Today we introduce a new McMaster budget model that achieves our initial goals of transparency, effectiveness and fairness. It is a customized approach combining the best attributes of other established models, while meeting McMaster’s unique needs and circumstances as a research-intensive university.

Early in this process, considerable time was invested studying and discussing alternative budget models. The McMaster new budget model is a hybrid of activity-based budgeting. It allows for flexibility in funding core University services, while providing a fairer allocation of revenues to Faculties.

The primary principle governing the new budget model is that income flows directly to the activity units (Faculties). Support units receive their funding through the assessment of levies, charged to the activity unit. These levies are controlled by drivers (e.g. enrolment, occupied space) that are most relevant to the operation of the support unit. It is therefore clear that two of the main functions of the new budget model are to determine, first of all, how income arriving at the university is allocated amongst the activity units, and secondly, how the levies that provide funding to the support units are to be determined.