Performance Based Budgeting (PBB)

FY 15 marks the first year that PSU is using Performance Based Budgeting (PBB).  The groundwork of PBB was created years ago with the Financial Futures Taskforce (for a history of PBB at PSU see http://www.pdx.edu/budget/history-of-performance-based-budgeting-0).

PBB moves us away from the incremental budgeting model of the past. Although that model served PSU well for many years, it was not able to fully support the dynamic nature of the growth and declines we were seeing both in terms of enrollment and stat funding.  To compensate for its shortcoming, PSU also developed a self-support model that ran in tandem with incremental budgeting.  And in recent years, we layered on to all of this the need to reduce budgets; making it even hard to distinguish what budget model was being used when and where.  I have probably over implied this, but given this is a blog post I am giving myself permission to do so.

As its name implies in PBB, performance and budget are linked.  But, at PSU that does not mean that every unit is a tub on its bottom—it does not mean that every unit performs the same.  In its simplest form, PBB for PSU schools/colleges can be explained as the relationship between 2 components: a revenue requirement and an expenditure budget (the expenditure budgets and performance requirements for all OAA units is available at (http://www.pdx.edu/budget/sites/www.pdx.edu.budget/files/Town%20Hall%20-%205-27-14_with%20video.pdf  (slide 43) ). This past spring we created a short, 9 minute animated video on how PBB works for our schools/colleges in OAA (http://www.youtube.com/v/Vdt30w5Yu8w ).

You can consider the video the OAA PBB primer.  It covers the most rudimentary elements and principles of PBB at PSU.  Over the course of this year I will post a series of issue briefs on PBB.  These will be short, 2 page documents designed to explain some of the ways PBB works (or does not work) and to dispel some of the myths and address concerns the model raises.  The one I will post soon is how PBB supports interdiicpilainry collaboration.  And, although I have yet to start writing  the second PBB issue brief, I already have a working title: “Getting over the loss of self – support and moving forward with PBB as an entrepreneurial tool”—or something like that.

Please do not hesitate to contact me if you have any questions or comments as we implement PBB.