Chapter 1 — STRUCTURE OF THE PLANNING AND BUDGETING SYSTEM
            1.1    Introduction
            1.2    Overview of the Process
            1.3    Participants in the Process
                        1.3.1    Planning and Budgeting Committees
                        1.3.2    University Planning and Budgeting Committee (UPBC)
                        1.3.3    University Senate and Regional Campus Senates
                        1.3.4    Chairs, Heads of Responsibility Centers, and Senior Vice Chancellors
                        1.3.5    Council of Deans
                        1.3.6    Provost
                        1.3.7    Chancellor
                        1.3.8    Board of Trustees
                        1.3.9    Planning and Budgeting Staff
            1.4    Publication

Chapter 2 — LONG-RANGE PLANNING AND BUDGETING
            2.1    Introduction
            2.2    University Vision Statement
            2.3    Support Services for Long-Range Planning and Budgeting Activities
            2.4    Components of Long-Range Plans and Budgets
                        2.4.1    Mission Statements
                        2.4.2    Goals Statements
            2.5    Long-Range Planning and Budgeting Calendar
            2.6    Other Long-Range Planning and Budgeting Initiatives

Chapter 3 — OPERATIONAL PLANNING AND BUDGETING
            3.1    Introduction
            3.2    Components of Operational Plans and Budgets
            3.3    Planning Information and Guidelines
            3.4    Operational Planning and Budgeting Calendars
                        3.4.1    Commonwealth Budget Cycle
                        3.4.2    University Operational Planning and Budgeting Cycle
            3.5    Budget Augmentations and Modifications

Chapter 4 — INTEGRATION AND EVALUATION
            4.1    Introduction
            4.2    Annual Assessment of Program Performance
            4.3    Progress Evaluations of New Programs
            4.4    Long-Term Program Evaluations
            4.5    Evaluation of the Planning and Budgeting System

APPENDIX A — Responsibility Centers
APPENDIX B — Authority for Approving Academic Planning Proposals

OVERVIEW

         Planning and budgeting in the University setting are responsibilities shared by administrators, faculty, staff, students, and trustees.  As the chief administrative officer of the University, the Chancellor has responsibility and authority for the University's planning and budgeting activities, subject to appropriate action by the Board of Trustees.
         The University of Pittsburgh recognizes the need for a planning and budgeting system that is both systematic and flexible.  The complexity of the University, the interdependence of its programs, and the constraints on its resources require well-defined policies and procedures for establishing missions, goals, and objectives; for setting priorities, planning programs, and allocating resources; and for evaluating the quality and effectiveness of academic and support activities.
         The Planning and Budgeting System (PBS) is an integrated, comprehensive system.  It combines within a single, coherent process all long-range planning and budgeting; creation of operational plans and budgets based on performance, personnel, capital, and financial budgets; budget modifications and augmentations; facilities management and development; and evaluation of all University programs and responsibility centers.  This document describes the members of the University community who participate in the process, the collegial structures through which they do so, the processes of planning and budgeting, and the mechanisms for program evaluation.
         PBS replaces the Planning and Resource Management System (PRMS) initiated in 1976 and subsequently modified to meet changing needs of the University.  PBS further integrates the planning, budgeting, and evaluation processes, and provides new collegial structures for appropriate participation by administrators, faculty, staff, and students at each level of the system.  The procedures outlined here are not intended to replace or eliminate the informal discussions among faculty, staff, students, and administrators about needs and possible program changes, out of which formal plans often emerge.  The faculty of each school or campus will continue to have primary responsibility in the areas of curriculum design, degree requirements, program content, methods of instruction, academic advising, and the conduct of research and public service.  Proposals for new academic programs will continue to be subject to academic review by the University Council on Graduate Study and the Provost's Advisory Committee on Undergraduate Programs.  For those units where employees are represented by unions, the Planning and Budgeting System must also take into account the processes of collective bargaining and the provisions of collective bargaining agreements.
         The PBS process is intended to facilitate the academic, research, service, and support activities of the University by both ensuring full access to relevant information and providing a rational, clear, and consistent framework for planning and budgeting decisions.  The planning and budgeting process is the central process for responding to the challenges and opportunities of the University.  Planning and budgeting decisions are legitimate only if they are both based on full information and arrived at through an open, formal process.
         All planning should be "strategic planning," aimed at moving the University from its present position to a more desired one.  PBS distinguishes, however, between operational planning and budgeting, which has a horizon of one year, and long-range planning and budgeting, which has a horizon of two or more years.
         Long-range planning and budgeting identifies opportunities and forces that are expected to affect the institution and its programs in the long term, assesses the impact that such factors may have on performance, personnel, capital, and financial budgets, and articulates alternative strategies for achieving long-range missions and goals.
         Operational planning and budgeting, the more detailed annual plans and budgets, are developed within the context of the missions and goals articulated in the long-range plans and budgets.
         Program evaluation criteria are used to assess the achievement of long-range and operational plans and budgets.  All plans and budgets must include criteria for evaluating the success of planning and budgeting activities.
         Under PBS, the widest participation by administrators, faculty, staff, and students in planning and budgeting takes place at the level of the smallest significant organizational unit, usually the department (or equivalent administrative structure), where the University's missions of teaching, research, and public service are accomplished.  Planning and budgeting at this level takes place in the light of detailed information on past and projected enrollments, revenues and expenditures, etc., and in the context of long-range missions and goals.
         At the responsibility center level (see Appendix A), representatives of faculty, staff, and students are involved, along with the relevant administrators, in coordinating and prioritizing the plans and budgets of the constituent departments.  At the senior vice chancellor level and at the University level, they participate in coordinating and prioritizing the plans and budgets of the responsibility centers.  The aim is to create conditions which encourage each department and responsibility center to be as effective and efficient, and as creative and innovative, as possible in pursuing its mission, within the constraints imposed by its role within the total University.

