Launched on September 30, 2025, the Budget Model Redesign (BMR) initiative prioritizes the development of a budget model that emphasizes clear resource allocation, predictability for unit leaders, financial stewardship, and incentives aligned with MSU's mission and values.
The current incremental budget model has evolved over time and no longer fully reflects the complexity and scale of the university’s teaching, research, and outreach mission. As the university continues to grow and adapt to changes in enrollment, research activity, and operational costs, it is important that the framework used to allocate resources reflects today’s institutional needs.
The Budget Model Redesign initiative is an opportunity to develop a more transparent and predictable approach to resource allocation—one that supports responsible financial stewardship and aligns incentives with MSU’s mission.
The budget is the university’s annual estimate of what financial resources will be available, and how each college, unit, and department plans to use them. The budget model is the framework used to allocate financial resources across the university to support those budgets.
The BMR project team is comprised of a Steering Committee, Working Group, and ad hoc committees. The Steering Committee is composed of leaders from across the university to provide strategic direction and input on model design options. The Working Group includes academic, fiscal, and operational leaders responsible for analyzing budget model design options and providing input to the Steering Committee and Executive Sponsors. There are also ad hoc committees that are diving into specific topics of interest.
The BMR team has worked to create opportunities for employees from all areas—regardless of project governance representation—to provide insights into unique operational needs and feedback on potential models. Engagement opportunities are posted on the project website.
Yes. Building on extensive engagement with university leadership, faculty, and staff—including representation at all levels of the BMR project governance—the Steering Committee has recommended a hybrid budget model that supports MSU’s unique needs. The redesign is being implemented in phases, with ongoing evaluation and refinement. Phase I is focused on academic year enrollment incentives, driven by undergraduate student credit hours (SCH) and headcount, as well as Master’s and professional degree revenue following an approach that gives credit for tuition generated by these programs.
It’s important to note that FY27 will serve as a parallel year between the current and new budget models. This will support understanding of the new model while also providing the opportunity to identify and implement improvements before the full launch of the model with the FY28 budget cycle.
Information regarding the Budget Model Redesign is available on the Office of Financial Planning and Budget’s website. The website will continue to be regularly updated to reflect the project status, future engagement opportunities, and additional resources.
Given that units have gone through a process of identifying 9% in budget cuts for FY26 and FY27, we are concerned that it would be difficult for units to absorb further reductions if their undergraduate enrollment statistics decline over the first several years of the new model. As a guiding principle of the BMR project is to ensure predictability and sustainability, we’ve designed guardrails. The Office of Financial Planning and Budget will calculate the college’s incremental change percentage in comparison to their base budget for the coming budget year. If the change exceeds the guardrail rate, a funding increment or decrement equivalent to the threshold will be applied.
| Undergraduate-based incremental guardrail | Graduate-based incremental guardrail | |
| Years 1 and 2 | 1% | 2% |
| Years 3 and 4 | 2% | 2% |
| Year 5 and beyond | 3% | 2% |
Increments beyond the threshold will also be tracked on a five-year rolling basis to allow for surpluses to be applied against any future enrollment decreases.
For more information on the details of the current proposed model, review the presentation slides from our May 12 Town Hall (MSU login required).
Undergraduate increments and decrements will be based on two factors.
First, undergraduate increments are impacted by the change in the number of Student Credit Hours (SCH) taught by the college. SCH calculations will account for all courses taken by undergraduates—regardless of the course level—in the Fall and Spring semesters, as reported by the Office of Institutional Research. As part of the FY27 shadow year, the BMR project governance will analyze the impact of cross-listed and co-taught classes during the Fall 2026 semester and may adjust the calculation methodology to ensure equity. Summer semester allocations will continue to be allocated at current levels, until addressed in a future phase. SCH data are counted as of census (quarter semester) in both fall and spring and are frozen at that point in time.
Additionally, undergraduate increments will be calculated based on the change in the headcount of enrolled majors by college, as of the Fall semester census. The model calculations will be based on the assigned undergraduate primary major, as each student is limited to one primary major. However, if a student is enrolled in a secondary undergraduate major in a college other than the college of their primary major, both colleges will get an increment for that student. If the student is enrolled in a secondary major within the same college as their primary major, the college will only receive a single increment. Data are counted as of fall census (quarter semester) and are frozen at that point in time.
For more information on the details of the current proposed model, review the presentation slides from our May 12 Town Hall (MSU login required).
The FY27 budget cycle will follow the university’s current incremental budget model.
FY27 will be a “parallel” year for the new model created by the BMR project. The project governance team will leverage the new model to share with college and unit leadership what their annual budget would have been as compared to the current model. This will support understanding of the new model while also providing the opportunity to identify and implement improvements before the full launch of the model with the FY28 budget cycle.
The budget model will serve as a framework that guides allocation of resources. The responsibility will lie with college and unit leaders to determine how best to deploy those allocated resources to meet operational needs in support of the university’s mission.
Consistent with prior years, certain aspects of the General Fund (GF) allocation will be eligible to be incremented for salary adjustments. Starting in FY28 (beginning July 1, 2027), the funding and cost responsibility for GF benefits will be distributed to MAUs, rather than being managed centrally, and unit budgets will be incremented for cost increases in those benefits in a way similar to salaries. Units will receive an allocation for increases in salaries and benefits covered by their current General Fund base budget.
For more information on the details of the current proposed model, review the presentation slides from our May 12 Town Hall (MSU login required).
For master’s and professional programs not currently treated as Revenue-Based Initiatives (RBI), the college will receive a portion of the revenue generated by these programs as incremental funding. These increments will be based on analysis of previous periods, rather than projections of future activity.
Generally, master’s and professional degree programs that are currently treated as RBI will continue to be covered by existing incentives; however, these programs will switch to the new budget model over the next five years.
For more information on the details of the current proposed model, review the presentation slides from our May 12 Town Hall (MSU login required).
Regardless of the budget model, programmatic decisions should continue to be made strategically at the unit level, with input from other areas (e.g., the Office of the Provost) as appropriate.
Protecting and supporting the university’s mission is a guiding principle for the project. The project governance team is mindful of all aspects of the mission—education, research, and outreach—in considering budget model impacts. It is also important to design a model that will work across the entire enterprise and allows for flexibility and innovation.
The base budget—which will continue to be funded at the same level following the FY27 budget reductions—is designed to support all of an MAU’s activities, regardless of revenue generation; however, priorities and corresponding allocations are determined at the MAU level. Additionally, the new budget model will introduce incentive elements which have the potential to generate additional funding for the MAU. For more information on the details of the current proposed model, review the presentation slides from our May 12 Town Hall (MSU login required).
While it is difficult to project future enrollments by field of study, the new budget model allows units to plan for budgetary impacts under different scenarios. This is a change from the current model, where there is no predictable connection between changes in enrollment and funding.
The new budget model will not be used for the FY27 budget cycle and does not impact planned reductions.
A current timeline is outlined on the project website. The “shadow year” (FY27) begins on July 1, 2026. It’s important to note that units will only maintain the current budget during the “shadow year.” No additional effort will be required to support the shadow model, whose purpose is to support analysis and further model development.
Throughout FY27, the project governance team will remain engaged with units to actively refine the framework in preparation of the Phase I implementation in FY28, beginning July 1, 2027.