New Budget Model
Budget Reform Timline
The Budget Reform project covers a five-year period from FY22 to FY26. In FY22 and FY23, we laid the foundation for moving from an incremental model to a hybrid allocation model. During FY24 and FY25, we ran the net new revenue model in parallel with the hybrid allocation model to evaluate the results and adjust the new model to better align with Georgia Tech’s needs. The hybrid allocation model will be implemented for FY26 budget development.
Hybrid Allocation Model – FY26
What is the Hybrid Allocation Model?
The Hybrid Allocation Model is the result of the Budget Reform project and the end state of budgeting at Georgia Tech, combining elements of both centralized and decentralized financial management. Here’s a breakdown:
- Initial Allocation: State funds, tuition, and other projections are allocated to the campus based on a formula, mainly supporting instructional growth.
- Centrally Required/Strategic Funding: Must-pays, reserves, and strategic initiatives are funded next.
- Remaining Funds: These are split between colleges and non-college units.
- Colleges: Receive half of the remaining funds, distributed based on credit hour growth and strategic allocations from the provost.
- Non-College Units: Get the other half, with each unit’s share determined by specific drivers.
- Indirect Cost Recoveries: Overhead is distributed separately, with colleges getting 30% as per policy, and non-college units’ share based on effort and expense management identified in Georgia Tech’s rate study.
This model aims to balance financial control and flexibility across the institution, rewarding innovation and promoting generation of revenue.
Why use the Hybrid Allocation Model?
The Hybrid Allocation Model will support the 10-year Institute Strategic Plan by rewarding innovation, containing costs, and generating revenue in alignment with our strategic goals and priorities.
Who does the Hybrid Allocation Model impact?
Each college and non-college unit will use the Hybrid Allocation Model.
When does the Hybrid Allocation Model take effect?
The Hybrid Allocation Model will go-live for the FY26 budget cycle.
- Total Allocable Revenues: Units continue to receive 100% of Direct Revenues annually (i.e., OMS, Tuition Differential). The change in the remaining revenues is shared out to the units based on activity as an incentive.
- Indirect Cost Recoveries: “Colors of cash” matter when allocating revenues. Changes in activity for research operations are distributed based on an internal rate study across Colleges and Non-Colleges. Unit leadership allocates accordingly.
- General Institutional: The Center is the first to receive allocations and is funded as the sum of Must Pays, Strategic Funding, and Institute Reserves.
- Must-Pay’s: Refers to the growth in General Institutional expenses that must be covered on an annual basis, i.e., legal, fringe, leases, etc.
- Strategic Funding: A percentage of the growth in Net Tuition/State Appropriations/Other Revenues that is earmarked for strategic initiatives. Includes Institute Strategic Plan (ISP), one-time strategic investments, and any budget funds that may be needed.
- Strategic Allocation to Colleges: A percentage (15%) of the change in Net Tuition/State Appropriations that is given to the colleges via the Provost as a strategic allocation. These funds can be used to support strategic initiatives within the colleges, among other uses.
- Colleges: Each college receives funding from individual changes in Student Credit Hour activity and strategic allocations from the Provost. Continuing to grow credit hours protects colleges from realizing full losses while maximizing full growth potential.
- Non-Colleges: Non-College units are allocated funding-based changes across unique drivers, such as Indirect Cost Recoveries, and student, faculty, and staff FTE.
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