1.1    Introduction

         Long-range and operational planning and budgeting are interrelated and form a single planning and budgeting system.  However, their different purposes may result in some differences in process and timing.  Both are iterative processes, in that information and ideas flow in both directions among the departments, responsibility centers, senior vice chancellors, and the Chancellor.  The Planning and Budgeting System (PBS) provides collegial structures (usually Planning and Budgeting Committees, or PBCs) for participation by administrators, faculty, staff, and students at all steps in the process of developing proposed plans and budgets, from the department through the Chancellor.

1.2    Overview of the Process

         At the beginning of a planning and budgeting process, the Chancellor, with the active participation of the University Planning and Budgeting Committee (UPBC) develops planning information and guidelines.  In preparing the information and guidelines, the Chancellor and UPBC may additionally seek input from the Senate Budget Policies Committee (SBPC), the Senate Educational Policies Committee (SEPC), the Senate Plant Utilization and Planning Committee (SPUPC), the Council of Deans, the regional campus Senates, and others.  The Chancellor distributes the planning information and guidelines to all unit heads and PBCs.
         At each of the four levels of the process — department, responsibility center, senior vice chancellor area, and University-wide — the unit head proposes and develops the unit's proposed plans and budgets with the active participation of the unit PBC. PBCs (and the UPBC) are advisory to the appropriate administrator, who has the final responsibility and authority to prepare the proposed plan and budget.  The unit heads and PBCs should take care to make the planning information and guidelines widely available and to provide opportunities for the relevant faculty, staff, and students to participate as fully as possible.
         When the unit's proposed plan and budget has been completed, the unit head forwards it to the next higher level, providing a copy to each member of the unit's PBC.  The appropriate scope of planning and budgeting may vary among responsibility centers.  Plans and budgets for regional campuses, for example, include not only academic programs but also other expenditure categories, such as student affairs, athletics, facilities, and security.  Further, the planning and budgeting process at the regional campuses may include analysis and comment by their Advisory Boards.
         Unit heads are responsible for noting in the documents they forward any alternative proposals or recommendations supported by the unit's PBC and explaining why they have not been incorporated.  At the responsibility center, senior vice chancellor, and University-wide levels, reasons shall be clearly articulated for any significant modifications of proposals received from the level below.  At every level, faculty, staff, and students shall have access to the proposals which are sent forward.  A PBC may also forward a statement concerning alternative proposals or recommendations.
         Unit heads and PBCs at each level may also be asked to develop contingency plans which identify priorities and strategies to be followed by their unit in the event of an unanticipated budget increase or decrease or other emergency.  Such contingency plans will remain within the unit.
         In general, proposed plans and budgets flow from department PBCs and chairs to the responsibility center PBC and head, where they are integrated into a single responsibility center proposal.  Responsibility center proposed plans and budgets are forwarded to the appropriate Senior Vice Chancellor and PBC, or (for nonacademic areas) to the appropriate Vice Chancellor or the Chancellor.  The Senior Vice Chancellors, with the active participation of their PBCs, prioritize and integrate the proposed plans and budgets for their areas, articulating reasons for any significant modifications of proposals received from the level below, and present their proposals to the Chancellor and they may also discuss them with the UPBC.  The UPBC develops budget parameters and makes recommendations concerning compensation and concerning proposals for significant changes at levels requiring approval of the Chancellor (see Appendix B). The Chancellor prioritizes and integrates the proposals of the Senior Vice Chancellors (and of the Vice Chancellors who report directly to the Chancellor) and of the UPBC into University performance, personnel, capital, and financial plans and budgets to form a comprehensive proposed University plan and budget again articulating reasons for any significant modifications of proposals received from the level below.  The Chancellor then presents the final comprehensive plan and operating and capital budgets to the Board of Trustees for appropriate action.

1.3    Participants in the Process

         Under PBS, planning and budgeting are formal activities requiring the active participation of administrators, faculty, staff, and students within the shared governance structure of the University.  The PBS process is designed to facilitate initiation of program ideas by the people most directly involved in the work of the University.  The principal vehicles through which they participate in planning and budgeting are their departments', responsibility centers', and senior vice chancellors' PBCs and other formal governance organizations, including the University and regional campus Senates, the Council of Deans, the Staff Association Council, and student governance bodies.
         Persons who serve on a PBC, or on the UPBC, are expected to consider proposed plans and budgets primarily in the perspective of the relevant unit, and of the University as a whole, rather than of the particular smaller units or constituencies from which those persons come.

