Resource Allocation Model

As I shared at our IU Indianapolis Faculty Council meeting earlier this week, with the launch of IU Indianapolis and our transition into a Research 1 university offering a comprehensive range of programs to serve our community, it is a good time to review our resource allocation model. That model should help us achieve our institutional goals and stay true to our mission.

Our current resource allocation model links revenues and costs to the units that generated them. Often described as a Responsibility Centered Model or RCM, this model assigns responsibility to the unit to manage their revenues and costs somewhat independently. Enrollment growth is the main driver of revenue, and costs are pro-rated and allocated based on the number of students, faculty, staff, and facilities associated with each unit.

This model works well when all units are similar in their ability to generate revenue and control costs. In the context of IU Indy, our academic and administrative units differ in the ways in which investments result in revenue and cost streams. In some disciplines, investments in faculty, staff, and facilities will lead to growth in enrollment, and hence, revenues with short lags. In these areas an investment this year could result in higher revenues the following year that cover the investment and more. Some examples include programs in business, law, analytics and, computing.

Investments in other areas may not always lead to an increase in enrollment. For instance, research in the physical sciences, engineering, and technology requires significant start-up investments that do not always break-even but are required if we are to stay true to our mission as a comprehensive research university. Investments in other areas like the social sciences and humanities are critical to preparing well-informed citizens whose work ensures the vitality of our democracy. These investments may not always generate revenues that cover all costs but are important if we continue to fulfill our mission to serve our state.

Choosing the right model that incentivizes all units while respecting our mission, and always staying within our budget is not a straightforward exercise. This is a perfect example of a decision that may not require approval from a committee but will benefit greatly from input from all faculty, staff and students. Your suggestions will help us refine our model so it works for all.

While we may not get full agreement on all the changes, we can all agree on guiding principles. Our goal is to develop a model that is built on transparency, simplicity, and congruence with our mission. We want to give units as much autonomy as possible to ensure that they are incentivized to do what is right by our mission. We also want to ensure that we achieve our goals as described in the three pillars of our strategic plan: student success and opportunity, transformative research and creativity, and service to our city, state and beyond.

To this end Camy Broker, vice chancellor for finance and administration, has been working with a Resource Allocation Redesign Taskforce comprised of faculty and staff. This month we are in discussions with deans about the model. Next, we will meet with the IFC’s Budgetary Affairs Committee for their input after which we will have discussions at an IFC meeting later this year or in early in 2025. During this time, we will also engage with Staff Council to get their input. The collective input will guide any changes we make.

We will also give ourselves time to adjust to the model by sharing a shadow or what-if version of model for this year so we understand the changes using this year’s numbers versus what they will look like under an adjusted model. In short, we will be looking to different groups for input before we finalize the model, and we will give ourselves some time to adjust to the model.

Your input matters and your opinion counts. I encourage you to reach out and share your suggestions. You can email me directly at lramchan@iu.edu.

Go Jags!

Latha Ramchand
Chancellor