Mac to implement new budget model

December 1, 2011
This article was published more than 2 years ago.
Est. Reading Time: 2 minutes

Farzeen Foda

Senior News Editor


McMaster University’s Budget Remodelling Task Force recently released its Final Report, available online through the Provost’s Website.

The Task Force has been working on this project since 2007, when Phase I was initiated, noted Khaled Hassanein, chair of Phase II of the Task Force, which started in August 2009.

The current University budget is undergoing a transformation to increase transparency, but also “find a balance between accuracy and simplicity,” said Hassanein, so faculties can better understand their funding allocations and make plans accordingly.

This new and improved budget system features a de-centralization of funding, noted Hassanein, and resembles the one used by the University of Toronto.

The current University budget follows an Incremental system, and McMaster is in the process of transitioning to an Activity-Based system.

The primary difference between the Incremental and Activity-Based system is that following the Incremental System, faculties receive funding based on historical estimates of their needs, whereas, in the Activity-Based system, funding is allocated based on the activities of each faculty, referenced as activity units in the report.

The Task Force has released the final report in an effort to receive feedback from the McMaster community.

Hassanein outlined a few potential risks associated with the Activity-Based budget model, noting that, given its nature, it may give way to reduced inter-faculty collaboration.

This strong drawback is intended to be targeted through a variation of the Activity-Based model, maintaining some aspects of the Incremental system.

Another potential risk pertains to the possibility that this alternative model may result in financial benefit for some faculties, while incurring a deficit in others.

To prevent this possibility, a University Fund will be put in place to support those faculties that may incur a loss upon transition to the new model.

A Shadow Budget will also be implemented for an undefined period of time.

During this time, the University will maintain its current model, but run the alternative model concurrently on a smaller scale to better evaluate its efficacy with McMaster.

The University will also be actively involved in training necessary staff in the implementation of the new budget system.

The budget remodelling task began with Phase I in 2007, at which time the Activity-Based Budget was evaluated, and it was decided, “would this be a good idea for Mac,” according to Hassanein, who explained that McMaster looked to other universities who had implemented the system.

Following careful evaluation, Phase I approved the Activity-Based Budget and concluded that McMaster must develop an Activity-Based Budget system that would be in line with the University’s academic mission, leading to Phase II, which began with a discussion with the Deans of faculties.

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