1.3.1    Planning and Budgeting Committees
         Each senior vice chancellor area and each academic responsibility center must have a Planning and Budgeting Committee (PBC), or its functional equivalent, as described below.  
        Business and administrative units, which support the teaching, research, and service missions of the University, rather than engaging in them directly, are not required to have PBCs, but may do so, if they choose.  Many are represented by liaison members on University Senate standing committees, and the President of the Senate should report to the UPBC on matters arising in these committees which are relevant to the concerns of the UPBC.  Support units may also establish advisory groups of users of the services they provide, to help maximize their effectiveness and efficiency.
        Each responsibility center is free to determine, through a collegial process, what lower level PBCs, if any, are appropriate to its size and structure, subject to the requirement that faculty, staff, and students have ample opportunities to participate in the development of proposed plans and budgets.  The term "department," as a significant administrative unit within a responsibility center, may therefore refer to a division or other administrative unit.
         All PBCs shall be reconstituted early in each year's planning and budgeting cycle, at each level, with the size and structure of the PBC, length of terms of its members, and the procedures for their selection adapted to the unit's situation.  The majority of the PBC shall be elected; other members may be selected ordinarily for reasons of particular knowledge or expertise, such members to be agreed upon by the unit head and the elected PBC members, with formal notification of appointment from the unit head.  Subject to the approval of the dean, regional campus president, or department chair, the chairperson of a PBC might best be one of the elected members of the PBC chosen as chair by vote of the members of the committee.  In smaller departments with PBCs or smaller responsibility centers the entire faculty and/or staff acting as a committee of the whole may function as the PBC.  A responsibility center or department may elect to use an alternative collegial governance structure for its planning and budgeting, subject to formal approval by the appropriate Senior Vice Chancellor, in consultation with the President of the University Senate.  A PBC may have subcommittees.  PBCs actively participate in the development of the unit's proposed plans and budgets and any  contingency plans.

1.3.2    University Planning and Budgeting Committee (UPBC)
         The University Planning and Budgeting Committee shall have 22 voting members:

• the Provost, the Senior Vice Chancellor for Health Sciences, the Executive Vice Chancellor, and the Vice Chancellor for Budget and Controller;
• the President of the University Senate;
• the President of the Staff Association Council (SAC);
• the chair of the University Senate Plant Utilization and Planning Committee (or another elected member of the committee, designated by the chair);
• the chair of the University Senate Budget Policies Committee (or another elected member of the committee, designated by the chair);
• the chair of the University Senate Educational Policies Committee (or another elected member of the committee, designated by the chair);
• four faculty members from the Pittsburgh Campus, who will not also be serving as Senate officer or elected member of a standing Senate committee, jointly appointed by the President of the Senate and the Chancellor, with regard for diversity of faculty perspective;
• two regional campus Senate Presidents or faculty designees jointly appointed by the regional campus Senate Presidents and the Chancellor;
• four representatives of the Council of Deans, jointly appointed by the Council of Deans and the Provost;
• one staff member selected by the Staff Association Council (SAC);
• one undergraduate student selected from all undergraduates on the Pittsburgh and regional campuses, agreed upon by the student government boards; and
• one student selected by the Graduate and Professional Student Association.

1.3.3    University Senate and Regional Campus Senates
         The University Senate, through its committees, Faculty Assembly, and Senate Council, provides advice to the Chancellor and administrative officers on all aspects of University planning and budgeting, including long-range planning and budgeting, program plans, operational plans and budgets, gift and endowment spending policies, compensation policies, and design and modification of the PBS.
         While the University Senate and many of its committees have representatives from the regional campuses, constraints of distance and time make full participation by regional campus faculty and staff in University Senate activities difficult.  The University Senate should make every effort, and develop mechanisms, to promote effective membership and participation by regional campus representatives.  Available technologies, such as interactive video and conference calls, should be considered.  Additional advice and recommendations on relevant aspects of planning and budgeting may be provided by Senates of the regional campuses, which may also assist SBPC in reviewing the planning and budgeting process.
         It may be appropriate for some Senate committees, such as Athletics, Computer Usage, and Library, to provide input to the development of responsibility center plans and budgets relevant to their areas of concern and, through their committee chairs, communicate their comments and recommendations to the UPBC.  Senate committees may often serve as focal points for University-wide discussion on topics of significance to University plans and budgets.  In addition, Senate committees may initiate recommendations with respect to broad University policies (such as gift and endowment spending policies, and compensation policies) and with respect to information collection and dissemination, such as the Revenue and Cost Attribution Study.
         The Senate Budget Policies Committee (SBPC), which includes faculty, staff, and student representatives, is responsible for reviewing whether the PBS processes are followed and whether all constituencies involved are provided adequate opportunities to participate in the process and to be informed of its outcomes. Accordingly, the SBPC may communicate or meet with PBCs as necessary.  The SBPC will regularly inform all unit heads and all members of PBCs of its role in reviewing the integrity of the planning and budgeting process.

1.3.4    Chairs, Heads of Responsibility Centers, and Senior Vice Chancellors
         Under the University's structure, administrative officers are delegated broad management authority over the areas under their purview.  At each level of the planning and budgeting process, administrative officers are expected to exercise leadership in cooperation with the relevant PBCs in the development of their respective proposed plans and budgets.  Department chairs, heads of the responsibility centers, and senior vice chancellors are responsible for forwarding their areas' proposals to the next higher level, noting any significant alternative recommendations supported by their PBCs and explaining why they have not been incorporated.  They shall provide every member of their PBC a copy of the documents forwarded.  The Senior Vice Chancellors, and the Vice Chancellors who report directly to the Chancellor, discuss with the UPBC any proposals for significant changes at levels requiring approval of the Chancellor (see Appendix B), and present to the Chancellor their proposals for prioritizing and integrating the proposed plans and budgets for their areas of responsibility, articulating reasons for any significant modifications of proposals received from the level below.

