When SHARP was implemented, a commitment was made to conduct a review within the first few years of its implementation to identify what was working well and areas for improvement. This review was conducted by external reviewers in Fall 2019, with the final report submitted to the University in February 2020.
In response to the recommendations from the external review, several enhancements to the SHARP Budget model were designed over the course of 2020-21 and will be implemented beginning 2022-23.
SHARP is a modified version of an activity-based budget model designed to flow revenue to the units generating it – primarily the Faculties and ancillary units – and attribute expenses to these revenue-generators based on cost drivers. This budgeting methodology is considered more rigorous and transparent than a traditional, incremental budgeting system that simply adjusts prior period budgets.
The University previously employed an incremental budget model, which distributed annual funding to the Faculties and departments based on historical amounts with adjustments on the margin. Over the years, understanding of budgets became increasingly limited, and the University’s ability to clearly align resources to priorities became challenging.
SHARP is a principle-based budget model that was designed over a five-year period (including pre-implementation “shadowing”) to offer a more transparent, strategically aligned and accountable method of allocating University resources. A key feature of SHARP – and an important tool in facilitating a more strategic budget approach – is the creation of a University Fund (see Question 4).
Faculties receive the total amount of revenue they generate, primarily student tuition and government grants; they do not receive “base budgets” and are not subjected to budget cuts. They are subject to any fluctuations in student tuition or government grants. Faculties are also required to contribute to the shared services costs (net of revenue) of the various central administrative support units (e.g. Student Services, Libraries, Facilities, IT, Research Management – 10 categories in total) and towards General Institutional costs such as insurance, bad debts, etc. Faculties contribute to the costs of shared services through various cost driver calculations that act as reasonable proxies for the proportionate share of the services they utilize. For example, central Student Services costs are charged to each Faculty based on their number of students; Facilities costs based on a combination of net assignable square metres, number of students, faculty and staff, and so on.
Faculties are responsible for funding their own direct costs, including the salaries and benefits paid to faculty and staff.
In the early years of SHARP (2017-18 to 2021-22) Administrative Units received annual base budgets that included 50% of their negotiated salary increments. Beginning 2022-23, Administrative Units will receive 100% of their negotiated salary increments as part of their base budgets. If Administrative Units require additional funds, they must make a submission to the Budget Council through their VPs for approval. Administrative Units are subject to additional budget cuts if necessary.
Ancillary Services include revenue-generating units such as Student Housing, Bookstore, School of Continuing Studies, etc. In the incremental model, Ancillary units received 100% of all the revenue they earned and paid their direct shared service costs. In SHARP, these units continue to receive 100% of the revenue they earn. In addition to paying for their direct costs, they also pay for the share of indirect costs that are applicable to the services and space they use. The methodology for calculating their proportion of shared service costs is based on the same cost drivers used for Faculties.
The University Fund is a source of funding for various commitments made in support of the University’s strategic initiatives, for tailored support to Faculties and for contingency funding. It is funded by revenues from Faculties and revenue generating Units, as well as revenue that cannot be easily attributed to a Faculty or Unit, such as interest income. Requests for funding from the University Fund are submitted to two Presidential Advisory Councils – the University Fund Council and the Budget Council – for consideration, and recommendations are made to the President. The various commitments made from the University Fund are available each year on the University’s multi-year budget plans.
Each January, Faculties are given their budgets from Finance based on the planned revenue associated with the commitments in their negotiated enrolment contracts with the Provost. During the year, if actual enrolment income differs (+ or -) from the enrolment contracts and budget projections, Finance adjusts revenue in-year after final enrolment count dates and ledger reconciliations.
SHARP was designed to support cross-Faculty programming and course enrolments. Student tuition and government grants are allocated to both the student Home Faculty, as well as their Teaching Faculty (for courses student may take outside their Home Faculty) at the rate of 60% for the Home Faculty and 40% for the Teaching Faculty. If a student has two Home Faculties, the revenue is also shared, at the rate of 50/50 for Inter-Faculty Double Majors and 70:30 for Major/Minors. This is intended to provide equitable support for inter-Faculty enrolment and program combinations, and to encourage Faculties to use each others’ course offerings and expertise, rather than duplicating within the Home Faculty.
The external SHARP review identified inter-Faculty revenue sharing as an area requiring further exploration. This is now under review.