Performance Based Budget
The University of Cincinnati's Performance Based Budget (PBB) model links budget allocation to performance. Tuition revenue is the essential performance measure of PBB. The model provides incentive for revenue-producing units to improve performance. These are the key elements of PBB:
- Tuition revenue is assigned to the college of student’s primary major.
- When students take courses outside of the college of their major, a portion of tuition revenue is transferred to the college that delivers the course (thereby covering instructional costs).
- Annual tuition revenue targets for each college are based on the prior year’s final tuition results. The university has the option of assigning individual colleges additional target amounts based on strategic needs (“re-allocation” amounts).
- Colleges that exceed their tuition targets and re-allocation receive expense budget increases.
- Colleges that do not meet their targets receive expense budget reductions.
For more information about PBB, please contact Business & Financial Affairs.
For more information about PBB data and reports, please contact Institutional Research.
PBB encourages colleges to advance UC’s core instructional mission. PBB is an incentive model that encourages innovation and entrepreneurship in academic programming. With PBB “splittable revenue,” colleges that exceed their tuition targets and assigned re-allocation are rewarded with expense budget increases, which provides additional resources for colleges to continue growing their academic enterprise. The PBB model also provides resources for innovations that are beyond the scope of any one college. An example is NEXT initiatives.
Yes! The PBB model is flexible enough to handle programs that are jointly developed and managed by multiple colleges. Key examples are the master’s degrees in health administration and health informatics that are the product of collaboration between the Lindner College of Business and the College of Allied Health Sciences.
After several years of PBB, some UC programs continue to have very high national rankings and continue to attract large numbers of applicants. In PBB, colleges are incentivized to increase enrollment and enhancing quality is a very good strategy for doing so.
PBB operates at the college level. Colleges that exceed their individual tuition targets and assigned re-allocation receive expense budget increases; colleges that do not meet their targets receive expense budget reductions. In the PBB model, there are neither across-the-board tuition growth targets nor across-the-board expense budget cuts.
No, it is not. PBB is a blended model which rewards growth with additional expense budget, and allows for reduction of expense budgets if revenue targets are not met. Prior to PBB, the University did not allow for additional expense budgets due to growth, but utilized reduction in expenses in an across-the-board method based on the performance of the entire University. In the PBB model, if growth happens, it allows the college to generate their own new expense dollars to invest in existing or new programs. If growth doesn’t occur, the model allows colleges to have the same targets as the prior year’s performance. If a decline in revenue occurs, the model demonstrates how much of an expense budget reduction needs to occur within that specific college.
Splittable revenue is surplus tuition remaining after a college has met its PBB re-allocation and tuition target. This remaining tuition surplus is split between the college and the Provost in the form of expense budget increases.
No, if the college gets Provostal approval, that additional revenue can be identified and credited in an isolated manner (one-time revenue) until it is determined that the new program and the revenue is sustainable.
The biggest shift has been revenue accountability at the local (college) level. Some colleges have even extended that accountability down to the unit level. This allows academic units to make their own decisions about programs.