1.3.5    Council of Deans
         The Council of Deans is made up of the deans of the various schools of the University, the presidents of the regional campuses, and the directors of major centers.  It provides advice to the Chancellor, Provost, and other administrative officers on all aspects of University planning and budgeting, including long-range planning and budgeting, program plans, operational plans and budgets, information collection and dissemination, revenue and expenditure allocation methodologies, gift and endowment spending policies, compensation policies, and design and modification of the PBS.

1.3.6    Provost
         The Provost is the senior academic officer of the University and is principally responsible for the development and implementation of the academic mission of the University in its academic responsibility centers.  The Provost also serves as chair of the UPBC, where his role is to marshall the entire array of University resources and fashion an institution-wide perspective of the University's academic mission, ultimately reflected in the University's plans and budgets.

1.3.7    Chancellor
         The Chancellor has the authority on all matters pertaining to planning and budgeting, subject to appropriate action by the Board of Trustees.  In addition to being responsible for final decisions on plans and budgets, the Chancellor also exhibits leadership through persuasion, influence, and encouragement, and by facilitating the marshaling of resources to address timely issues.
         The Chancellor develops the overall vision of the future of the University.  The formulation and articulation of the University mission statement is ultimately the responsibility of the Chancellor.  The Chancellor has authority for approval of planning policies, guidelines, and proposals, allocation of resources among the responsibility centers, and approval of all planning, budgeting, and management actions.  The Chancellor consults the UPBC, and others, for advice in the development of proposed plans and budgets.  The Chancellor has delegated to administrative officers of the University authority for management in their respective areas.

1.3.8    Board of Trustees
         The Academic Affairs Committee, a standing committee of the Board, is charged by the Board of Trustees with overseeing the University's planning of academic initiatives.  The Budget Committee and the Property and Facilities Committee, also standing committees, recommend appropriate action concerning the University's plans and budgets to the Board of Trustees.

1.3.9    Planning and Budgeting Staff
         The Provost, in cooperation with the other administrative officers of the University, the appropriate Senate committees, the Council of Deans, and the planning and budgeting staff, continually develops and revises planning and budgeting procedures; maintains and reviews University long-range planning and budgeting; facilitates and coordinates planning and budgeting by the departments, responsibility centers, and senior vice chancellors through the UPBC; and supports the development and reviews the management of University budgets.

1.4    Publication

         The UPBC may solicit written comments and hold open meetings for the University community in order to allow its members to express their views on planning and budgeting recommendations.  While UPBC meetings are not open to the public, minutes of all UPBC meetings will be published in appropriate media.  Final plans and budgets approved by the Board of Trustees will be published in a form accessible to and understandable by the University community.  Reports on the activities of the UPBC should be made at least once a year by the Provost to the Senate Council, by the President of the Senate to the Faculty Assembly, and by the President of SAC to SAC.  At responsibility center and department levels, the appropriate comparable person should likewise regularly report to the faculty and staff on the activities of the relevant PBC.

2.1    Introduction

         Long-term planning and budgeting assumptions may differ from those made in operational planning and budgeting since it is intended to give each unit the widest possible choices in creating its future opportunities and emphases.  Units are encouraged to propose, and be responsible for, choices within their areas of expertise, within the resources available to them, and consistent with University long-range priorities.
         Long-range planning and budgeting shall include careful consideration of potential external influences and recognized internal strengths and weaknesses; analysis of trends; delineation of options; assessment of possible strategies; and articulation of mission and goals.  Proposals for initiating, reorganizing, or terminating activities may require approval at differing levels internal and external to the University (see Appendix B), and may be subject to other University policies and procedures, such as the Guidelines for the Review of Academic Planning Proposals, November 1995.
         The conduct of long-range planning and budgeting should create conditions which promote academic and administrative excellence and encourage departments, responsibility centers, and senior vice chancellor areas to be effective and efficient.  Long-range planning and budgeting should encourage creativity and innovation as departments, responsibility centers, and senior vice chancellor areas articulate and achieve their mission and goals consistent with their role within the University.

2.2    University Vision Statement

         Long-range planning and budgeting incorporates the Chancellor's articulation of the University vision.  The vision statement identifies the core values of the University and, along with the institutional mission statement, guides administrators, faculty, staff, and students in the development and achievement of goals and objectives.
         The vision statement describes the University's direction and commitment to academic values and program priorities, thus helping senior vice chancellor areas, responsibility centers, and departments recognize strategic opportunities.  The vision persuades, influences, and encourages each member of the University community to strive towards achievement of the ideal future state of the University.

2.3    Support Services for Long-Range Planning and Budgeting Activities

         The University has planning and budgeting staff available to assist the UPBC and units in carrying out various informational and analytic tasks useful in long-range planning and budgeting endeavors.  This help may range from internal institutional research to scanning of external factors, options analysis, and strategic analysis.  The aim of external scanning is to identify trends, opportunities, or concerns likely to have an impact on the University or the unit.  Investigation of external trends focusses on factors which are likely to have an impact on the University's operations, but are beyond the University's control, such as economic, demographic, technological, social, and cultural trends.  Options analysis consists of:

1.    Resource Analysis — focusses on the people, facilities, time, and funds available to the University to pursue goals.
2.    Niche Analysis — determines the unique role the University or a unit may play in a particular area; explores impacts of entering new fields or substantially altering participation in existing fields.
3.    Concerns Analysis — identifies those entities and events in the context of which the University or unit must plan; evaluates the likelihood of occurrence of scenarios requiring response from the University or unit, or jeopardizing achievement of long-range mission or goals.
4.    Opportunities Analysis — recognizes and classifies specific areas where the University or a unit may wish to change based on predicted events; concentrates on informed consideration of possible futures, their impacts on the University or unit, and prioritizing institutional responses.
5.    Tradeoffs Analysis — assesses various options, comparing relative constraints to potential benefits; quantifies the assets and liabilities of options in terms of performance, personnel, capital, and financial impacts.

