Funding from tuition revenue would follow spikes in student enrollment at ISU colleges under a new proposed budget model. This is according to alternative budget model No. 3 released by the budget model development committee.

A more responsive process for allocating funds, called “responsibility-based budgeting,” would disburse more funds faster to colleges that increase the number of students enrolled in their courses.

Funding would be distributed based on credit hours, enrollment and tuition revenues, and could be implemented by 2008.

Under the current model, tuition revenues go into a general university pool from which it is distributed across the university. The proposed plan would disburse revenue to colleges more proportionally based on undergraduate credit hours.

Revenues generated when a business student takes classes within his or her college would be directed to the College of Business. Meanwhile, credit hours taken in other disciplines would be prorated to the respective colleges.

Currently, Iowa State’s budget process involves slight increases – or decreases – in years of budget cuts in funding to colleges based on the previous fiscal year’s budget. That model is too outdated and cumbersome in today’s educational economic environment, said Ellen Rasmussen, associate vice president of budget and planning.

“It is not as responsive to the changing funding requirements: declining state appropriations and increasing tuition,” she said. “The model that we have just doesn’t respond to the financial changes that occur.”

The proposed model, if approved by ISU President Gregory Geoffroy and the Iowa Board of Regents, would make Iowa State one of a number of schools to switch to a responsibility-based budget model over the past decade. Rasmussen said the University of Illinois, the University of Minnesota, the University of New Hampshire and the University of Wisconsin are a few institutions that have shifted from more traditional allocation processes.

There are some concerns, however, that tying an increase in students enrolled in a college’s courses to funding could lead to an erosion of academic standards.

“That is a pitfall that has occurred at other institutions,” said Gregory Palermo, ISU Faculty Senate president and professor in architecture. “But that is something we’re all well alerted to at the university.”

“There have been universities where there has been some sort of academic warfare in the sense of [awarding] easy grades to bring students into the classroom. The potential for abuse is there.”

Douglas Epperson, associate dean of the College of Liberal Arts and Sciences and head of the 16-person budget model committee, warned that a new budget model is not a cure-all for financial ills in higher education. Although the proposed responsibility-based model would help the university’s budgeting process become more “dynamic,” and be able to get funds to colleges where new needs arise, it will not make a lack of state financial support disappear.

“A change in budget model doesn’t create new money,” Epperson said. “It just changes the distribution of the money.”

One of the model’s stated goals is giving deans and administrators a clearer picture of what actions lead to more funding for their college’s programs.

“The reason transparency is important is so people understand what they can do to increase their financial standing,” Epperson said. “Right now, under the incremental model people don’t know what they can do to change their budgets.”

The ability to carry over funds is another key component to the proposed model. Under the current model, any state appropriated funds not used at the end of a fiscal year revert to the state Legislature, making it hard engage in long-term planning, Epperson said.

“You need to build a cash reserve to carry you through those unpredicted downfalls in revenues so you can maintain some level of predictability to balancing your revenues and expenditures,” he said.

By Sept. 30, Geoffroy will decide whether to submit the proposed budget model as-is to the senate for review, ask that the proposal be refined or reject the model. His final decision on the proposed budget model is due mid-January 2007.