Budget Model ReSTART

The purpose of any university’s budget is to enable the university to carry out its mission in a fiscally sound, planful, and transparent way. The budget model is the framework for allocating costs and revenues. A budget model doesn't create or eliminate revenue; rather it aligns existing revenue with the University's priorities. 

Overview of the New Model

Prior to Fiscal Year 2023, the University operated under an incremental budget model, which involved taking the prior year’s budget and adjusting for certain changes, such as compensation, to determine the current year’s budget. That prior model lacked transparency and did not provide sufficient incentives to raise revenue or reduce costs. It also limited our ability to support significant strategic initiatives outlined in the Plan for Pitt.

Starting with the Fiscal Year 2023 budget, the University transitioned to an incentive-based budget model, which provides RCs with a tool to evaluate their total performance, including direct activity as well as allocated central revenue and overhead costs. Given the enhanced data in the new budget model, schools are better informed to set priorities and work with leadership to develop plans to resource them. Annual Strategic Resource Reviews are now focused on discussing a school’s strategy, and schools have greater visibility and oversight regarding the support services they receive and their related costs. 

The new model also creates incentives to generate revenue, achieve cost efficiencies, support strategic initiatives within the schools, and collaborate on research initiatives.

Background and Engagement in Developing the New Budget Model

Beginning in 2020, the University of Pittsburgh reviewed of its current budget model, which uncovered a lack of transparency, limited authority or accountability at the RC level, lack of incentives to raise revenue or reduce costs, and limited ability to support the significant strategic initiatives outlined in the Plan for Pitt. To better align budget decisions with strategic objectives, Pitt began an initiative to improve the budget model to address those concerns.

The new budget model was developed using feedback from discussions with faculty and staff. Key to this process was input from a steering committee co-chaired by SVC/CFO Hari Sastry and Provost and Senior Vice Chancellor Ann E. Cudd. Members of the committee represented administrative and academic leaders from across the University and provided expertise, support, and recommendations throughout the process. This group met multiple times over 10 months to develop the structure of the model, and their experience and knowledge were invaluable in helping to create the model.

Additionally, focus group meetings were held with all the RCs; a deans’ retreat took place, and more than 50 meetings were conducted with deans, regional campus presidents and RC directors of administration. Sessions were also held with key stakeholder groups including the Senate Budget and Policy Committee, University Planning and Budget Committee, Faculty Assembly, Staff Council, Budget and Planning Community of Practice with Directors of Administration and business managers, senior leadership, and the Board of Trustees budget committee.

University of Pittsburgh faculty and staff can review more information about Budget Model ReSTART at this site.

Frequently Asked Questions

What’s different about the new model? 

Budget ReSTART is designed to empower the University’s RCs as they have the best understanding of their operations. It equips RCs with new tools to evaluate not only direct revenues and expenses but also allocated central revenues and costs. It provides visibility and oversight over the allocated revenues and costs, especially as it relates to central services received. RC heads and senior administration will be able to assess the full impact of each unit’s operations and track progress over time. This data will ensure that we reward units with favorably-trending results and align our available resources with strategic priorities in the Plan for Pitt.

What is the timeline for implementation of the new budget model? 

Planning for the new model began in 2020. Chancellor Patrick Gallagher approved moving forward with a parallel process in October 2021. The current model and the new model ran in parallel during Fiscal Year 2022; the end of the parallel process will be October 31, 2022. Full implementation of the new model begins with Fiscal Year 2023.

Does the new model apply to the School of Medicine Division (SOMD)? 

SOMD already operates under a full Responsibility Center Management (RCM) model, which is more de-centralized than Budget Model ReSTART. The ReSTART model includes the impact of net shared services paid to central University operations by the School of Medicine Division. This impact is reflected as a net credit “SOMD management fee” (or reduction of expenses) applied to the cost pools affected, which reduces the charges allocated to the Primary RCs. This SOMD management fee will be revisited and updated in Fiscal Year 2024 to ensure the net amount is based on current costs and activity volume.