Principles of the Model
The following principles were established to guide the Steering Committee in the development of the Waterloo Budget Model for the operating budget (in alphabetical order):
- Academic excellence: Consistent with the University and Faculty strategic plans, academic excellence and quality learning experiences for students will be at the forefront of every decision made within the new budget model. This necessarily implies that students will learn in the Faculty that makes most sense to their overall academic program.
- Clarity: Methodologies, record keeping and key processes in the new budget are clearly communicated and understood.
- Collaboration: The new budget is developed, implemented and supported through collaborative and consultative relationships and structures.
- Efficiency: Revenue will be allocated and used to support existing and new resources, structures and processes, and all Faculties and Academic Support Units will be mindful of reducing and containing costs.
- Long term budget planning: The new budget model will incorporate budget planning at all levels of the institution with a longer term outlook.
- Risk management and flexibility: The new budget model will include mechanisms to minimize negative impact from changing funding, enrolment or costs and be able to allow an optimal and nimble response to unanticipated or unfavourable funding conditions.
- Strategic alignment: The new budget model will support the approved overall strategic direction of the university and aligns to academic support, Faculty and academic strategic plans.
- Support for strategic initiatives: The new budget model will ensure that there is a reserved portion of revenues in the Provost office available to stimulate and develop strategic initiatives and institutional priorities guided by clearly articulated academic and business plans.
- Transparency and accountability: The University will have a transparent resource allocation process across the Faculties and Academic Support Units with clear data analysis and evidence to support decision making.
Fund Accounting and the Waterloo Budget Model
The University uses an accounting principle known as 'Fund Accounting'. Money is segregated in several different Funds, depending on their source and purpose. Most Funds (including Research, Trust and Endowment) have very specific purposes attached to them; the way that the University must spend that money is clearly prescribed either by legislation, or by agreements with the granting agency or donor.
The Fund that is the largest, and the one where the University has the most flexibility on spending, is the Operating Fund. Because of its size and flexibility, the University developed the Waterloo Budget Model for distributing this Fund. The Operating Fund is the only Fund for which the University developed the Budget Model.
All of the Funds are described below.
The Operating Fund is used for the majority of expenses including faculty and staff salaries, utilities, student support, and supplies. The two major sources of revenue that contribute to the Operating Fund are the operating grant from the Ontario Ministry of Advanced Education and Skills Development (MAESD), and student tuition fees. The Waterloo Budget Model applies only to the Operating Fund; it provides a methodology for allocating the Operating Fund to units across the University.
Trust Fund and Endowment Fund
The University has many trusts and endowments, most of which support scholarships, Chairs, and student activities. As with the Research Fund, the University acts as a trustee for these monies, and must ensure that spending is in accordance with the specific Terms of Reference for that donation.
Each year, MAESD provides money specifically to support building repairs and related maintenance and alterations.
Ancillary enterprises include Housing and Residences, Retail Services, Food Services and Parking; revenues earned are placed into this fund. The ancillary enterprises pay the University for space, utilities, administrative services, and maintenance from the revenues they receive.
Allocation of Operating Fund
The Waterloo Budget Model describes how the Operating Fund revenues are allocated to Faculties, Academic Support Units, and the University Fund. Within a given Faculty, the model does not describe how money flows to Academic Departments or Schools; the internal allocation of funds is at the discretion of the Faculty.