UFM 2.0: Striving for Simplicity and Predictability

When UVA adopted the University Financial Model six years ago, it was a vast improvement from the target-based system we had been using. The new model, often referred to as the UFM (you've surely heard it called “YOU-fum”), meant that resources would be allocated based on activity levels like enrollments and research activity. Now, in 2021, with new University leadership in place and many financial changes underway, the UFM is under review to make sure it supports efforts to achieve 2030 strategic plan goals.

As reported prior, the UFM Implementation Committee has taken up the work of reviewing and improving the UFM in time for the FY23 budget development process. FST Executive Committee member and Vice Provost for Planning, Adam Daniel says that periodic review of financial models such as the UFM is a best practice in higher education.

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“It makes sense that over time, and on a cycle, you go back and validate and refine your model after you learn and acquire new data and experience,” he says.

For this review, the Committee’s charge from Provost Liz Magill in reviewing the UFM is twofold:

1. Ensure that the plan we’re using has what we need to serve us well in light of UVA’s strategic vision. This is a strategic review of the UFM that analyzes how it serves the needs of the organization.

2. Assess how the current model is serving the needs of activity centers and central service units around UVA. Focusing on the needs of the model’s users.

Financial models such as UFM are not accounting systems, but planning tools built to advance both strategic and operational needs. The Committee’s recommended changes focus on improving planning and reducing the administrative burden that comes from managing the current model. Based on guidance from stakeholders and peer benchmarking, they are keeping these guiding principles in mind as they recommend changes to the model:

• Simplicity: Users report that the current UFM is overcomplex, requiring precision in some areas that does not necessarily result in added value.
• Predictability: The tool must better support multi-year planning, which means we need to work on the timing between budgeting in central service units and activity centers so that there is a stronger understanding of the relationship between revenue and expenditure growth.

The fact that this review takes place during a large-scale financial transformation at UVA was unplanned but serendipitous. Bill Ashby, an FST Functional Owner and Associate Vice President for Financial Strategy, says “The toolset supporting UFM is going to enhance the total budgeting and planning environment. We’re able to contemplate bigger changes than we would’ve otherwise if we weren’t going through Finance Strategic Transformation.”

Between now and the end of September, the UFM Implementation Committee will continue to work toward a smooth transition to UFM 2.0 for FY23. With an anticipated FY23 budget planning kick-off in early October, the Committee plans to have its report and significant work completed by the end of September.