on model principles from across the College to design the principles for the ABB model. There will be regular check-in sessions with the Oversight Committee (explained in more detail below). If you have an individual question or concern, you can bring your question or concern to the Oversight Committee through the Director, Dean or VP that represents your area.  Additionally, the ABB Task Force has broad representation from areas across Sheridan. Please feel free to reach out to any of us to talk about ABB and ask questions you may have regarding the project.

What is the Oversight Committee?

The Oversight Committee is a group consisting of senior leadership members in both academic and administrative areas from across the College.

Who is on the Oversight Committee?

The members of the Oversight Committee are as follows*:

Ronni Rosenberg

FAAD

Leslie McGale

FAAD

Yael Katz

FHASS

Raj Dhaliwal

FHASS

Dave Wackerlin

FAST

Eric Wojcik

FAST

Sandy McKean

PSB

Connie Taylor

PSB

Michael O'Leary

FAHCS

Angela Panarisi

FAHCS

Nazlin Hirji

CAPS

Don McCulloch

CAPS

Melanie Spence-Ariemma

Provost and Vice President, Academic

Wayne Steffler

Vice President, Finance & Administration and CFO

Carol Altilia (Starting Jan 14, 2019)

Vice President, Student Experience & Enrolment Management

Ryan Piper

Vice President, Human Resources

Jeff Vallentin

Vice President, External Relations

Amanda Pike

Chief Change Officer

Christine Szustaczek

Chief Communications Officer

Arlene Minott, acting for Alexa Abiscott

General Counsel & Secretary to the Board of Governors

*As of November, 2018.

What is the significance of the Oversight Committee?

The Oversight Committee allows leaders from across Sheridan to understand the principles developed by the ABB Task Force. While it is not practical to include leaders from all academic and administrative areas, we have included all the Faculty deans and the Director of CAPs and their operations managers, as well as members of the PVP, which collectively represent all budget holders at Sheridan. Note that we included all Faculty deans and the Director of CAPS because these budgets will experience the biggest changes. For example, both revenue allocation and cost allocation are applicable to a revenue unit.

How will updates be communicated to me?

The Change Management and Communications Support Team consists of members from CPAM (Communications, Public Affairs & Marketing) and CPOD (Centre for People and Organizational Development), who will assist with the ABB project by facilitating regular communication with the broader Sheridan community. The ABB website is also a medium for sharing progress and updates, past communications, ABB meeting schedules and more with the broader Sheridan community over the course of the ABB project.