2.4    Components of Long-Range Plans and Budgets

         Long-range plans and budgets are developed by each department, responsibility center, and senior vice chancellor area, and ultimately prioritized and integrated into a long-range plan and budget for the entire University.  The long-range plan and budget guides formation of operational plans and budgets, as well as program evaluation efforts.  At each level, the long-range plan and budget consists of two basic components — mission statements and goals statements.

2.4.1    Mission Statements
         Mission statements of the University and each senior vice chancellor area, responsibility center, and department should be clear, concise, and concrete.  They are statements of overall purpose and direction.  Thus they should not be overly specific in terms of programmatic content, administrative form, or timeframe.
         A mission statement provides a point of reference for all planning and budgeting activities.  It ensures a consistent, clear purpose throughout the unit.  A mission statement must promote commitment from those within the unit and communicate a self-concept.  A mission statement should generate understanding and support from those outside the University who are important to the unit's success.

2.4.2    Goals Statements
         Goals provide the context for setting operational objectives during operational planning and budgeting and address expectations in the following areas:

• Performance — for example, numbers and kinds of students served, faculty workloads, research projects planned, professional and community service rendered, etc.
• Personnel — full-time and part-time faculty, staff, and student employees.
• Capital — expenditures for new construction, anticipated major repairs or renovations, and expensive equipment.
• Finances —  revenues and expenditures from all sources and for all purposes.

2.5    Long-Range Planning and Budgeting Calendar

         Long-range planning and budgeting produces the department, responsibility center, senior vice chancellor area, and University mission and goals (long-range plans and budgets).  They comprise the context within which operational planning and budgeting occurs.  While long-range planning and budgeting is a continuing process, the University may from time to time engage in an institution-wide process leading to formulation of a University long-range planning and budgeting document.  The activities are not specifically bound by the calendar, but rather by a sequence of steps, subject to modification as circumstances require.  The sequence of steps, and a possible calendar, are as follows.

Month One — With the active participation of the UPBC, and with input from the SBPC, SEPC, SPUPC, the regional campus Senates, and the Council of Deans, the Chancellor reviews and either reaffirms or updates the long-range plan and budget of the University, and prepares appropriate planning information and guidelines for distribution in view of the level of past fulfillment of responsibility center, or University mission and goals.  The guidelines should also include planning and budgeting assumptions based on the most recent external scanning and options and strategic analyses and the scope of support services available.  The information and guidelines are distributed to the University community.  Senior vice chancellor areas and responsibility centers may also issue supplemental planning information and guidelines to their departments.

Months Two-Six — With the active participation of the PBCs, unit heads develop their proposed long-range plans and budgets, together with appropriate accompanying narrative statements, including elaboration of mission and goals.  Responsibility center PBCs and heads may hold planning and budgeting reviews with the respective department PBCs and chairs.  Department proposed plans and budgets are forwarded by the chair to the responsibility center head and PBC within an appropriate time frame determined by the responsibility center PBC and head.  At every level care must be taken to communicate with other departments and responsibility centers concerning the reciprocal impacts of contemplated options.  Responsibility center proposed long-range plans and budgets are forwarded to the appropriate Senior Vice Chancellor and PBC, if any, or to the Chancellor and the UPBC.

Months Seven-Nine — Senior Vice Chancellors and PBCs are encouraged to hold planning and budgeting reviews with responsibility center PBCs and heads, and evaluate their responsibility centers' proposed plans and budgets for internal consistency, compatibility with each other, and economic feasibility.  Members of the UPBC may attend the reviews.  The Senior Vice Chancellors, and the Vice Chancellors who report directly to the Chancellor, discuss with the UPBC and present to the Chancellor their proposals for prioritizing and integrating the proposed plans and budgets for their areas.  The UPBC may consult with the University community, particularly the University Senate and the Council of Deans in reviewing the proposals.  Proposals for new academic programs will first be sent to the University Council on Graduate Study (UCGS) or the Provost's Advisory Committee on Undergraduate Programs (PACUP), as appropriate, for evaluation of academic quality in accordance with their Guidelines for Conducting Evaluations of Academic Programs.  Results of the evaluations will be forwarded to the Provost and other relevant administrators and made available to the UPBC.

Months Ten-Twelve — The Chancellor discusses and consults with the UPBC regarding prioritizing and integrating the proposals of the Senior Vice Chancellors and Vice Chancellors into University performance, personnel, capital, and financial plans and budgets to form a comprehensive University plan and budget.
     The Chancellor then submits the final proposed University long-range plan and budget to the Board of Trustees.  After appropriate action, the Chancellor publishes the long-range plan and budget.

