2 No. 72 19th June 1995 CUHK Newsletter Comment from Senior Administration A nUpdat e o n th e New Fundin g Mode l From the Convener, Working Party on Implementation of New Funding Model I n March each faculty was allocated a budget b y the Resource Allocation Committee (RAC) in the form of a block grant. By April, all faculties had sub- allocated the funds to their departments and each department had submitted a budget plan to the University. This sequence of events looks ordinary enough. After all, budgeting is an annual chore or brawl that many organizations have to go through. In this university, however, it marks an important departure from three decades of centralized resource planning and the beginning of a new management culture. The New Funding Model, as the new resource planning system is called, has two major features. First, it links the allocation of resources to departments/faculties to their performance. The University has always emphasized teaching and research performance, but never has it linked resource allocation so closely to performance as it does under the NewFunding Model. This linkage is inevitable as the University Grants Committee (UGC) has also adopted a performance-based new funding model which allocates resources to the universities on a similar basis. It will no doubt generate incentive (and pressure) for departments and units to be more performance conscious. Second, it decentralizes resource decision-making by allocating funds by way of one- line budgets. The University has been devolving authority and decentralizing the decision-making process to faculties and departments in the last several years. Many decisions invariably have resource implications, and without devolving the authority to use resources, decentralization cannot progress further along the track. Therefore, allocation by way of one-line budgets which gives the budget-holder full authority (subject to minimal financial restrictions) and the responsibility that comes with it to use resources, is a major step in forging ahead with decentralization. The University has been accustomed to a centralized system of resource decision-making. It will take some time before the University administrative units get used to the idea of relinquishing the authority to make resource decisions for the departments, and for the departments to fully comprehend and appreciate the range of possibilities that are now open to them within their one-line budgets. When this new idea sinks in, a newmentality and management culture based on incentives, performance, delegation, and accountability will emerge. It is expected that this new change in our resource allocation systemwill bring about higher efficiency in three ways. First, performance-based allocation will have a direct incentive impact on improving performance. Second, the one-line budget has the effect of increasing efficiency in the use of resources at the departmental level. The department budget-holder being the frontline manager has better information on the department's resource needs and relative priorities than the central administration. Given the flexibility, he/she will be able to make optimal use of the allocated resources to increase the department's teaching and research output than if the decisions are made by the central administration on its behalf. Third, there will be an improvement in administrative efficiency at both the department and the University level. Once the resource decision, in particular the decision to engage new staff, is decentralized, the time and effort that need be spent in justifying the establishment of a new post, getting endorsement by the dean, vetting by the Personnel Office, consideration by the Administrative Affairs Committee/ Administrative and Planning Committee, further justifications, arguments and communication under the current system will be largely eliminated. This will shorten the decision process and reduce a large amount of paper work. While it is too early to evaluate efficiency gain under the New Funding Model, we are beginning to see a shift in expenditure pattern among the departments as indicated in their budget plans submitted to the University. Compared with the existing expenditure pattern, the 1995-96 expected expenditure shows an increase of about one percentage point in the share of non-staff and non- equipment expenditure (general expenditure), representing $14 million in the University as a whole. This is an indication that under the old resource planning system, departments have been underprovided in the departmental supplies item relative to staff and equipment expenditure. Once given the freedom, many departments want to increase the proportion of general expenditure in their budgets. We expect to see further shifts in the expenditure pattern in future financial years when departments have more time to realize the range of possibilities under the one-line budget and to plan ahead. Following the completion of the budget planning stage, the Bursar's Office and the Information Management Unit are working feverishly to put together an on-line financial system that provides up-to-date information on expenditure for the department budget- holders via the campus network. This system has to be ready by 1st July, when spending under the New Funding Model begins. In the meantime, the RAC and the Working Party on Implementation of the New Funding Model have received a number of inquiries from departments seeking clarification on what can or cannot be done under the New Funding Model. These queries are expected to increase after 1st July, as we move into the next financial year when the new resource system is actually implemented. Some of these queries contain ideas which are innovative and challenging, and were not expected when the New Funding Model was conceptualized. In deliberating on a response