State appropriations have been an ongoing battle for Central Michigan University in the last five years.

The result – declining revenue – has led administrators to re-think the university’s operating budget model.

When CMU’s 2008-2009 fiscal year began Tuesday, an operating budget had yet to be approved. It’s nothing out of the ordinary – University President Michael Rao approves the continuation of the previous budget so CMU can operate in deficit until July 17, when the Board of Trustees approve a new one.

The trustees were sent a proposed budget Tuesday that includes a revised revenue streaming model they improved in December, which alters the direction of revenue produced by student credit hours in academic colleges.

Instead of being held to a certain figure to give back to the university, each college now is assessed an amount based on a percentage calculated using its actual revenue.

The money is then used to fund campus service centers like budget offices, off-campus programs and other administrative offices, said Carol Haas, director of financial planning and budgets.

“All state appropriations now go to academic centers based on the percentage of student credit hours they produce,” she said. “(Service centers) now tax the academic center a fee for their indirect costs.”

Haas said dwindling state appropriations could no longer fund the service centers.

The old model budgeted a fixed figure for each college based on its revenue from the previous year. If a college brought in more money, it would be expected to generate even more the next fiscal year, which costs more, said Ray Christie, vice provost of academic administration.

“The new model would reserve a portion of new revenue for the recognition of the expenditures that colleges and departments incur to generate the additional revenue,” he said. “There’s no benefit to holding down projections.”

Christie said the new model should help programs look forward to the following year.

“For the most part, the tax rate shouldn’t be changing, which should put the deans in a position to plan earlier for the next fiscal year,” he said.

Some revenue, like student fees for trips and other expenses, is free from the new assessment because the colleges do not make money from it.

New revenue

For the first time, colleges will manage off-campus tuition revenue. But it will also put the expenses for developing these programs into their hands.

The changes have turned ProfEd, the university’s facilitator of off-campus programs, into more of a service center, said Merodie Hancock, vice president and executive director of ProfEd.

“It doesn’t change so much what we do, what it does is give resource recognition to the colleges,” she said. “ProfEd does the same thing it has always done. However, it makes it more collaborative with the colleges.”

The money that once flowed through ProfEd will instead be handled by each college.

The old model created a barrier between on-campus and off-campus programs, Haas said.

“It was very difficult for ProfEd to get that involved because they felt some of the colleges didn’t feel that they were getting back what they should,” she said. “ProfEd was reliant on the colleges to develop those courses.”

Hancock said off-campus enrollment continues to decline because face-to-face programs are falling faster than online courses are growing by about 5 percent.

But she said CMU’s strengths, such as cohorts with companies and student service centers, will help slow the decreases.

Haas said the colleges may need a year to generate enough revenue.

“That will be a big change for them, but I think a good change,” she said.

No lump sum

For the first time in four years, Haas and the budgeting team did not need to project tuition increases four years in advance.

The end of the CMU Promise in the spring means incoming freshmen will likely experience an increase each year instead of a large increase at the outset that will give constant tuition for four or five years.

Haas was unable to comment on the proposed budget’s tuition figures for incoming freshmen, but Trustee John Kulhavi said in an interview June 3 that if an increase would occur, it would be “modest.”

“Many people only look at the rate they’re paying today,” Haas said. “That was tough for our admissions staff to recruit.”

Haas said a decrease in high school graduates in the near-future will increase the importance of marketing.

“Students are much more picky on what they want,” she said. “They want higher living commodities, the Internet and all kinds of things. We need to put our moneys there to be able to attract those students.”

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