         The Chancellor may from time to time have the UPBC evaluate long-range scenarios and strategies beyond current long-range plans and budgets in order to provide new information and guidelines for future long-range planning and budgeting efforts.  Consequently, the Chancellor and UPBC may utilize planning and budgeting staff to conduct trend analyses, such as statistical and literature reviews and survey research both within and without the University, and also assess resource tradeoffs and possible niches for innovative ideas.  The Chancellor and UPBC may form a planning task force on a particular opportunity, concern, or trend.  Results of all work will be distributed to the University community.

3.1    Introduction

         The operational planning and budgeting process is designed to take place in the context of departmental, responsibility center, senior vice chancellor, and University mission statements and long-range plans.  Operational plans and budgets include four components:  performance (for example, numbers of students to be served, research and service activities to be undertaken); personnel; capital requirements (including facilities and equipment); and financial resources and expenditures.
         The operational planning and budgeting process governs both ongoing activities and proposals for programmatic and other changes.  Proposals that require action outside of the normal cycle should be infrequent, but may be expedited, provided they receive the same sequence of recommendations and approvals within the planning and budgeting process as ongoing programs (see 3.5).
         Once the final University operational plan and budget is adopted by the Board of Trustees, it can be augmented or modified only through the budget process (see 3.5).

3.2    Components of Operational Plans and Budgets

         Operational plans and budgets will be developed by each department, responsibility center, and senior vice chancellor area, and ultimately prioritized and integrated into the annual operational plan and budget for the entire University.  At each level, the operational plan and budget contains the following four components.
         The performance plan and budget is a systematic description of the objectives for that unit.  The specified objectives of the plan and budget should be clearly defined, attainable, and measurable, and their relation to the unit's mission statement and goals statement should be clear.
         The personnel plan and budget includes tables of organization for both full-time and part-time faculty and staff.  The tables include, for both active faculty and staff and those on sabbatical or leave, descriptions of current, approved, and requested positions.  Also provided are aggregate data on workloads and salaries.  The confidentiality of individual salaries will be maintained.
         The capital plan and budget represents expenditures for new construction, major repairs or renovations, and expensive equipment.  To be included in capital plans and budgets, an expenditure (or a group of related expenditures) should exceed $50,000.  Capital plans and budgets should anticipate major building repairs or improvements and equipment replacements for continuing programs, and should include deadlines, estimated costs, specific purchases, and sources of funding.
         The financial plan and budget details the unit's estimated revenues and expenditures, from all sources and for all purposes, relating sources of funds, where appropriate, to program outcomes.
         Operational plans and budgets must be fully integrated, since changes in one component may have implications for another.  Increases in personnel, for example, will impact not only on the financial budget but on the capital budget, in the form of new space requirements.  Similarly, the construction of a new building is likely to add personnel and maintenance costs.
         Unit heads, with the active participation of PBCs, at each level may also be asked to develop contingency plans identifying priorities and strategies to be followed in the event of an unanticipated budget increase or decrease or other emergency.  Such contingency plans will remain within the unit and any other directly affected unit, unless the Chancellor determines that conditions exist which require them to be activated.
         At each planning level, special care should be exercised to take into account the performance, personnel, capital, and financial impact of contemplated changes in one department, responsibility center, or senior vice chancellor area on other units throughout the University.

3.3    Planning Information and Guidelines

         Planning and budgeting require a comprehensive system for generating and distributing relevant information about both the internal operations of the University and its external context.
         At the beginning of each operational planning and budgeting cycle, the Chancellor develops the following information for distribution to the senior vice chancellor areas, responsibility centers, and departments.

1.    Current mission statements and goals embodied in long-range plans.  Any modifications made to these, at any level, during the preceding year should be highlighted and explained.
2.    Historical data.  For each department, responsibility center, and senior vice chancellor area, historical data will be provided for a multi-year period on such matters as enrollments; student credit hour production and consumption; staffing information with regard to faculty, staff, and graduate students; financial information by source and use of funds; and summaries of annual budget modifications.  The most recent Revenue and Cost Attribution Study will also be distributed.
3.    Assumptions and projections.  Estimates will be provided concerning external circumstances which impact upon the University's planning, including inflation, demographics, the Commonwealth appropriation, endowment and gift income, and costs of services and supplies.

3.4    Operational Planning and Budgeting Calendars

         The annual calendar of events for the operational planning and budgeting process is based on two separate cycles.  Under the Commonwealth's budget cycle (see 3.4.1 below), the University requests and receives its annual appropriation from the Commonwealth of Pennsylvania.  In the University's operational planning and budget cycle (see 3.4.2 below), decisions are made for allocating personnel and financial resources among the departments, responsibility centers, and senior vice chancellor areas of the University.  Subsequent budget augmentation requests are governed by 3.5.

3.4.1    Commonwealth Budget Cycle
         In August and September the planning and budgeting staff prepares the University's Commonwealth Budget Request under the direction of the Chancellor and in consultation with the UPBC and others.  After review of the principal assumptions and priorities by these constituencies, the planning and budgeting staff incorporates initial planning, enrollment, revenue and expenditure projections for the next three fiscal years. In September of each year, the University submits its Commonwealth budget request for the next fiscal year to the Pennsylvania Department of Education.
         In October, the Pennsylvania Department of Education may hold budget workshops at which University representatives present the University's budget request.  In November, the Secretary of Education ordinarily submits to the Governor's Budget Office recommendations for funding Commonwealth-supported institutions of higher education.  The Governor's Budget Office then develops the Executive Budget which is presented to the General Assembly in February.  The House and Senate Appropriations Committees usually hold budget hearings in February or March, at which time the University is given an opportunity to explain its budget request.  Following the budget hearings, an appropriation bill is introduced, considered, and passed by the General Assembly for the fiscal year beginning July 1.

