Mystery Surrounds Overhead Charge as Fiscal Year Begins
As the fiscal year kicks off, confusion still hovers over how a newly instituted 10-percent overhead charge will be applied to revenue-dependent accounts. The charge was referenced in the 2024-2025 operating budget, but specifics on how it will be implemented and which accounts will be impacted are yet to be divulged.
Uncertainty Over Overhead Charge
Two weeks into the new budget year, information about the implementation of the 10-percent overhead charge on revenue-dependent accounts is still unknown. The surcharge is only mentioned in the 2024-2025 operating budget with no further explanation on how it will be imposed. The executive vice president for strategy, operations, and finance confirmed ongoing discussions with “budget managers” across the university for further identification of affected entities.
Reactions to Overhead Charge
The lack of clarity has led to speculations and concerns. Some revenue-dependent units expressed their uncertainty and unease about the potential impact of this surcharge. The director of continuing and professional development reported a lack of defined parameters on the implementation of the new 10-percent overhead charge, preventing him from forming an opinion on the matter. Similarly, the associate director of student activities and Greek life also aired concerns about potential financial impacts on the “Greek Activities” budget.
Seeking Balance in the Budget
The executive vice president for strategy, operations, and finance explained that the overhead charge will help balance the budget and offset costs associated with the existence of revenue-dependent units, urging those questioning the move to suggest viable alternatives.
History of The Overhead Charge
Conceptualized in the university’s budget model, RAMP (Resource Allocation, Management, and Planning), the 10-percent overhead was not part of the original model. After two to three years of its use, revisions on the model were made, which introduced the overhead charge. RAMP, which is built off principles from the Responsibility Center Management (RCM) budgeting strategy, vests responsibility and authority in academic units allowing them to make budgetary decisions. It enables units to benefit from financial successes and covers expenses and a portion of upper administrative costs.
Potential Impacts of Overhead Charge
For some departments, the implementation of the overhead charge could potentially lead to budget cuts and operational limitations. The director of Student Publications warned that the overhead charge would directly impact student workers, possibly leading to pay cuts for student journalists or a reduction in the number of print editions of publications each semester.
Looking Forward
As the fiscal year unfolds, the details on the overhead charge are yet to be ironed out. Although deemed essential for budget balance measures, unanswered questions remain about how this charge will impact the university’s financial structure and day-to-day operations. Those affected await a clearer picture as to how this charge will be rolled out and integrated into the overall fiscal policy.