to such queries, the Working Party has adopted the criteria that any new options, rules or guidelines should be consistent with the concept of the New FundingModel, and administratively simple. Sometimes, they conflict with existing rules and practices, in which case the responsible units/committees will be consulted as to whether existing rules and practices should be upheld or amended to accommodate these new ideas. The New Funding Model has brought us into an uncharted territory as far as resource planning is concerned. New ideas, proposals and counterproposals need to be discussed, distilled, and incorporated into The New Funding Model — A Guide for Budget- Holders' which we plan t o update periodically and send to budget-holders. Institution building is a cumulative and evolutionary process. With the benefit of collective wisdom and experience, we should be able to build a new institutional setup for resource planning that will provide the departments with flexibility in using allocated resources to meet challenges and to respond to changes, thus giving them an edge in competing with departments in other universities. An outstanding problem of the New Funding Model is the incorporation of teaching quality besides full-load equivalent student numbers into the resource allocation process. The UGC is grappling with this problem. It remains intractable for there are no reliable and acceptable performance indicators of teaching quality that may be utilized. In the meantime, the UGC has allocated teaching development grants to universities, and launched a perennial exercise in teaching and learning quality process audit to reward and improve teaching quality on the one hand and to monitor their teaching quality assurance mechanisms on the other. This two-pronged approach will, to some extent, make up for the lack of explicit incentives for quality teaching in the UGC's formulaic new funding model. The University will simply mirror the two- pronged approach of the UGC internally as a way to assure teaching quality under our New Funding Model. Teaching development grants will be allocated and an internal academic process audit will be conducted ahead of the formal UGC exercise. The next step forward is to extend the New Funding Model to cover the non- teaching units. The problem proves to be more complex than the application of the model to teaching departments for two reasons. First, unlike teaching departments whose research output can be assessed in a research assessment exercise, and whose teaching output can be represented (at least quantitatively, though not qualitatively) by full-load equivalent student numbers, non- teaching units tend to have outputs that arc hard to quantify. They are so diverse that it is almost impossible to even compare outputs across different units. Without common performance indicators, it is difficult to set a proper budget base for each unit and to provide incentives through a formulaic performance-based funding model. Direct monitoring of performance unit by unit will be necessary. Second, while the budgets of the teaching departments tend to be similar in structure and scope, the budgets of non- teaching units can be very different because the functions of these units are very diverse. A good example is the Buildings Office which has a large and rather complicated budget or set of budgets. The budget structure of each non-teaching unit needs to be studied individually in detail before the one-line budget can be extended to these units. This is now being done. The aim is to bring in some form of one-line budget for the non- teaching units by the beginning of the 1996- 97 financial year if not earlier. Liu Pak-wai International Symposium on Hypertrophic Scars A n international symposium o n hypertrophic scars, with special emphasis on basic science an d clinical management, was held at the Prince of Wales Hospital on 3rd and 4th June. I t was chaired by Prof. P. C. Leung (Department o f Orthopaedics and Traumatology, CUHK) and Prof. John Evans (Department of Rehabilitation Sciences, Hong Kong Polytechnic University). Prof. Basil Pruitt and Prof. Hugo Linares, respectively the president and vice-president of the International Society for Bum Injuries, were among the eminent guest speakers from Hong Kong, mainland China and overseas. A trade exhibition of different products used in wound management and scar treatment was held close to the symposium venue. Issues such as wound management, scar formation, causes and risk factors for hypertrophic scar formation, and advances in preventing and treating troublesome scars were addressed i n th e course o f th e symposium. Two First MFA Graduates Exhibit their Artistic Achievements CUHK is Hong Kong's only university offering a Master of Fine Arts (MFA) programme. Its first two MFA graduates are sculptor Camille Yeung Sau Ying and oil painter Li Yau Mang. Camille Yeung graduated from CUHK with a BA degree in fine arts. With 'The Most Promising Artist Award' in the sculpture division of the Philippe Charriol Foundation, Hong Kong, her talent in her chosen field of sculpture started to gain recognition. The noted sculptor and chairman of the Hong Kong Sculptors Association, Van Lou, rates Camille as Hong Kong's first prominent female sculptor. Her works were exhibited at New Asia College's Hui's Gallery from 26th May to 7th June. Li Yau Mang received his BA degree from the Guangzhou Academy of Fine Arts' Department of Oil Painting in 1991. His works have been exhibited by many art galleries in both China and Hong Kong, and are currently on exhibit (9th- 22nd June) at Hui's Gallery. CUHK offers its two-year MFA Programme i n painting, sculpture, Chinese calligraphy and seal carving. I t includes thesis writing, seminars, non-art elective courses, professional practice and graduation exhibition in the area of study.