3.4.2    University Operational Planning and Budgeting Cycle 
         Parallel to the Commonwealth's budget cycle, the University begins the internal operational planning and budgeting cycle approximately 15 months prior to the beginning of a fiscal year. While the schedule of activities may vary each year, the general process and procedures are as follows.

 April-September — The UPBC and all other PBCs are reconstituted for the coming academic year.

August-November — The Chancellor reviews and either reaffirms or updates the long-range plan and budget of the University and prepares planning information and guidelines, which are distributed to each senior vice chancellor area, responsibility center, and department.  After consultation with the senior vice chancellors, the Chancellor authorizes University funded faculty and staff recruitment and positions for the next fiscal year at the earliest possible time, but no later than the time appropriate for effective recruitment in the various units.

November-March — With the active participation of the unit's PBC, unit heads evaluate the previous year's performance (as required by 4.2) and develop their proposed plans and budgets within the context of their long-range plans and prepare appropriate accompanying narrative statements.  They articulate specific program objectives, indicate proposed modifications to the long-range plan, and develop proposed performance, personnel, capital, and financial plans and budgets.  Responsibility center PBCs and heads may hold planning and budgeting reviews with the respective department PBCs and chairs.  Proposed department plans and budgets are forwarded by the chair to the responsibility center within an appropriate time frame determined by the responsibility center head.  Responsibility center proposed plans and budgets are forwarded to the appropriate Senior Vice Chancellor and PBC, or to the Chancellor.

January-May — The UPBC develops budget parameters -- target revenues and expenditures for the components of the overall operating and capital budgets -- for the coming fiscal year.  Senior Vice Chancellors and PBCs are encouraged to hold planning and budgeting reviews with responsibility center PBCs and heads, and evaluate their responsibility centers' proposed plans and budgets for internal consistency, compatibility with each other, and economic feasibility.  The Senior Vice Chancellors, and the Vice Chancellors who report directly to the Chancellor, discuss with the UPBC any proposals for significant changes at levels requiring approval of the Chancellor (see Appendix B), and present to the Chancellor their proposals for prioritizing and integrating the proposed plans and budgets for their areas.  The UPBC may consult with the University community, particularly the University Senate and the Council of Deans in reviewing proposals.

May-June — The UPBC completes its recommended budget parameters and forwards them to the Chancellor, along with recommendations concerning allocation of salary increases among the components of the salary policy and any proposals for significant changes at levels requiring approval of the Chancellor.  The Chancellor may consult with the UPBC regarding prioritizing and integrating the proposals of the Senior Vice Chancellors and Vice Chancellors into University performance, personnel, capital, and financial plans and budgets to form a comprehensive University plan and budget.
     The Chancellor then submits the final proposed University operational and capital budgets to the Board of Trustees for appropriate action.  When the operational and capital budgets have been approved by the Trustees, the Chancellor publishes them for the University community.

June-August — The Vice Chancellor for Budget and Controller distributes the approved budgets to the units.  The Vice Chancellor processes the PBS data collection forms and operational budgets are established for each department, responsibility center, and senior vice chancellor area for the fiscal year beginning July 1.

         Unavoidable or unexpected events may require budget augmentations from University contingency funds (excluding events associated with externally sponsored projects).  Such events may include casualty losses or safety requirements, unanticipated external cost increases, special hiring opportunities, and special program opportunities.  Based on the apparent time constraints, the apparent expenditures, the overall impact, and the nature of the request, the relevant administrators will determine whether additional review will be necessary by the appropriate senior vice chancellor area, responsibility center, or department PBCs, heads, and chairs.  Review, if any, will occur within an appropriate time frame.
         Budget modifications within a department, responsibility center, or senior vice chancellor area not requiring augmentation are an expected occurrence throughout the year.  The unit head will regularly account for budget modifications which occur during the year to the department, responsibility center, or senior vice chancellor area PBC.

         The first three chapters of this document describe long-range and operational planning and budgeting as somewhat discrete activities.  Without formal linkages, long-range plans and budgets lose their vitality soon after they are written, and operational plans and budgets lose their focus.  The University, senior vice chancellor area, responsibility center, and department must integrate the two into a cohesive planning and budgeting system.
         Program evaluation is a critical and essential aspect of the planning and budgeting system at every level: department, responsibility center, senior vice chancellor area, and University-wide.  It assesses the quality and effectiveness of academic and administrative programs, the extent to which planned activities have contributed to the achievement of specified objectives and consequently to specified goals and missions, and the cost effectiveness of those activities.  Evaluation provides guidance for the continuous review, adjustment, coordination, and prioritization of institutional plans and budgets.  It is essential that faculty, staff, and students be fully involved in these evaluation processes.
         For planning and budgeting purposes, four different processes of formal evaluation may be distinguished: annual assessment of program performance; progress evaluation of newly instituted programs; long-term evaluation of programs, departments, responsibility centers, or senior vice chancellor areas; and evaluation of the effectiveness of the Planning and Budgeting System itself.  Each of these is discussed below.  The formal evaluations resulting from these processes shall be publicly available.

