Review of SOM Revenues and Allocation Process

1. Review of SOM Revenues and Allocation Process New Faculty Orientation Session October 19, 2011 S. Dawn Bulgarella Sr. Associate Dean for Administration & Finance

2. SOM Revenues - $569 MillionFY 2010 Values are in millions

3. Mission-Aligned Budgeting Missions: Teaching Research PatientCare Budget Sources: Tuition ASETF IER Grants HSF Hospital

4. SOM ASETF Allocation FY 2010

5. Purpose of the ASETF (state) Allocation Process • Align state funding with appropriate missions of the SOM and its departments • Develop a model that helps the Dean evaluate the performance of departments with regard to teaching, research and space utilization • Propose methods to identify and correct inequities in the historic allocation of state funding to departments

6. Allocation Model for SOM/JHS Depts • Departmental infrastructure 7.5% • Size of Faculty (FTEs) 7.5% • Teaching Efforts 35% • Research Productivity 35% • Dean’s discretion 15% • Space costs are factored into final allocation • Legislative earmarks are respected outside of the model • Basic and Clinical departments are treated the same in the model

7. Teaching Subcomponent of the Model • Teaching (35% overall) - Graduate teaching : credit for graduate students registered/mentored; # of didactic credit hours; # PhDs conferred - Medical teaching : credit for # of course or clerkship directors; faculty contact hours in MS1&2; contact weeks in MS3&4; mentorship of scholarly activity - T-series & R21s: credit for NIH training grants - Post-docs & Residents : credit for headcount -

8. Research Subcomponent of the Model • Research (35% overall) - Total expenditures : credit for total expenditures on extramural funding as a market share across the School – incentivizes grants awarded - Extramural salary coverage : credit for extramural salary support as a market share across the School – incentivizes collaboration on grants

9. Accountability for Space • Space is assigned to departments and charged back at three different rates per square foot per year: research space (~$24), admin space (~$15), and clinical space (~$18) • If a department generates sufficient indirect costs to cover the space costs assigned to them, it is held harmless in the allocation • If a department does not cover its space costs via generation of indirect costs, the ASETF allocation is reduced accordingly

10. Discretionary • 15% (~$7.65M) of the allocation of state dollars to departments is based on Dean’s discretion – primarily now determined by quality and special circumstances as discussed with the Dean by the chairs.

11. SOM State Appropriation History:Includes Operations and Special Program Support

12. State Support Principles Protect core missions Education Research Patient Care/Service Continued investment in areas of strategic priority Assessment of primary revenue streams (i.e., IER, HSF/Health System, Philanthropy) for new opportunities to improve operations and strategic growth Improve productivity and efficiency where possible

13. A Glass Half-Full Perspective • Every other medical school will be negatively impacted by the current economy – some will figure out how to weather, and even competitively strike, during this down time • UAB ranks 14th in “support from parent institution” among 125 medical schools

14. In Conclusion • Our Allocation Model is complicated, but tested and transparent • We believe that we are rewarding the behaviors that fulfill the School’s mission • The SOM and its departments are well supported relative to our peer institutions

15. But, Is There Enough Institutional Funding In Departmental Budgets to Support Growth • Yes, if we are Productive & Efficient: - extramural funding thresholds are met and maintained (probably 55-70%) - faculty reasonably participate in teaching (Medical School and Graduate School) - departments are efficiently operated (i.e., spending less than 35-40% of state funding on things other than faculty salaries

16. Questions? Thank you!