4.2    Annual Assessment of Program Performance

         As part of the annual operational planning and budgeting process, each department, responsibility center, and senior vice chancellor area will provide data and discussion indicating the extent to which objectives specified in the previous year's budget have been realized and progress toward long-range goals has been achieved.  These self assessments by departments, responsibility centers, and senior vice chancellor areas will be reviewed in the next higher level of the planning and budgeting process.
         As part of the annual operational planning and budgeting cycle, departments, responsibility centers, and senior vice chancellor areas must review long-range objectives and goals relative to current external and internal trends.  Unit heads, with the active participation of their PBCs, may utilize the planning and budgeting staff to help assess external opportunities and concerns and internal strengths and weaknesses in conducting this review.
         Sufficient evidence may warrant a formal change in a department, responsibility center, or senior vice chancellor area's long-range plan and budget.  If this occurs, the relevant unit head, with the active participation of the unit PBC, must develop a modification proposal, including discussion of the events or circumstances that have brought about changes affecting the achievement of the specific mission or goals to be modified, and forward it to the next level of planning and budgeting process.
        As part of their routine reporting, deans and regional campus presidents should discuss their schools' and campuses' planning and budgeting activities with the Provost or Senior Vice Chancellor.

4.3    Progress Evaluations of New Programs

         Newly instituted programs, or programs which have undergone major expansion or other substantial changes, will receive special review and evaluation (see Appendix B and the full Guidelines for the Review of Academic Planning Proposals).  Criteria and the timeframes for such reviews should be described in the initial planning proposal.  While administrative and academic programs are somewhat different, the overall evaluation process should generally be the same.  For example, in establishing new academic or administrative programs, specific indicators of progress, such as number and quality of faculty and/or staff involved, student recruitment, as well as costs (including capital costs) of initiating and continuing the program, should be specified in the proposal document and used for the evaluation.  Criteria should be both quantitative and qualitative.
         The head of the department, responsibility center, or senior vice chancellor area will ensure that annual progress reports address the criteria outlined in the original planning proposal.  Any substantial modifications in plans should be clearly delineated.  The head of the department, responsibility center, or senior vice chancellor area will include in the report a brief evaluation of the extent to which the proposed plans have been implemented and objectives achieved.  These reports will be prepared with input from the PBCs.  The evaluations will then be forwarded along with any recommended actions to the relevant Senior Vice Chancellor and PBC, or the Chancellor and UPBC.  The Senior Vice Chancellor will provide the evaluations to the UPBC as part of the planning and budgeting process.
         For new academic programs, academic progress reports and self study documents should be presented for review to the University Council on Graduate Study and/or the Provost's Advisory Committee on Undergraduate Programs, depending on the nature of the program.  Initial and subsequent full reviews will proceed using their Guidelines for Conducting Evaluations of Academic Programs.  Results of the reviews will be forwarded to the Provost and other relevant administrators and made available to the UPBC.

4.4    Long-Term Program Evaluations

         The attainment of long-range goals, especially those relating to the quality of academic and research programs, can be assessed only by reviewing the achievement of a given campus, area, school, or department over a period of years.  Long-term evaluations are intended to provide a means for such an assessment.  It may be appropriate to coordinate these long-term evaluations with other internal and external evaluations, such as those conducted by boards of visitors and accrediting agencies.
         Long-term evaluation begins with department (or other appropriate unit) evaluations conducted by the department chairs with the active participation of their PBCs.  The responsibility center head, with the active participation of the PBC, combines the department findings into a single evaluation for the responsibility center.  These reports are forwarded to the UCGS or PACUP, which subsequently forward their evaluative conclusions and recommendations to the Provost and other relevant administrators.  When a long-range plan and budget is drawing near the end of its timeframe, the Chancellor will institute a comprehensive evaluation, using the findings of the individual senior vice chancellor area and responsibility center evaluations and input from other relevant sources.
          Long-term evaluations should be scheduled so that major programs or units in each senior vice chancellor area and responsibility center are reviewed on a regular basis.  Comprehensive long-term evaluations will be implemented for both academic and administrative programs.  Academic evaluations of academic units will proceed according to the UCGS and PACUP Guidelines for Conducting Evaluations of Academic Programs.  Since senior vice chancellor areas and responsibility centers within the University often will have both academic and administrative components, the evaluation of academic and administrative programs should be coordinated to provide an integrated, comprehensive review of the entire area or responsibility center.

4.5    Evaluation of the Planning and Budgeting System

         An effective planning and budgeting process should accomplish the following purposes.

• Increase openness and sharing of information, participation in the decision making process, and accountability.  PBS should allow administrators, faculty, staff, students, and regional campus Advisory Boards to have full knowledge of, and to take part in, planning and budgeting activities at all levels.  PBS should also ensure that planning and budgeting decision-makers are accountable to the University community and other relevant constituencies.
• Improve the ability of administrators, faculty, staff, and students to make sound decisions.  PBS should increase interaction among departments, responsibility centers, and senior vice chancellor areas, improve the ability of planners to anticipate needs and avoid crises, and enhance the quality of planning and budgeting decisions.  It should reinforce the benefits of examining trends, improving coordination of planning and budgeting, and looking at long-term opportunities and results.
• Help department, responsibility center, and senior vice chancellor area heads function effectively.  PBS should increase understanding of and support for the work of persons exercising responsible leadership.
• Ensure maintenance and achievement of performance standards.  PBS should promote the cost effective use of resources, fair and open performance appraisals, and constant improvement in programs and services.
• Enhance the University.  PBS should provide visible evidence of achievement of basic mission and goals of the University, responsibility centers, and departments.